Kazakhstan’s Agency for Regulation and Development of the Financial Market has launched an ongoing Debt Service Review (DSR) supervisory process covering 11 major banks to verify their calculations of borrowers’ debt burden ratios. The ratio compares monthly loan payments with average monthly income to assess borrowers’ capacity to service existing and new loans. The launch follows a pilot at eight banks that identified inconsistencies in calculation approaches. The reviews will examine assessments of borrowers’ income and credit obligations to identify understated debt burdens and reduce excessive household borrowing and banks’ credit risks. They also aim to standardize calculations and improve assessments of repayment capacity, including timely recalibration of internal scoring models. The focus on affordability is consistent with earlier measures restricting new lending to borrowers with repayment problems. Following the reviews, the agency will assess the nature and materiality of any breaches and consider supervisory measures and approval of banks’ corrective action plans. Findings will also inform proposals to improve regulatory requirements for calculating debt burden ratios.
Kazakhstan’s Agency for Regulation and Development of the Financial Market launches ongoing debt service reviews covering 11 major banks
Kazakhstan’s Agency for Regulation and Development of the Financial Market has begun ongoing checks of borrower debt burden calculations at 11 major banks, following a pilot at eight banks that found inconsistent approaches. The reviews target understated debt burdens and weaknesses in repayment capacity assessments. Results may lead to supervisory measures and corrective action plans and will inform proposals to refine calculation requirements.