Key Interest Rate Limits Introduced
The newly approved regulatory framework establishes the following maximum thresholds for the annual effective interest rates:
- Unsecured Bank Loans: Capped at 46% AEIR
- Secured Bank Loans (with collateral): Limited to 35% AEIR
- Mortgage Housing Loans: Not to exceed 20% AEIR
- Microloans from Microfinance Organizations (MFOs): Capped at 46% AEIR
- Short-Term Microloans (up to 45 calendar days):
– For amounts up to 45 times the Monthly Calculation Index (MCI), the AEIR must be less than 0.3% per day
– And must not exceed 179% per annum
These limits are set to improve affordability and reduce the burden of excessive debt among borrowers, especially within the rapidly expanding microfinance segment.
Compliance Requirements and Legal Framework
To qualify for these rates, microloans must comply with the provisions outlined in the National Bank’s regulation: “On the Procedure for Concluding a Microloan Agreement”. This includes detailed requirements for:
- Clear and upfront disclosure of the total cost of the loan (including overpayment and loan purpose)
- Transparent and standardized formatting for loan agreements and repayment schedules
- Mandatory presentation of key terms on the first page of the contract
Moreover, at the time of signing a loan or microloan agreement, or when modifying interest rates or fees, the AEIR must strictly remain within the newly set caps.
Implications for the Financial Sector
These changes reflect a broader effort by Kazakhstan’s authorities to align lending practices with best international standards. They are expected to:
- Encourage responsible lending
- Improve consumer confidence
- Enhance market discipline across banking and microfinance institutions
