Unsecured consumer lending at Kazakhstan’s banks expanded by an average of 32% a year between 2021 and 2024. Growth slowed to 14.6% in 2025 and to just 3.1% in the first half of 2026, the weakest pace in six years. This is not a byproduct of an economic slowdown. It is the result of a three-year regulatory campaign to curb excessive household indebtedness, culminating in a package of measures approved on July 27 by the Board of the Agency for Regulation and Development of the Financial Market.
The new regulations introduce risk-based conduct supervision, marking a fundamental shift in how financial institutions are regulated. Previously, the regulator focused largely on whether banks formally complied with legal requirements. The new objective is to prevent consumer harm before it occurs.
Banks, microfinance institutions, insurers, and certain securities market participants will now be responsible for managing financial products throughout their entire lifecycle – from product design and launch to servicing and eventual withdrawal. This includes mandatory procedures for identifying the target customer group, assessing whether a product delivers fair value, testing products before launch, and continuously monitoring their performance afterward. In practice, financial institutions must demonstrate in advance that a product is suitable for the customers it is being sold to, rather than merely proving that it complies with the law.
At the same time, the regulator approved a unified framework governing the work of the Financial Ombudsman, Kazakhstan’s out-of-court dispute resolution mechanism for conflicts between consumers and financial institutions.
The aim is to provide consumers with an effective alternative to litigation. The new rules establish transparent complaint procedures, standardized timelines for case resolution, and make the Ombudsman’s decisions binding on banks, microfinance institutions, and collection agencies. The Ombudsman’s office will be funded through mandatory contributions from financial institutions themselves, while complaint data will be transmitted directly to the regulator. This effectively turns consumer complaints into a supervisory intelligence tool rather than simply a mechanism for resolving individual disputes. The new framework will take effect on January 1, 2027.
The third element of the package expands the scope of Finkalisim.kz, Kazakhstan’s Unified Digital Platform for Collective Debt Resolution, which has been operating since July 1, 2026.
Previously, the platform covered only debts owed directly to banks and microfinance institutions. It will now also include loans whose claims have been transferred to collection agencies. The objective is to allow borrowers to negotiate with all creditors through a single platform instead of holding separate discussions with each lender.
Following the introduction of the moratorium on transferring distressed loans to collection agencies, the number of borrowers serviced by collectors has already fallen by 61%, from 877,000 to 341,000 people. Most restructuring efforts now remain with the original lender instead of being passed further down the collection chain.
These three measures represent the latest layer of a reform agenda that has been developing over the past three years and explains why the regulator has steadily tightened oversight.
The foundation consists of two laws: the 2024 Law on Minimizing Risks in Lending and the 2025 Law on Financial Market Development and Consumer Protection. Their purpose was not to restrict lending itself but to ensure that access to credit does not undermine borrowers’ financial resilience or create excessive systemic risk within the banking sector.
The first stage focused on limiting the cost and structure of consumer loans.
The maximum annual percentage rate on unsecured consumer loans was reduced from 56% to 46%, while the cap on secured loans fell from 40% to 35%. The objective was to lower the overall cost of borrowing rather than simply reduce nominal interest rates.
Maximum loan sizes were also introduced. Unsecured consumer loans are now capped at KZT 9.5 million for banks and KZT 4.8 million for microfinance institutions. Their maturity may not exceed five years, preventing lenders from artificially extending repayment periods to lower monthly installments while substantially increasing the borrower’s total repayment costs.
The second stage targeted the practice of solving existing debt problems by issuing new loans.
Since 2025, banks have been prohibited from extending new consumer loans to borrowers with payment arrears exceeding 30 days on bank loans or even one day on microloans. Previously, the threshold had been 90 days.
The reforms also prohibit new lending to borrowers whose debts were written off or artificially restructured during the previous three years without a genuine restoration of repayment capacity. The principle is straightforward: financial distress should be resolved by restructuring existing obligations rather than issuing additional loans. Otherwise, new credit merely postpones the problem instead of solving it.
For the first time, Kazakhstan has also introduced a formal category of high-risk borrowers – individuals with a combination of elevated debt burdens, payment arrears, limited credit histories, or unverified income. Banks are now required to apply enhanced affordability assessments when lending to these customers.
The third pillar shifted attention from borrowers to banks’ own incentives.
The risk weight applied to unsecured consumer loans exceeding KZT 2 million with maturities between three and five years was increased from 150% to 350%. Banks must now hold substantially more capital against these loans, making this segment significantly less profitable and reducing incentives to aggressively expand higher-risk retail lending.
The regulator also introduced monthly monitoring of default rates on newly issued loans. Initial results already suggest an improvement, with average default rates at some banks falling from 5% to 2.5%.
Beginning April 1, 2026, Kazakhstan also introduced a 2% sectoral countercyclical capital buffer on risk-weighted retail lending assets. The additional capital cushion is designed to absorb potential losses if household lending begins expanding too rapidly again.
Another safeguard will come into force on January 1, 2027: a borrower’s total debt relative to annual income will become a formal lending metric, preventing households from taking on obligations beyond their realistic repayment capacity before a loan is approved.
The fourth pillar addresses what happens once a loan has already become distressed.
Previously, banks could quickly sell non-performing loans to collection agencies and remove them from their balance sheets. That approach has changed.
A moratorium on transferring distressed consumer loans has been extended until May 1, 2027 under the new Banking Law. During this period, original lenders remain responsible for restoring borrowers’ repayment capacity through restructuring, payment holidays, or debt relief rather than simply passing the problem to collectors.
The role of collection agencies has also changed. They are now subject to many of the same debt resolution obligations as banks, including the ability to partially or fully forgive outstanding debt.
The results are already visible. In 2025 alone, financial institutions resolved KZT 814.3 billion of distressed debt, including KZT 740.4 billion through restructuring and KZT 73.8 billion through debt write-offs. The debts of 142,500 socially vulnerable borrowers were written off in full.
The final piece of the reform agenda is the overhaul of Kazakhstan’s personal bankruptcy framework.
The government has shortened out-of-court bankruptcy procedures for certain categories of long-term delinquent borrowers. Over time, collective debt resolution and bankruptcy procedures are expected to be integrated into a single digital process.
The underlying philosophy remains consistent across the entire reform package: borrowers should first be given every available opportunity to restore financial stability. Bankruptcy should remain a measure of last resort, used only when all other options have been exhausted.
This article was translated with the assistance of artificial intelligence.
