The Majilis approved amendments to improve pledge policy of the second-tier banks

Special edition №112

Briefly

On 24 November 2021, the Majilis of the Parliament of Kazakhstan approved the draft law that w ill improve the terms of pledge policy of the second-tier banks.

In detail

The main concept of the amendments is to protect the rights of individuals w ho borrow mortgage loans from the bank. There are follow ing key changes made:

Criteria to recognize the amount of unfulfilled obligation on mortgage loans as insignificant has changed:
- it became 15% (instead of 10%) of the amount of unfulfilled obligation
- the delay period for payment became 6 months (instead of 3 months).
New provision requires individual w ho has mortgage loan to sell the pledged property through its ow n effort in case of both non-judicial and judicial sale of property (earlier this was applicable only to non-judicial sale).
New provision prohibits:
- participation of a bank, its employees and affiliates in auction on sale of the pledged property
- participation of a legal entity in auction, if its employee or affiliate is a borrow er that sells the pledged property
- participation in auction of spouses and close relatives, if one of them is selling and another is purchasing the pledged property.
New provision allow s parties to agree and determine attorney w ho is responsible to sell pledged property in case of non-judicial sale.
New provision underlines that mortgage loan is terminated upon the sale of the pledged property even if not fully repaid, if a borrow er does not have another property or income exceeding the amount of 2 minimum w ages (earlier 1 minimum wage).

The draft law shall enter into force on 1 January 2022.

Are you interested in this topic?

We w ould be pleased to discuss w ith you the above amendments and how they can impact your business.

If you are interested in additional information, please contact Pw C specialists w orking as part of a group serving your company, or to any of the persons listed