Mon-Fri 09:00-18:30

What does the Problem Loans Fund do, and how do they help mortgage borrowers?

02 November 2020

NUR-SULTAN. KAZINFORM - Less than a third of the tenants - owners of small and medium-sized businesses in Kazakhstan used the right to suspend payments for the lease of state property by the end of the year. The Vice Minister of Finance of the Republic of Kazakhstan Berik Sholpankulov told in an interview to MIA Kazinform about why this is happening, how much money this decision costs the state, what measures have been taken to help mortgage borrowers and what the Problem Loans Fund is doing today.

- Berik Sholpankulovich, please tell us how the order of the President of the country to suspend the charging of rent for SMEs on real estate objects owned by state bodies by the end of the year is being implemented? What does a tenant need to do to get this benefit?

- The suspension of the accrual of lease payments to SMEs for real estate objects belonging to state bodies is carried out in strict accordance with the instructions of the Head of State. The system works quickly, it is simple and accessible. Lessees - SMEs - through the web portal by means of an EDS, only need to submit an application for concluding additional agreements on the suspension of lease payments. Processing of applications is carried out within one hour as they are received by employees of the departments of state property and privatization and local executive bodies. It is clear that during business hours. As of today, out of 9,399 lease agreements in force according to the State Property Register, 5,413 lease agreements may be suspended. The tenants submitted 4,942 applications to conclude additional agreements. 4,280 of them are for communal property, 662 for republican property. They are all satisfied.

Similar work was carried out in relation to joint-stock companies and LLPs, the state block of shares of which is in the republican ownership. From June 20 to the end of this year, the accrual of penalties for rent arrears, which formed at the beginning of the benefits, was also suspended.

- In what cases is it possible to refuse to suspend the calculation of lease payments?

- Only if the tenant does not belong to SMEs or the leased property is not real estate.

- Why, in your opinion, the owners of SMEs have not yet fully used the opportunity provided by the Government of the country to suspend payments for the lease of public property? Are they doing well, or are they afraid that the debts will still have to be paid back? That they will accumulate and then be collected forcibly?

- The decision to submit applications for suspension of payment for the lease of state property objects is made by the subjects of SMEs independently. Perhaps some SMEs have not suspended their activities, so they continue to pay for the premises used. As for the possible return of the suspended rent - this is not required. Their subsequent payment and enforcement measures will not be applied.

- The Problem Loans Fund operates in Kazakhstan, which is a subordinate organization of the Ministry of Finance and is engaged in improving the quality of the loan portfolio of second-tier banks. What is he focusing on this year?

- The main goal of the Fund is to rehabilitate the banking sector, assist second-tier banks in the process of “clearing” balance sheets from “non-performing” loans, as well as involving redeemed non-performing loans in the economic circulation. Overloading with non-performing loans does not allow banks to effectively perform their function and fully lend to the economy, which negatively affects the fundamental factors of the country's economic growth. During the period of the fund's activity, 36 projects were rehabilitated in various segments of the economy.

Currently, the fund's activities are aimed at selling the assets purchased in the period 2017-2019 in order to further involve them in the economic turnover and maximize the return on funds invested by the state.

The plan for involving property in the economic turnover is being developed as one of the socio-economic measures to support small and medium-sized businesses, enshrined in accordance with the Comprehensive Plan to Restore Economic Growth by the End of 2020.

This year, as part of the anti-crisis measures outlined by the Head of State in connection with the situation with the coronavirus, a Working Group for the Development of the Distressed Assets Market was created. Its task is to develop proposals for the development of the market for distressed assets, including those aimed at improving the regulatory, supervisory and legal conditions for managing distressed assets, restructuring and selling distressed assets of second-tier banks.

As part of the instructions of the Head of State to support the population and business entities, the fund adopted a number of decisions - debtors were granted deferrals to pay off debts, SMEs were exempted from rent for commercial premises. This working group initiated a number of proposals aimed at developing the market for non-performing assets in Kazakhstan, which are currently being considered by the Government.

- What measures have been taken to assist mortgage borrowers?

-The program of state support for mortgage borrowers was adopted back in 2015 on behalf of Elbasy. The Housing Mortgage Refinancing Program - as it is precisely called - is aimed at solving the problems of mortgage borrowers, who were most severely affected by currency fluctuations, to reduce their debt burden. As the program was being implemented, changes and additions were made to it three times, the contingent for receiving assistance expanded, and conditions improved. The latest changes were made in September this year to help socially vulnerable groups of the population and people with the only housing.

In particular, the National Bank of the Republic of Kazakhstan, together with the Government, carried out comprehensive work to expand the Program for Refinancing Housing Mortgage Loans in terms of:

- reimbursement of exchange rate differences to banks when converting foreign currency loans unilaterally without the borrower's application;

- financing the CFC for the purpose of repurchasing housing on the balance sheet of the liquidated Bank of Astana and BTA Bank, and leasing it to former owners with the option to purchase it;

- extension of the conditions adopted for socially vulnerable segments of the population to the co-borrower, mortgagor, guarantor of the mortgage loan;

- exclusion of restrictions on the period of acceptance of housing on the bank's balance sheet for the purpose of its further transfer into ownership by concluding a lease or loan agreement;

- providing the opportunity to return to the ownership of the borrower/mortgagor of the only housing transferred by the bank to the balance of the Organization for the Management of Doubtful and Bad Assets.

- Thank you for the interview!