We don’t want people to think that microfinance organizations are overwhelming citizens with loans

The microfinance market is waiting for a change. Since 2020, online lenders, companies that issue “payday loans,” will receive MFI status. Are there any risks for consumers? talked about this with the director of the Association of Microfinance Organizations (AMFOK) Yerbol Omarkhanov. And he also found out why MFIs “do not select clients for banks”, how scoring in this sector differs from solvency assessment in banks and other credit organizations and how the introduction of the total debt burden ratio for borrowers, which is currently being developed, can affect MFIs.

- Yerbol, in September, the National Bank will propose  legislative amendments to the Parliament that will prohibit the  accrual of commissions and penalties for loans NPL 90+. How relevant is the issue of delay to MFIs?

- According to the National Bank, by the end of 2018, overdue loans over 90 days in the microfinance sector account for 3.5%. This is a very good indicator, even compared to banks. And he says that microfinance organizations are very responsible in lending to citizens: they do not overload them with loans and monitor their debt burden. Moreover, according to the First Credit Bureau, in the total loan portfolio, which includes banks, online lenders, and credit institutions, the share of MFIs is 2.6%. That is, we have no influence on the debt load of the population.

- The state has taken a number of measures to limit the debt burden of citizens. How will they affect the microcredit market in Kazakhstan?

- In July of this year, President Kassym-Zhomart Tokayev signed a law according to which a ban was imposed on microfinance organizations to levy commissions and other payments related to the issuance and servicing of microloans. In addition, the National Bank is considering the possibility of prohibiting the collection by MFIs of penalties and fines for microloans that are not related to entrepreneurial activity, as well as setting limits for MFIs to demand remuneration, fines and penalties for microloans secured by housing. Our sector takes this calmly, we are in solidarity with the state in this matter and we believe that these restrictions are timely and justified by the difficult situation on the credit market.

- In the updated Law "On Microfinance Activities" included online lenders ...

- Yes, this law included in the perimeter of the legal regulation of MFIs, credit partnerships, pawnshops, online companies that provide loans. All will now be regulated by a single specialized law, which will enter into force on January 1, 2020.


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