LAW OF THE REPUBLIC OF KAZAKHSTAN

of November 26, 2012 No. 56-V ZRK

About microfinancial activities

This Law governs the public relations connected with implementation of activities for provision of the microcredits, establishes features of creation and reorganization of the organizations performing microfinancial activities of the legal status, organization activity performing microfinancial activities and also determines features of state regulation of the organizations performing microfinancial activities, control and supervision of their activities.

Chapter 1. General provisions

Article 1. The basic concepts used in this Law

For the purposes of this Law the following basic concepts are used:

1) it is excluded

1-1) electronic trading platforms selling bank and microfinancial assets - the Internet resource providing infrastructure to participants for tendering, operating according to the Law of the Republic of Kazakhstan "About state regulation, control and supervision of the financial market and the financial organizations";

2) the credit folder - the documents and data created by the organization performing microfinancial activities on each borrower;

3) the borrower - the physical person or legal entity which concluded with the organization performing microfinancial activities, the agreement on provision of the microcredit;

3-1) trust management agreement of the rights (requirements) - the trust management agreement of the rights (requirements) for the agreement of bank loan, to the agreement on provision of the microcredit concluded between service company and person specified in Item 1 of article 63 of the Law of the Republic of Kazakhstan "About banks and banking activity in the Republic of Kazakhstan" or person specified in part one of Item 5 of article 9-1 of this Law or the insurance (reinsurance) organization;

4) the microcredit - the money provided by the organization performing microfinancial activities, to the borrower in national currency of the Republic of Kazakhstan in the amount of and procedure, determined by this Law, on the terms of the paid nature, urgency and recoverability;

5) the organization performing microfinancial activities - the microfinancial organization, credit partnership, pawnshop performing activities for provision of the microcredits;

6) it is excluded

6-1) large member of the organization performing microfinancial activities - physical person or legal entity which owns directly or indirectly ten or more percent of shares in the authorized capital or voting (less exclusive) shares of the organization performing microfinancial activities;

6-2) faultless goodwill - professionalism and conscientiousness of person, confirmable including lack of the facts:

making by the specified person of illegal actions (failure to act) which resulted in the insolvency which entailed involuntary liquidation of the financial organization or to application to bank of the mode of settlement;

not removed or unspent conviction of the specified person, including lack of the court resolution which took legal effect about application to person of criminal penalty in the form of deprivation of the right to hold leading employee position of the financial organization, bank and (or) insurance holding and to be the large member (large shareholder) of the financial organization for life;

availability of the relations with the third parties (control and influence of the third parties) whose actions promoted legalization (washing) of income gained in the criminal way, to financing of terrorism and financing of distribution of weapons of mass destruction based on data of authorized body on financial monitoring;

7) the applicant - the physical person or legal entity which submitted the application to the organization performing microfinancial activities for receipt of the microcredit;

7-1) service company - the affiliated organization for management of stressful assets, the collection agency having within the trust management agreement rights (requirements), powers on trust management of the rights (requirements) for the agreement of bank loan, the agreement on provision of the microcredit including in the relation:

changes of terms of the contract of bank loan, agreement on provision of the microcredit;

representations in court of interests of person with which the trust management agreement of the rights (requirements) is signed;

acceptance from the debtor of money and (or) other property;

other powers provided by this Law, other laws of the Republic of Kazakhstan and (or) the trust management agreement of the rights (requirements);

7-2) consumer microcredit - the microcredit which is not the microcredit provided with mortgage of real estate, provided to physical person on purchase of goods, works, services and (or) other purposes which are not connected with implementation of business activity;

8) authorized body - the state body performing state regulation, control and supervision of the financial market and the financial organizations.

Article 2. Legislation of the Republic of Kazakhstan on microfinancial activities

1. The legislation of the Republic of Kazakhstan on microfinancial activities is based on the Constitution of the Republic of Kazakhstan and consists of the Civil code of the Republic of Kazakhstan, this Law and other regulatory legal acts of the Republic of Kazakhstan.

2. The laws of the Republic of Kazakhstan "About joint-stock companies", "About economic partnerships", "About partnerships with the limited and accessorial liability" and "About credit partnerships" extend to the organizations performing microfinancial activities in the part which is not settled by this Law.

