The Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market has taken measures to reduce the pace of consumer lending and strengthen the protection of the rights of borrowers

In retail lending, growth was 5.6% to 7.9 trillion tenge due to an increase in consumer loans by 6.1% to 4.7 trillion tenge. Considering the repayment of mortgage loans at the expense of one-time pension payments, the growth of the mortgage portfolio amounted to 3.4% to 2.4 trillion tenge. In general, in the retail lending segment, the last year's trend of shifting the growth of lending to individuals from high-risk consumer loans to less risky mortgage loans persisted.

To curb the excessive growth of consumer lending and credit risks of the banking system, the Agency has taken appropriate regulatory measures.

From January 1, 2020, a ban on charging penalties and commissions after 90 days of delay on unsecured consumer loans, as well as a ban on providing loans to citizens with an income below the subsistence minimum, was introduced. In addition, banks and MFIs are required to calculate the borrower's debt burden ratio before issuing a loan, and the capital adequacy requirements for unsecured loans are doubled to form additional capital reserves and cover credit losses.

"The tightening of regulatory requirements for banks has reduced the growth rate of consumer lending from 26.9% in 2019 to 4.3% in 2020," the head of the financial regulator said.

In March of this year, the Agency introduced a differentiated approach to determining the maximum amount of interest rates on loans, depending on the type of credit institution and the type of loan. As a result, the limits on collateral bank loans and mortgage loans have been reduced.

In order to increase the availability of financial services for citizens with a negative credit history, in April of this year, the Agency introduced a mechanism for the rehabilitation of credit histories of borrowers who have repaid arrears of more than 12 months and did not allow repeated delinquencies. To date, 1.4 million citizens have received the status of "rehabilitated" on their loans. Obtaining this status indicates that the borrower has fulfilled its obligations to credit institutions in good faith.

At the legislative level, the Agency has taken additional measures to prevent the growth of the debt burden of citizens and protect the rights of borrowers.

On May 25 of this year, the Head of State signed a Law on the regulation of banking, microfinance, and collection activities, initiated by the Agency. The law introduced a single mandatory procedure for banks and MFIs to settle overdue debts of citizens on loans, a ban on accrual of remuneration on capitalized overdue remuneration, and expanded the conditions for writing off blank balances on mortgage loans of citizens after the judicial implementation of the pledge.

At the legislative level, the procedure for concluding agreements on micro-loans has been tightened, additional restrictions have been introduced for collection organizations, and the Agency's powers to control the subjects of microfinance and collection activities have been expanded.

To exclude unfair actions of collectors, the obligation to record all cases of interaction between the collector and the debtor, to make calls only from registered phone numbers, has been introduced. For the proper implementation of collection activities, the Agency will introduce a minimum amount of authorized capital in the amount of 10 million tenge.

The measures taken will strengthen the protection of the rights of borrowers, clear the market of unscrupulous microfinance and collection organizations.

In order to help certain categories of mortgage borrowers experiencing objective difficulties in repayment of their loans, the Program of refinancing mortgage loans has been continuing since 2015 on behalf of Yelbasa. The Program of refinancing mortgage loans reduced the debt burden of 28.1 thousand borrowers for 156 billion tenge, last year the conversion of foreign currency mortgage loans for 14 thousand citizens with debt cancellation for 109 billion tenge was completed.

In the current year will be completed measures to support borrowers - socially vulnerable strata of the population with coverage of 8 thousand people.