Private investors to be allowed to buy debts of legal entities

11.05.2022, 18:15

Kazakh private investors will be able to buy distressed assets on the balance sheets of banks and microfinance institutions. The corresponding bill was approved today by the Mazhilis members. According to the chairwoman of the Kazakh Agency for Regulation and Development of the Financial Market Madina Abylkassymova, the document provides for the sale of loans only to legal entities. In general, this will eliminate the problem loans market and bring them into economic circulation. For example, to eliminate the idle time of mortgaged land plots and industrial commercial facilities. To date, the total value of such distressed assets exceeds one trillion tenge.

“Currently, banks and microfinance organizations keep such seized assets on their balance sheets for up to five years. This property does not participate in the economic activities. The bill proposes to set a three-year deadline for the holding of recovered property on the balance sheets of banks and microfinance institutions. During this time, banks need to sell the seized property. Otherwise, we will take appropriate measures,” said Madina Abylkassymova, Chairperson of the Kazakh Agency for Regulation and Development of Financial Market.

Non-residents of Kazakhstan may also be among private investors eligible for the purchase of distressed assets. However, in this case, assets should not be linked to land. The document also provides for the establishment of the institution of service companies. They will provide services to private investors in the maintenance and management of non-performing loans, which will be placed in their trust.

“It is proposed to assign the functions of service companies to the subsidiaries of banks that manage distressed assets, and collection agencies that already have the relevant experience and competence. Higher capital requirements and market experience for service companies will be established at the by-law level,” added Madina Abylkassymova.

Abylkassymova stressed that the Agency for Regulation and Development of the Financial Market will keep a register and post information on service companies that meet the established requirements on its Internet resource. This will provide an additional mechanism to protect borrowers’ rights, as these organizations are within the Agency's regulation.

 

 

 

 Translation by Assem Zhanmukhanova

Editing by Saule Mukhamejanova