Differentiation of marginal interest rates on loans and micro-loans

In order to implement the order of the Head of State, the Agency of the Republic of Kazakhstan for Regulation and Development of Financial Market introduced differentiated maximum values of interest rates depending on the type of credit institution and the type of loan. The relevant Resolution of the Agency's Management Board No. 49 "On Amendments to Certain Regulatory Legal Acts of the Republic of Kazakhstan on the Regulation of Banking and Microfinance Activities" (hereinafter - the Resolution) was adopted on March 15, 2021.

Since 2011, the effective annual rate (EAR) for all types of bank loans and micro-loans has been the same and amounted to 56%.

With the adoption of the Resolution, the marginal interest rates on bank loans and micro-loans are differentiated:

• for unsecured bank loans, the maximum value of the EAR is maintained at 56%;
• for collateral bank loans, the maximum value of the EAR is reduced from 56% to 40%;
• for residential mortgage loans, the maximum value of the EAR has been reduced from 56% to 25%;
• for micro-loans(collateral and unsecured), the maximum value of the EAR is maintained at the level of 56%;
• for collateral micro-loansissued for a period of up to 45 days and an amount of up to 50 MCI, the maximum value of the nominal interest rate has been reduced from 30% to 20%.

The EAR is the remuneration rate in a reliable, annual, effective, comparable calculation (real value) for the services of a bank, an organization that performs certain types of banking operations, and an organization that performs microfinance activities.

The EAR calculation on the loan includes the client's payments on the principal debt and remuneration, as well as commissions and other payments related to the issuance and servicing of the loan, including:

1. payments of the client in favor of the insurance company, if the beneficiary under the insurance contract in the event of an insured event is a credit institution;
2. payments of the client to the guarantor (surety) for obtaining a guarantee(surety), to the appraiser for evaluating the pledged property;
3. payments of the client in favor of organizations (intermediaries) that provide services to a credit institution for attracting customers, verifying documents provided by customers for compliance with the terms of issuing a loan, transferring customer documents to the bank, accepting payments and transfers from customers to repay loans.

The EAR is calculated by the Resolutions of the Board of the National Bank of the Republic of Kazakhstan No. 137 dated March 26, 2012, and No. 208 dated November 26, 2019.

The list of commissions and payments charged to the client was approved by Resolution No. 218 of the Board of the National Bank of the Republic of Kazakhstan dated November 28, 2019.

Excess by banks, organizations that carry out certain types of banking operations. and organizations engaged in microfinance activities, the maximum amount of remuneration rates entails liability provided for by the legislation of the Republic of Kazakhstan.

Consumers of financial services can independently calculate and check the value of the EAR on the loan on the Agency's website.