Kazakhstan Introduces New Measures to Improve Quality of Loan Portfolios
Astana, Kazakhstan - Restoring Stability to the Financial System
The government of Kazakhstan has introduced a new initiative aimed at improving the quality of loan portfolios in the country’s second-tier banks. The measures are designed to help restore stability to the financial system and reduce the risk of non-performing loans.
Establishing an Organization for Loan Portfolio Quality Improvement
Under the new rules, an organization specializing in improving the quality of loan portfolios will be established to reacquire shares and bonds from banks and legal entities that were previously banks. The organization will also assess the quality of assets and rights of claims held by these institutions and make decisions on their acquisition.
Powers and Responsibilities
The organization will have the power to:
- Acquire doubtful and bad assets, as well as rights of claim, from the National Bank of Kazakhstan and other banks
- Manage these assets through trust management or sale
- Place money in securities and other financial instruments, including second-tier banks and the National Bank of Kazakhstan
- Carry out financing on the conditions of payment, urgency, and repayment of banks and legal entities that were previously banks
Additional Powers
The organization will also have the right to:
- Engage collection agencies to collect and assign rights of claims on bank loans with a delay in fulfilling an obligation under a bank loan agreement for more than ninety consecutive calendar days
- Levy collections in an indisputable manner on money held on the bank accounts of borrowers
Budget Support
To support its activities, the organization will have the right to receive target transfers from the budget.
Ban on Non-Authorized Activity in the Banking Sector
The government has also introduced a ban on non-authorized activity in the banking sector. All financial institutions must obtain appropriate licenses from the National Bank of Kazakhstan or an authorized body before engaging in any banking transactions.
Expected Impact
The new measures are designed to improve the stability and transparency of the Kazakhstani financial system, and to reduce the risk of non-performing loans. They are expected to have a positive impact on the country’s economy and financial sector as a whole.
- Restoring stability to the financial system
- Reducing the risk of non-performing loans
- Improving the quality of loan portfolios in second-tier banks
- Enhancing transparency and accountability in the banking sector