"Limiting deposits to less than 10 million tenge in Kazakhstan"
Revamped Report: Banking Changes in Kazakhstan
In a recent Senate discussion, the deputy head of ARRFR disclosed modifications in Kazakhstan's banking landscape. As resistance against potential risks, the government plans to issue a basic banking license for entry into the market, with a modest T10 billion starting capital.
Microfinance institutions (MFIs), including key players like KMF and Binkay Finance Kazakhstan, aim to transform and tap into this opportunity. At present, 12 MFIs have amassed capital surpassing T10 billion, with two set to evolve into second-level banks.
To restrict bank risks, the basic banks will be barred from providing loans and other credit products to non-residents or bank-related individuals. Additionally, a cap on the total savings deposits of individuals has been set at 10 million tenge. The banking market will also prohibit activities related to brokerage and dealer operations involving complex or high-risk financial instruments.
Last summer, Kazakhstan capped maximum loans issued by banks and MFIs to combat population over-indebtedness. Moreover, payment cards for non-residents will have a 12-month validity period to prevent illicit activities like drug trafficking and digital assets misuse. Furthermore, foreign exchange purchasing rules for non-residents have become stricter.
Astana International Financial Centre (AIFC) offers a unique jurisdiction with innovative banking regulations, potentially shaping the broader financial sector, including the banking and microfinance industries. The Kazakh government supports fintech development, including digital banking and microfinance. The launch of the Central Bank Digital Currency (Digital Tenge) and the 2025 pilot for Open Banking are demonstrative of this support.
In brief, the basic banking license is one of several measures enacted by the Kazakh government to modernize and regulate the banking sector, with the potential to impact how MFIs and banks operate. However, specific details about restrictions for non-residents and related parties are not entirely transparent in the current information.
Enrichment Insights:- Basic Banking License: Aimed at promoting competition by simplifying the entry of new players, this license sets limitations on assets, transactions, and regulatory requirements for basic banks[1].- Microfinance Institutions and Basic Banks: Converting MFIs into banks necessitates meeting specific requirements, and the two MFIs mentioned – KMF and BNK Finance Kazakhstan – have made strides in this regard[5].- Regulations for Loans, Credit Products, and Deposits: While specific restrictions against non-residents and related parties are not detailed, the basic banking license seeks to enhance regulation of banking activities[1][5].- Government Support for Fintech: The Kazakh government is encouraging fintech development, particularly digital banking and microfinance. Its initiatives include the pilot for Open Banking and the launch of the Central Bank Digital Currency[3].- Astana International Financial Centre (AIFC): A special financial jurisdiction with innovative regulations, the AIFC has the potential to influence the broader financial landscape, including banking and microfinance operations[3].
The Kazakh government's introduction of a basic banking license is designed to promote competition, lowering the entry barrier for new entrants by setting limits on assets, transactions, and regulatory requirements for basic banks, potentially impacting the operations of banks and microfinance institutions (MFIs) like KMF and Binkay Finance Kazakhstan. Despite the restrictions on non-residents and related parties not being transparent in the current information, the basic banking license aims to enhance the regulation of banking activities. The Astana International Financial Centre (AIFC), with its innovative banking regulations, could shape the broader financial sector, including the banking and microfinance industries, further driving fintech development in Kazakhstan.
