Article 4. Minimum requirements for microcredit of the Law on Microfinance Activities

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1. Microfinance organizations provide micro-loans in accordance with the requirements of the legislation of the Republic of Kazakhstan and the rules for granting micro-loans.

2. The procedure for concluding a micro-loan agreement, including the requirements for the content, design of the agreement and its first page containing information on the full cost of the micro-loan (the amount of overpayment for the micro-loan, the subject of the micro-loan), the mandatory terms of the micro-loan agreement, as well as the form of the repayment schedule for the micro-loan are approved by a regulatory legal act of the authorized body specified by in the first part of paragraph 3 of Article 3-1 of this Law.

3. Microfinance organizations, when interacting with the applicant in the framework of providing micro-loans, must comply with the following requirements:

1) provide the applicant with reliable and comprehensive information about the terms of the micro-loan, including the amount of the annual effective remuneration rate, and the risks associated with obtaining a micro-loan, including the consequences of the applicant's failure to fulfill his obligations under the micro-loan agreement;

2) to assess the creditworthiness (solvency) of the applicant based on information about his financial situation;

3) provide information to the credit bureau in accordance with the Law of the Republic of Kazakhstan "On Credit Bureaus and formation of credit histories in the Republic of Kazakhstan";

4) to charge remuneration only for the actual number of days of the borrower's use of the microcredit in the case of partial early repayment or full early repayment of the microcredit;

5) to prevent the indexation of obligations and payments under the agreement on the provision of microcredit issued in tenge, linked to any currency or other equivalent;

6) to prevent, when changing the terms of the contract for the provision of a microcredit with an individual and (or) issuing a new microcredit in order to repay an individual's microcredit, the accrual of remuneration on overdue remuneration, penalties (fines, penalties), commissions and other payments related to the issuance and maintenance of a microcredit.

4. Microfinance organizations do not have the right to change the terms of the microcredit agreement unilaterally, except in cases of their improvement for the borrower.

For the purposes of this paragraph, an improvement in the terms of a micro-loan agreement for a borrower is understood to mean:

1) a change in the direction of reduction or complete cancellation of the penalty (fine, penalties);

2) a downward change in the remuneration rate under the microcredit agreement;

3) postponement, including for a period including the term of military service and sixty calendar days after its completion, and (or) installment payments on a micro-loan.

An additional list of improving conditions for the borrower may be provided in the micro-loan agreement.

5. If microfinance organizations apply improving conditions, the borrower is notified of changes in the terms of the microcredit agreement in accordance with the procedure provided for in the microcredit agreement, as well as through information technology facilities.

The requirement for notification through informatization facilities does not apply to credit partnerships and pawnshops.

6. The borrower has the right, within fourteen calendar days from the date of receipt of the relevant notification to the microfinance organization, to refuse the improving conditions proposed by the microfinance organization and to inform the microfinance organization of his decision in accordance with the procedure established by the microcredit agreement and (or) through information facilities.

Microfinance organizations provide deferred and (or) installment payments under a micro-loan agreement without increasing monthly micro-loan payments only with the consent of the applicant.

7. Microfinance organizations are not entitled to provide consumer microcredit in excess of the amount established by the regulatory legal act of the authorized body specified in the first part of paragraph 3 of Article 3-1 of this Law.

8. An individual has the right to establish or cancel, free of charge, at a credit bureau or on the e-government web portal, or using microfinance organization information facilities integrated with services hosted on the e-government gateway, a voluntary refusal by an individual to receive a micro-loan.

Microfinance organizations are prohibited from providing micro-loans to an individual if there is information about the establishment by an individual of a voluntary refusal to receive micro-loans in his credit report received by microfinance organizations before making a decision to provide a micro-loan.

This prohibition does not apply to cases where a micro-loan is issued by a pawnshop.

9. A microfinance organization is prohibited from providing consumer micro-loans to an individual that are not secured by a pledge of property subject to registration, in excess of the amount established by a regulatory legal act of the authorized body specified in part one of paragraph 3 of Article 3-1 of this Law, without the consent of his spouse.