3. If the international treaty ratified by the Republic of Kazakhstan establishes other rules, than those which contain in this Law then are applied rules of the international treaty.

4. And other legal entities performing activities within the specific mode of regulation, regulation of this Law and regulatory legal acts of authorized body, National Bank of the Republic of Kazakhstan accepted according to this Law entered according to the Law of the Republic of Kazakhstan "About state regulation, control and supervision of the financial market and the financial organizations" extend to the microfinancial organizations in the limits provided by conditions of specific mode of regulation.

5. The provisions of this Law applied in relation to banks of the second level extend to the branches of nonresident banks of the Republic of Kazakhstan opened in the territory of the Republic of Kazakhstan.

Article 2-1. The main the purpose, tasks and the principles of state regulation in the field of microfinancial activities

1. Main objective of state regulation in the field of microfinancial activities is establishment of the legal basis of implementation of microfinancial activities.

2. The main objectives of state regulation in the field of microfinancial activities are:

1) regulation of organization activity, performing microfinancial activities, establishment of standards of activities, control and supervision of microfinancial activities;

2) protection of the rights and legitimate interests of consumers of services of the organizations performing microfinancial activities.

3. The basic principles of state regulation in the field of microfinancial activities are:

1) effective use of resources and instruments of regulation;

2) transparency of organization activity, performing microfinancial activities;

3) responsibility of the organizations performing microfinancial activities.

Chapter 2. Microfinancial activities

Article 3. Microfinancial activities

1. Treat microfinancial activities:

1) activities of the microfinancial organization for provision of the microcredits to physical and (or) legal entities with providing or without providing in the amount of, not exceeding twenty-thousandfold size of the monthly settlement indicator established for the corresponding financial year by the law on the republican budget;

2) activities of pawnshop for provision of the bestselevy microcredits to physical persons under pledge of the personal estate intended for private use, and also on the security of the vehicle intended for private use, for a period of up to one year in the amount of, not exceeding eight-thousandfold size of the monthly settlement indicator established for the corresponding financial year by the law on the republican budget;

3) activities of credit partnership for provision of the microcredits to the participants with providing or without providing in the amount of, determined by the internal regulations of credit partnership approved by the supreme body of credit partnership.

2. The license for implementation of microfinancial activities, stipulated in Item 1 this Article, is issued by authorized body.

3. The microfinancial organization, in addition to the activities specified in the subitem 1) of Item 1 of this Article having the right to perform the following transactions:

1) attraction of loans (except for fund raising in the form of loan from citizens as business activity) from residents and nonresidents of the Republic of Kazakhstan;

2) investment of own assets into securities and other financial instruments;

3) rendering to the borrower consulting services in the questions connected with its business activity;

4) delivery in property employment (lease) of own property, and also delivery of the property hired for the purpose of implementation of microfinancial activities in the sublease (sublease);

5) realization of own property;

6) implementation of leasing activities;

7) implementation of functions of the payment agent and payment subagent;

8) the conclusion of insurance contracts for and on behalf of insurance companies - residents of the Republic of Kazakhstan as insurance agent;

9) implementation of functions of the agent of electronic payment system according to the legislation of the Republic of Kazakhstan;

10) factoring transactions: financing under concession of monetary claim with acceptance or rejection of risk of non-payment;

11) forfaiting transactions (forfetirovany): payment of debt obligation of the buyer of goods (works, services) by purchase of the bill of exchange without turnover for the seller;

12) issue to legal entities of the guarantees, guarantees and other obligations providing execution in cash;

13) development, realization and support of the specialized software used for automation of activities of the microfinancial organizations, or other software used in activities of the microfinancial organizations;

14) provision of consulting services in the questions connected with implementation of the transactions specified in subitems 6), 10), 11), 12) and 13) of this Item.

4. Pawnshop, in addition to the activities specified in the subitem 2) of Item 1 of this Article having the right to perform the transactions specified in subitems 1), 2), 4), 5) and 8) of Item 3 of this Article and also accounting, storage and sale of the jewelry containing precious metals and gemstones.

