03 September 2019
On June 26, 2019, the Decree of the President of the Republic of Kazakhstan "on measures to reduce the debt burden of citizens of the Republic of Kazakhstan" on unsecured consumer loans (hereinafter – the Decree) was signed.
The mechanism for implementing the Decree was developed by the Government of the Republic of Kazakhstan and the National Bank of the Republic of Kazakhstan in two key areas.
The purpose of the first direction is to provide direct and targeted financial assistance to borrowers classified as citizens who find themselves in a difficult life situation, by paying off the state debt on the main debt and accrued remuneration, not exceeding 300 thousand tenge per borrower.
Debtors for these unsecured consumer loans, the total debt for which does not exceed 3 million tenge as of June 1, 2019, are:
- large family;
- families receiving survivor benefits;
- families with children with disabilities, disabled since childhood over 18 years of age;
- recipients of state targeted social assistance;
- children left without parental care who are under twenty-nine years of age and have lost their parents before coming of age, as of June 26, 2019.
The purpose of the second direction is to write off second-level banks and microfinance organizations to all citizens of the Republic of Kazakhstan accrued fines and penalties on unsecured consumer loans and reimbursement by the state of part of the debt written off in the amount of 30 percent.
In order to implement this Decree, JSC "problem loans Fund" is defined as an organization that transfers targeted funds to repay the debts of these categories of citizens, and reimburses part of the debt for fines and penalties for unsecured consumer loans.
Thus, within the first direction, the Government of the Republic of Kazakhstan allocated targeted funding in the amount of 105 billion tenge from the Republican budget, which was sent by the Fund to second-tier banks and microfinance organizations. For more than 629,000 borrowers, these measures have become a significant support in restoring solvency and reducing their debt burden on the main debt and remuneration.
In the second direction, second-level banks and microfinance organizations have forgiven the debt on penalties and penalties for unsecured consumer loans of 1.4 million citizens for a total of 33 billion tenge, of which 30 percent, amounting to 10 billion tenge, were reimbursed by the state through the "problem loan Fund" JSC.
In General, thanks to the Decree, the average debt burden of Kazakhstanis was reduced by more than 40%, while the debt of a number of citizens, taking into account the size of their loan to banks and microfinance organizations, was fully repaid.
Thus, the implementation of all measures provided for by the decree has been completed. This promotion is a one-time event.