Kazakhstan's population is heavily indebted, with around 8.5 million citizens having debts, and approximately 1.6 million individuals unable to repay on time. The total overdue debt surpassing 90 days amounts to around 1.7 trillion tenge.
In an effort to address this issue, the Mazhilis deputies have developed a bill to minimize credit risks and protect borrowers' rights. The bill, introduced at the end of last year, has undergone 15 working group sessions and is set to be presented for the first reading at the Mazhilis plenary session soon.
One of the bill's authors, Berik Beisengaliev, shared details about the proposed changes. The bill aims to restrict banks and MFIs from charging interest after 90 days of default on existing consumer loans and prohibit the issuance of unsecured consumer loans to individuals with over 90 days of arrears.
Additionally, the bill introduces the concept of consumer loans and sets the maximum limit at 5 million tenge for banks and 2 million tenge for MFIs. This measure aims to enhance financial institutions' discipline in granting loans and prevent the easy transfer of problematic debts to collectors.
The bill also imposes restrictions on selling individual's debts to collection agencies, allowing such sales only after 24 months from the date of default and debt settlement procedures. This change aims to hold banks and MFIs accountable for dealing with problematic borrowers.
Furthermore, the bill proposes mandatory compliance with two prudential norms - the debt service ratio and the debt-to-income ratio. These norms aim to regulate borrowers' debt repayment capabilities and impose limits based on the borrower's age and income level.
The bill also simplifies the process for individuals declaring bankruptcy and enhances the role of the banking ombudsman in pre-trial dispute resolution regarding all types of loans. It aims to ensure fair treatment of borrowers and obliges financial institutions to provide information on debt settlement directly to credit bureaus.
Overall, the bill seeks to protect borrowers' rights, improve lending practices, and establish measures to address debt-related challenges in Kazakhstan.