The procedure for obtaining the consent of a spouse to receive a consumer micro-loan that is not secured by a pledge of property subject to registration, and the minimum amount of a micro-loan that requires the consent of the spouse, are determined by a regulatory legal act of the authorized body specified in the first part of paragraph 3 of Article 3-1 of this Law.

10. It is prohibited for a microfinance organization to conclude an agreement on the provision of consumer micro-credit, not secured by collateral, with an individual whose credit report does not contain information about previously received micro-loans and (or) bank loans, without biometric authentication of such individual in his personal presence in the microfinance organization on the basis of written consent given by such individual in a microfinance organization.

The minimum amount of a micro-loan under a consumer micro-loan agreement, at the conclusion of which, in accordance with part one of this paragraph, the personal presence of an individual is required, is determined by a regulatory legal act of the authorized body specified in part one of paragraph 3 of Article 3-1 of this Law.

The requirement provided for in the first part of this paragraph does not apply to cases when the amount of a consumer micro-loan is transferred to the bank account of the seller (supplier) of goods, works and services for the purpose of purchasing goods, works and services, the receipt of which is confirmed by the borrower (buyer).

A microfinance organization makes a decision on the application of an individual to conclude an agreement on the provision of consumer microcredit, not secured by collateral, within one hour from the moment of its receipt.

A microfinance organization is prohibited from making a positive decision on the application of an individual to conclude an agreement on the provision of consumer microcredit that is not secured by collateral, as well as to conclude such an agreement if there is information in the credit report about an application submitted by this individual to another microfinance organization or bank for the conclusion of a microcredit agreement or a bank loan agreement that is not secured by collateral property for which there is no status on the decision.

It is prohibited for a microfinance organization to conclude an agreement on the provision of consumer micro-loans that are not secured by a pledge of property, if the microfinance organization fails to provide information to the credit bureau about the individual's application for such an agreement and the decision taken on it.

The requirements set out in parts five and six of this paragraph do not apply to cases where a consumer micro–loan is issued, not secured by a pledge of property, to repay the debt on a micro-loan of an individual borrower obtained from the same microfinance organization.

At the request of an individual borrower, the microfinance organization, no later than ten working days, provides the borrower with information about the process of biometric authentication, including the date and method of its implementation, the reconciliation of data for the availability of information about it in the database of the microfinance organization's anti–fraud center and the National Bank of the Republic of Kazakhstan, as well as the value of the debt burden coefficient, used in the examination of the application and the conclusion of a contract for the provision of consumer microcredit.

11. In the cases and in accordance with the procedure provided for by the regulatory legal act of the authorized body specified in the first part of paragraph 3 of Article 3-1 of this Law, a microfinance organization enters into an agreement on the provision of consumer microcredit, not secured by a pledge of property, with an individual only after obtaining the consent of the individual to conclude such an agreement.

In the case of an agreement on the provision of consumer micro-loans that are not secured by collateral, consent to its conclusion via the Internet is issued at the credit bureau or on the e-government web portal, or through the microfinance organization's information facilities integrated with services hosted on the e-government gateway.

12. A microfinance organization transfers money to a borrower on a consumer micro-loan that is not secured by a pledge of property on the basis of a micro-loan agreement concluded via the Internet, the amount of which exceeds the minimum amount determined by the regulatory legal act of the authorized body specified in part one of paragraph 3 of Article 3-1 of this Law, subject to the following requirements:

1) not earlier than twenty-four hours after the signing of the agreement on the provision of a micro-loan or an increase in the amount of the micro-loan;

2) if there is consent (confirmation) of the borrower to receive a consumer micro-loan, issued in accordance with the requirements of the regulatory legal act of the authorized body specified in part one of paragraph 3 of Article 3-1 of this Law, and received by the microfinance organization not earlier than the deadline specified in subparagraph 1) of part one of this paragraph.

