Kazakhstan has prohibited issuing loans that exceed a borrower’s income by a significant margin. The Agency for Regulation and Development of the Financial Market (ARDFM) has introduced a new prudential standard called the Debt-to-Income Ratio (DIR). This measure, outlined in the regulator’s resolution, took effect on August 20, 2024.
The DIR is calculated by dividing the total debt from all loans by a borrower’s annual income. Lending institutions will use this ratio alongside the existing Debt Load Factor (DLF), which limits a borrower’s periodic payments to no more than 50% of their monthly income.
The ARDFM has announced that the DIR will cap the total amount of outstanding loans a borrower can hold based on their annual income. A standard limit will be established in 2025. Until then, the regulator will collect and analyze data from banks and microfinance organizations to determine the appropriate limit.
Additionally, the ARDFM has set maximum amounts for unsecured consumer loans and microloans at 2,200 Monthly Calculated Indices (MCI, approximately $17,000) and 1,100 MCI ($8,300), respectively. For secured microloans issued by pawnshops, the limit is 8,000 MCI ($61,600), and for microfinance organizations, it’s 20,000 MCI ($154,000).
These changes were implemented as part of a law on minimizing lending risks, signed by President Kassym-Jomart Tokayev on June 19 of this year.
