Kazakhstan: Banks Prospering, Foreign Bank Regulations Eased

Madina Abylkasymova, head of the Agency for Regulation and Development of the Financial Market, assessed the reliability and accessibility of the Kazakh banking system. She says this sector is experiencing its best times in history, Orda.kz reports.

According to Madina Abylkasymova, the banking system's indicator of stressed assets has been at a record low for the past two years.

In addition, the level of creditors with overdue payments of more than 90 days currently does not exceed three percent.

Thirdly, banks have sustainable capital at the level of 20%, which reflects the stability and health of the banking system, she believes.

Abylkasymova says the organization is monitoring to ensure that problem loans do not appear. 

She says that even in a worst-case scenario, including low GDP and falling oil prices, capital adequacy will remain at 13.5%.

Meanwhile, the Majilis of Parliament approved the draft amendments on the development of the financial market and the protection of the rights of financial services consumers in the first reading. This simplifies the conditions for foreign banks' operations in Kazakhstan.

Madina Abylkasymova presented the draft law "On Amendments and Supplements to Certain Legislative Acts of the Republic of Kazakhstan on the Development of the Financial Market and Protection of the Rights of Consumers of Financial Services" at a plenary session.

The first block of amendments is aimed at liberalizing the requirements for opening foreign banks in Kazakhstan, as well as simplifying the licensing procedures for executives of financial organizations, she clarified.

In particular, the list of documents required for foreign investors to obtain permission to open a foreign bank is being reduced.

The requirements for foreign bank assets when establishing branches are also being reduced from 20 billion to 10 billion US dollars to attract more foreign investors, added Madina Abylkasimova.

The bill expands the list of permitted activities for branches of foreign banks.

It will include foreign currency exchange transactions, storage and accounting of financial instruments and clients' money, confirmation of rights to them, assumption of obligations for their safety, issuance of payment cards, and others.

The second block of the bill has been developed to implement the Presidential Decree on de-bureaucratization. The amendments reduce the number of provisions in laws regulating the financial market, including the banking and insurance sectors, the securities market and microfinance activities, Abylkasimova clarified.

The third block of the bill provides for further measures to develop the insurance and securities markets.

The bill also includes amendments initiated by deputies to protect the rights of consumers of financial services and improve financial accessibility:

• Proposes to expand access to financial services for persons with disabilities.
• When regulating debt on overdue loans, additional measures are provided to protect citizens belonging to socially vulnerable groups and those affected by emergencies.
• Several penalties for bank loans are excluded.
• A limitation on the maximum amount of commissions under bank loan agreements is introduced.
• Financial organizations are being required to approve internal procedures for developing and implementing financial products.

The proposals of deputies to grant Otbasy-Bank the right to issue educational loans within the framework of the state educational savings system have been taken into account,added Madina Abylkasimova. 

Abylkasimova says the bill's main innovations will increase competition in the banking sector, attract investment, increase financial accessibility, protect consumer rights, and develop the insurance and securities markets.

Original Authors: Anastasia Prilepskaya, Olga Ibraeva