Skip to main content

Eurasianet

Main Menu

  • Regions
  • Topics
  • Media
  • About
  • Search
  • Newsletter
  • русский
  • Support us
X

Caucasus

Armenia
Azerbaijan
Georgia

Central Asia

Kazakhstan
Kyrgyzstan
Tajikistan
Turkmenistan
Uzbekistan

Conflict Zones

Abkhazia
Nagorno Karabakh
South Ossetia

Eastern Europe

Belarus
Moldova
Russia
The Baltics
Ukraine

Eurasian Fringe

Afghanistan
China
EU
Iran
Mongolia
Turkey
United Kingdom
United States
X

Environment

Economy

Politics

Kazakhstan's Bloody January 2022
Kyrgyzstan 2020 unrest

Security

Society

American diplomats in Central Asia
Arts and Culture
Coronavirus
Student spotlight
X

Visual Stories

Podcast
Video

Blogs

Tamada Tales
The Bug Pit

Podcasts

EurasiaChat
Expert Opinions
The Central Asianist
X
You can search using keywords to narrow down the list.
Kazakhstan, Central Asia

Kazakhstan: Government eases burden on problem borrowers

Delinquent debtors are being offered a way off bad credit blacklists.

Almaz Kumenov Apr 2, 2021
Nurlan Abdrakhmanov. (Photo: Kazakhstan government website) Nurlan Abdrakhmanov. (Photo: Kazakhstan government website)

The government in Kazakhstan is spearheading a new initiative enabling problem borrowers to whitewash their credit history and take out new loans.

Under a measure announced on April 1, starting next week, debtors who had been placed on credit blacklists for failing to repay loans within a 90-day period after their due date, but who eventually did clear their arrears, will be removed from those same lists.

"This [rehabilitated] status will be a confirmation of that citizen's conscientious fulfillment of their obligations to banks and other creditors," said Nurlan Abdrakhmanov, deputy head of the state financial market regulator.

Before delinquent borrowers are able to wade back into the debt market, they will be required to undergo a 12-month probationary period. Even bank clients who have not paid off their debts in full, however, are in with a chance of redemption, so long as they can persuade the bank to draw up a debt restructuring schedule and keep to it for a 12-month period.

Non-performing loans are the albatross around the neck of Kazakhstan’s banking system and this initiative is intended as an incentive to mitigate that problem.

President Kassym-Jomart Tokayev approved a drastic decision in June 2019, when he signed a decree that he said he would clear all or some of the debts of around 3 million citizens. Under the terms of that decree, consumer debts up to $800 were wiped off in whole. Amounts over that had $800 knocked off. 

A leading cause of debt delinquency are the high interest rates charged by Kazakhstan’s banks. Around 20 percent is considered normal. 

Banks have been at fault in other ways, often, and without sufficient diligence, actively encouraging barely solvent clients to take out debts to cover the cost of holidays and weddings.

Tokayev’s bazooka solution worked only temporarily. The coronavirus pandemic and the subsequent lockdowns have caused extensive damage to private enterprise and created widespread job losses.

A National Bank report in September, for example, showed how the volume of overdue loans had inflated to 1.32 trillion tenge ($3 billion), up by 10 percent from the start of the year. The peak of non-performing loans had come in June, when the volume stood at 1.42 trillion tenge.

But the broader picture is ostensibly less gloomy, at least if Abdrakhmanov’s word is anything to go by. While the volume of nonperforming loans grew in absolute terms in the first three quarters of 2020, officials also say they fell as a proportion of overall consumer loans. 

Abdrakhmanov said that his regulatory body in January 2020 adopted new rules to prevent a further expansion in the growth of non-performing loans by tightening the rules on who was eligible for a loan. People with low incomes were as a result prevented from taking out credit. 

The measures appeared to have had some result, if only on paper. It is often uncertain where the most desperate go to borrow money when official avenues are closed to them.

"Last year, the percentage of consumer loans that are past due by 90 days and more declined to 6.9 percent compared with 8.6 percent in 2019,” Abdrakhmanov said.

 

Almaz Kumenov is an Almaty-based journalist.

Sign up for Eurasianet's free weekly newsletter. Support Eurasianet: Help keep our journalism open to all, and influenced by none.

Related

Aeroflot poised to return to Kazakhstan despite legal risks
Kyrgyzstan, Uzbekistan complete border delimitation process
Why Central Asian journalists hide their names

Popular

Azerbaijani embassy in Iran comes under deadly attack
Heydar Isayev
Aeroflot poised to return to Kazakhstan despite legal risks
Fight or flight: Tbilisi and Kyiv caught in another round of tensions
Nini Gabritchidze

Eurasianet

  • About
  • Team
  • Contribute
  • Republishing
  • Privacy Policy
  • Corrections
  • Contact
Eurasianet © 2023