5. Credit partnership, in addition to the activities specified in the subitem 3) of Item 1 of this Article having the right to perform the transactions specified in subitems 1), 2), 3), 4), 5), 6), 7), 8), 9), 10), 11) and 12) of Item 3 of this Article and also to render consulting services in the questions connected with implementation of the transactions provided by subitems 6), 7), 8), 10), 11) and 12) of Item 3 of this Article.

6. The microfinancial organization, pawnshop, credit partnership is forbidden to perform other business activity which is not provided by this Law.

Article 3-1. General requirements to microfinancial activities

1. (Except for credit partnerships and pawnshops) in case of interaction with consumers of financial services the responsible business practicians in the financial market providing set of the principles and actions aimed at providing the fair, transparent and fair attitude towards consumers of financial services including in the relation shall observe the microfinancial organizations:

1) managements of financial products;

2) disclosures of information on provision of the microcredits;

3) non-admissions unfair the practician at all stages of interaction with consumers of financial services;

4) considerations of addresses of consumers of financial services;

5) increases in level of financial literacy of clients by development and realization of the relevant activities.

Requirements to responsible business practicians in the financial market are established by Chapter 2-4 of the Law of the Republic of Kazakhstan "About state regulation, control and supervision of the financial market and the financial organizations".

2. The organizations performing microfinancial activities (further - the microfinancial organizations), perform the activities in the presence of rules of provision of the microcredits approved by their supreme body.

3. Rules of provision of the microcredits shall conform to the requirements to implementation of microfinancial activities established by regulatory legal act of authorized body.

Requirements to implementation of microfinancial activities are established:

1) the list of data which shall contain rules of provision of the microcredits;

2) procedure for disclosure of information by provision of the microcredits and consultation of clients;

3) procedure for the conclusion of the contract on provision of the microcredit with physical person which is not connected with implementation of business activity, including the requirement to its content, registration, compulsory provisions;

4) the principles of fair behavior by provision of the microcredits;

5) types and signs unfair the practician, and also procedure for their identification by provision of the microcredits;

6) procedure and responsible business practicians to debt collection during the work with insolvent clients;

7) procedure for consideration by the microfinancial organization of addresses of the clients arising in the course of provision of microfinancial services;

8) the requirements to development and implementation of actions directed to increase in level of financial literacy of clients.

Rules of provision of the microcredits in addition to data which list is established by the regulatory legal act of authorized body specified in part one of this Item shall contain regulations on operating procedure with clients, including:

procedure for provision of services to persons with disability and to handicapped national groups taking into account requirements of the national standard for availability of departments of the financial organizations for provision of services to persons with disability and to other handicapped national groups;

features of provision of services to persons with disability and to handicapped national groups with participation of the authorized representative.

4. Rules of provision of the microcredits are open information and cannot be subject of trade secret or the mystery of provision of the microcredit.

5. The microfinancial organizations have the right to use artificial intelligence when implementing the activities and (or) rendering services for the purpose of assessment and risk management.

The microfinancial organizations bear responsibility for the decisions made with use of systems of artificial intelligence.

Article 3-2. Features of provision of the microcredits by electronic method

1. The microfinancial organizations have the right to provide the microcredits by electronic method according to the procedure, determined by authorized body.

2. The microfinancial organizations are forbidden to sign the contract on provision of the microcredit with physical person by means of the Internet without carrying out its biometric authentication.

The procedure for carrying out biometric authentication, and also storage durations of results of biometric authentication are determined by authorized body in coordination with National Bank of the Republic of Kazakhstan.

If the amount of the microcredit exceeds the size established by regulatory legal act of authorized body, biometric authentication of the borrower is carried out by means of the Center of exchange of identification data of National Bank of the Republic of Kazakhstan which functioning is provided by the Law of the Republic of Kazakhstan "About payments and payment systems".

3. From the moment of detection of illegal information access, being secret of provision of the microcredit, its illegal change, implementation of wrongful acts from the third parties or other illegal (fraudulent) actions with the microcredits of physical persons the microfinancial organization within one working day informs on it the client and authorized body, within two working days takes measures for elimination of wrongful acts and within ten working days takes measures for elimination of effects of such actions.