If, within one calendar day, several consumer micro-loans are provided to the borrower via the Internet, not secured by property collateral, in the same microfinance organization, the amount of which, as a result of addition, exceeds the minimum amount determined by the regulatory legal act of the authorized body specified in part one of paragraph 3 of Article 3-1 of this Law, the microfinance organization in respect of micro-loans exceeding the specified minimum amount, complies with the requirement set out in subparagraph 1) of the first part of this paragraph, It also checks the specified micro-loans for signs of fraud in accordance with internal documents, taking into account the requirements established by the regulatory legal act of the authorized body specified in paragraph 1 of Article 3-2 of this Law.

13. The requirements provided for in the second part of paragraph 8, paragraph 11 and the first part of paragraph 12 of this article do not apply to the following cases::

1) transfer by a microfinance organization of the amount of consumer microcredit to the bank account of the seller (supplier) of goods, works and services for the purpose of purchasing goods, works and services, the receipt of which is confirmed by the borrower (buyer);

2) issuance by a microfinance organization to an individual in order to repay his debt on another microcredit in this microfinance organization;

3) issuing a micro-loan by a microfinance organization to an individual in order to pay the borrower's debts on taxes, fines, and enforcement proceedings, in which the amount of the micro-loan is transferred to the bank account of the relevant authorized body accepting such payments specified by the borrower, or to a private bailiff opened at the bank to store the collected amounts in favor of the recoverers.

14. If a microfinance organization issues a micro-loan to an individual without complying with the requirements established by the first part of paragraph 9 of this article, the microfinance organization:

1) does not have the right to require the specified individual to fulfill obligations under such a microcredit;

2) no later than three working days from the date of revealing the fact of issuing the specified micro-loan, take the following measures:

decides on the full write–off (forgiveness) of the individual borrower's debt on such a microcredit;

stops debt collection and claim-based work on such a microcredit;

makes adjustments to the credit history of the individual borrower in the credit bureaus by eliminating records of information on such a microcredit;

returns to the borrower, an individual, the previously withheld (paid) amounts of the principal debt, remuneration and (or) penalties for such a microcredit.

The measures provided for in part one of this paragraph shall apply to cases of issuing a microcredit without complying with any of the requirements provided for in paragraph 2 of Article 3-2, part two of paragraph 8, part one of paragraph 10, paragraphs 11 and 12 of this article, provided that the microfinance organization receives the procedural documents of the criminal prosecution authorities specified in part one of paragraph 4 of this article. 3-2 of this Law.

15. Microfinance organizations are not entitled to provide micro-loans to an individual within five years from the date of posting an announcement on the completion of out-of-court bankruptcy or judicial bankruptcy proceedings against the specified individual in accordance with the procedure provided for by the Law of the Republic of Kazakhstan "On Restoration of Solvency and Bankruptcy of Citizens of the Republic of Kazakhstan", as well as to accept collateral from such an individual in the form of collateral, guarantees and (or) sureties under microcredit agreements.

The requirements of this paragraph do not apply to micro-loans provided by pawnshops secured by movable property that is not subject to state registration.

16. Microfinance organizations have the right to set and charge commissions and (or) other payments from legal entities for issuing and changing the terms of a micro-loan, the amount of which is determined by microfinance organizations independently.

Microfinance organizations are required in contracts for the provision of a microcredit issued to a legal entity to indicate the full list of commissions and (or) other payments, as well as their amounts to be charged in connection with the issuance and modification of the terms of the microcredit.

Microfinance organizations do not have the right to unilaterally introduce new types of commissions and (or) other payments within the framework of a microcredit agreement concluded with a legal entity.

The Law of the Republic of Kazakhstan dated November 26, 2012 No. 56-V.

This Law regulates public relations related to the provision of micro-loans, establishes the specifics of the creation and reorganization of organizations engaged in microfinance activities, the legal status, activities of organizations engaged in microfinance activities, and also defines the specifics of state regulation of organizations engaged in microfinance activities, control and supervision of their activities.

President

Republic of Kazakhstan

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