Madina Abylkassymova, Chairwoman of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market, presented to the Senate the draft law “On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on the Regulation and Development of the Insurance Market, the Securities Market, and Banking Activities.”
Earlier, she reported on the development of the insurance market and the further development of the stock market. The third block of amendments within the draft law is aimed at improving banking activities.
First.
In order to simplify the approval process for senior executives of banks and banking holding companies, the issuance of a comprehensive preliminary approval by the regulator is envisaged. If a senior executive moves to a similar position in another organization, obtaining repeated approval will not be required. At the same time, qualification requirements for senior executives will be strengthened, including an increase in candidates’ total work experience, as well as experience in managerial positions.
Second.
The draft law introduces a new mechanism for converting large microfinance organizations into banks without surrendering their licenses. The microfinance market already includes large participants whose scale is comparable to that of mid-sized banks. Therefore, there is an objective need to create conditions for the further scaling of large microfinance organizations’ businesses through their conversion into banks.
All requirements for obtaining a banking license, including a minimum authorized capital of KZT 10 billion, must be fully met. A microfinance organization will continue lending to businesses until the moment it receives a banking license.
Third.
Opportunities for second-tier banks and banking holding companies to invest in non-financial organizations, including fintech companies, will be expanded. However, the amount of such investments will be limited at the level of a regulatory legal act of the authorized body.
Fourth.
To ensure an adequate assessment of borrowers’ debt burden, it is proposed to reduce the period for submitting information on issued loans to credit bureaus from 15 days to 1 business day. Within this timeframe, the list of information necessary to reflect the fact of loan issuance to a borrower and to identify the borrower will be transmitted. Implementation of these amendments will help prevent loans from being issued to already over-indebted individuals.
Fifth.
Under the current version of the law on microfinance activities, special conditions apply to issuing microloans to individuals in amounts of up to 50 monthly calculation indices (MCI) for a period of up to 45 days. In particular, the maximum interest rate on microloans and the amount of penalties are limited.
In order to reduce the debt burden of microfinance organization borrowers, the draft law proposes to limit borrowers’ debt burden by halving the amount of overpayment on microloans — from 100% to 50% of the microloan amount.
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