4. Based on the introduced (taken-out) criminal prosecution authorities according to Code of penal procedure of the Republic of Kazakhstan idea of taking measures to elimination of the circumstances promoting making of criminal offense, or the resolution on recognition of the borrower - physical person the victim on the criminal offense connected with registration of the microcredit by fraudulent method, the microfinancial organization no later than three calendar days from the date of receipt of the specified representation or the resolution stops concerning the specified microcredit:

debt collection and claim and claim work;

charge of remuneration and (or) penalty.

The microfinancial organization no later than ten working days from the date of receipt of the court resolution which took legal effect in which registration established fact on the borrower - the physical person, recognized as the victim on criminal case, the microcredit as fraudulent method owing to illegal receipt and use by the third party of identification means of such physical person, including in case of registration of the microcredit by use of remote management of the software of remote rendering services of the microfinancial organization and (or) violation by the microfinancial organization of procedure for carrying out biometric authentication or the requirements for identification, fixing and the analysis of the facts established by regulatory legal act of authorized body internal, external and (or) different ways of fraud, makes the decision on write-off of its debt on the corresponding microcredit, and also measures for return to the borrower - to physical person of earlier withheld (paid) amounts on such microcredit.

Article 3-3. Features of the microcredit serviceman of conscription military service

1. The microfinancial organizations are forbidden to provide the microcredits to the military personnel of conscription military service during passing of conscription military service by them in Armed Forces of the Republic of Kazakhstan, other troops and military forming in the presence of information on appeal of such serviceman on conscription military service in its credit report received by the microfinancial organization before decision making about provision of the microcredit.

In case of provision of the microcredit by the microfinancial organization to the serviceman of conscription military service in the presence of information on appeal of such serviceman on conscription military service in its credit report received by the microfinancial organization before decision making about provision of the microcredit, the microfinancial organization has no right to require obligation fulfillment on such microcredit and no later than three working days from the date of identification of the fact of issue of such microcredit takes measures, stipulated in Item the 14th article 4 of this Law.

2. The microfinancial organizations shall provide under the agreement on provision of the microcredit by the serviceman of conscription military service payment deferral on principal debt and remuneration for the period including the term of passing of conscription military service and sixty calendar days after its termination, without charge of remuneration on the microcredit according to the procedure, determined by authorized body.

3. Exchange of information about the military personnel called on conscription military service, and also their dismissal, availability or lack of the microcredit, provision of payment deferral on it is performed by means of ensuring interaction of digital systems of state bodies and credit bureaus according to the procedure, determined by authorized body in coordination with the Ministry of Defence of the Republic of Kazakhstan.

In the cases provided by part one of this Item, collection, processing and use of personal data are performed according to the legislation of the Republic of Kazakhstan.

Article 4. Minimum requirements to microcredit

1. The microfinancial organizations provide the microcredits according to requirements of the legislation of the Republic of Kazakhstan and rules of provision of the microcredits.

2. The procedure for the conclusion of the agreement on provision of the microcredit, including the requirement to content, execution of the agreement and its first page containing information on all-in cost of the microcredit (the overpayment amount on the microcredit, microcredit subject), to compulsory provisions of the agreement on provision of the microcredit, and also form of the repayment schedule of the microcredit affirms the regulatory legal act of authorized body specified in part one of Item 3 of article 3-1 of this Law.

3. The microfinancial organizations in case of interaction with the applicant within provision of the microcredits shall observe the following requirements:

To provide 1) to the applicant reliable and exhaustive information about microcredit conditions, including the size of annual effective rate of remuneration, and the risks connected with receipt of the microcredit including effects of failure to carry out by the applicant of the agreement obligations about provision of the microcredit;

2) to carry out assessment of creditworthness (solvency) of the applicant based on information on its financial position;

3) to provide information in credit bureau according to the Law of the Republic of Kazakhstan "About credit bureaus and forming of credit stories in the Republic of Kazakhstan";

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

5) not to allow indexation of obligations and payments under the contract on provision of the microcredit issued in tenge with binding to any currency or other equivalent;

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