Customers Need to See the Loan Cost on the First Page of the Contract

Kazakhstani parliament wants to oblige microfinance organizations to do that by law

On December 9 the Mazhilis of the Parliament of Kazakhstan has approved a draft law that is aimed to change the regulation of microfinance companies as well as debt collectors, the Interfax-Kazakhstan news agency reported.

The bill was initiated by parliament members.

“We propose to change clause three of article four of the law that regulates activities of the microfinance businesses,” said Mazhilis Deputy Albert Rau.

As he noted, microfinance companies must be obliged to reveal all crucial details about the loan on the first page of a contract because the problem of irresponsible lending is still there.

«According to the First Credit Bureau, as of November 1, 2020, 170,000 entrepreneurs and 810,000 individuals currently have microloans in those microfinance organizations. The total amount of such loans exceeds 735 billion tenge ($ 1.7 billion) while 38% or 310,000 borrowers can’t pay debts as they fall due,» the deputy said.

The draft law also provides new requirements for debt collection agencies; they will be obliged to have the registered capital minimum not less than 10 million tenge ($23,740). The legal change to those agencies is necessary because many people are not happy with them, Rau noted.

Therefore, new requirements for the registered capital that debt collection agencies should have to operate is justified. At the same time, 10 million tenge is enough to launch a business and do it in a proper, responsible way.

Earlier, officials reported that due to the activities of MFOs and pawn shops, Kazakhstanis lost more than 21 billion tenge ($49.8 million).

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