Kazakhstan's National Bank has published a discussion paper analyzing the installment plan market and proposing regulation of certain types of installment plans offered by non-bank entities such as retailers, developers and car dealers, infohub.kz reports.
The paper divides installment plans into two categories. The first is financial installments, provided by banks and microfinance organizations. The second is non-financial installments, offered by sellers of goods and services or by non-financial organizations.
Financial installments are already covered by legislation, while non-financial ones, according to the National Bank, remain in a "grey zone." This, the regulator believes, creates significant risks for consumers.
To address the situation, non-financial creditors would be required to assess the buyer's creditworthiness and report issued installment plans to the credit bureau. In addition, a cap on penalties and late fees for non-financial installments is planned, along with a review of the rules governing lease-to-own arrangements.
Several categories could fall under the new regulation. First and foremost are BNPL providers and factoring agreements involving a third party: such transactions are currently arranged without verifying the buyer's income, and the obligations are not reported to credit bureaus. The second category is lease-to-own, under which the buyer legally remains a lessee, meaning such arrangements are not covered by the financial rules and guarantees that apply to lending. The third is installment plans from developers and car dealerships: deals made directly with the seller are not reflected in credit reports, even though the amounts can be substantial.
Put simply, the National Bank does not plan to ban installment plans or introduce new rules for bank and microfinance products. The discussion paper addresses the problems of those installment plans that fall outside banking legislation.