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Easing of the conditions for Entrepreneurs in Kazakhstan to obtain loans
At a meeting on Wednesday, February 18th in Almaty, the leaders of 28 of the country's banks and representatives from the "Damu" Fund talked about the unification of requirements for borrowers, the simplification of banking products, and transparency in business
The "Damu" Fund has come to the conclusion that a standard loan application should be adopted in Kazakhstan, with a template of electronic forms and a single credit policy developed by the banks for "Damu" products. All this became the topic of discussion at the Almaty meeting.
How to unify the banks' "wishlist"
Lyazzat Ibragimova, Chairman of the Board of "Damu", told the audience that the Fund had a client whose loan application documents were pored over by one bank for 86 days, while another bank later approved the application in 20 days. In the Kyzylorda region, entrepreneurs complained that
the bank branches do not register a loan on the day it is applied for, but only after the businessman has gathered all the required documents.
According to Serikbay Bisekeev, Independent Member of "Damu's" Board of Directors, many businessmen often complain that they cannot get loans under state programmes, since different banks have different loan application forms. Moreover, each financial organisation has their own concepts and their own criteria for determining micro, small and medium-sized businesses, which makes it difficult to issue loans under the state programmes.
"According to our data, another $ 800 million of additional international loans will soon be allocated, which we will be prepared to transfer through banks under the programme. For this reason, I would like to have some common rules worked out," says Bisekeev. "Each bank has its own requirements for the filling out of forms. They resemble each other approximately 80% of the time. In addition, each bank has its own separate "wishlist". We can put them all together and develop a single document, so that it's the same as in developed countries.
Those who know less sleep worse
Bankers took advantage of the meeting with their colleagues to air their most pressing issues. Accordingly, Stanislav Kosobokov, the deputy chairman of the National Bank of Kazakhstan pointed out: "the main problem of interaction between businessmen and bankers is the opacity of business and its financial reports. Moreover, the absence of additional information on a client significantly slows down the bank's decision-making process regarding a loan, and increases the lending risks. The larger the potential customer and the more complex the project and its collateral framework, the longer the issue of financing such an enterprise needs to be assessed."
"Let's take Russia, for example," suggested Mr. Kosobokov. "They have a unified state registry of legal entities and individuals, through which banks can gain access to customer information. A customer's credit history can be only obtained here through the Credit Bureau. In Russia, in addition to their credit history, the entrepreneur's financial statements are stored in the database, so the banks have access to tax data.
Discussion began in the hall over the fact that in many cases, the postponement of any final decision on a loan doesn't happen without good reason.
"It's clear that credit risks are borne by the banks, but we need to develop uniform funding standards," insisted Oraz Zhandosov, Independent Member of "Damu's" Board of Directors. Nevertheless, the state allocates the money, and wants these funds to help entrepreneurs in the first place, not the banks.
"You're right, the risks are borne by the bank, because it is distributing state funds," responded Mr. Kosobokov. "Let's look again at the experience of the Russian Federation..."
"When I left the National Bank, we were ahead of the Russian Federation (in the banking sector. - F). How did it happen that we are referring to their experience?!" exclaimed Oraz Aliyevich, half jokingly and half seriously.
"They also have a development institution like the "Damu" Fund,"
"But it plays a much less in important role in the economy."
"Their approach is like this: to help business, they just provide state guarantees. This is effectively monitored using a uniform application form template. If you meet the conditions, you get the money. If you don't repay on time, the guarantee is revoked.
"And why then do we need you [the banks]? We are distributing the money ourselves," Serikbai Bisekeev thus put the lid on the matter.
Government support should only be received by transparent companies
"Damu" Fund told the bankers the good news, that in August 2014 work began on automating compilation of the borrower's documents for the banks. Already, about 25 documents do not need to pass through the chain of command, and thereby waste precious time, but can be obtained through the e-government web portal at egov.kz. It is planned that by the end of the year, the issuance of almost all documents will have been automated.
It was also pointed out that in the beginning of February 2015, guarantees were included in the government services subject to automation. "Damu" Fund is now actively working on this.
"We select the credit scoring system (credit assessment - F.)," Lyazzat Ibragimov told the bankers. "In the future, we will provide the borrower with a guaranteed specified amount, on the basis of which you will provide the loan. This function is well implemented in Turkey.
In addition, Lyazzat Erkenovna spoke about optimization of the re-subsidisation process.
"With all borrowers, we conclude an agreement which states that we receive a copy of their tax returns, from which it can be seen how much tax the entrepreneur pays. It will thus become clear how the business is developing, in order to be able to decide on re-subsidisation or loan extension. I think that the majority of government support should only be received by transparent companies," summed up Lyazzat Ibragimov.
"Damu's " Chairman of the Board related a further piece of news: currently a market analysis is being conducted, after which it is expected that the Fund's financial instruments will be upgraded.
"We are already lauded, but we want to become even better," said Lyazzat Ibragimov. She suggested that the Deputy Chairmen of the banks should take part in the working group as external experts.
Other proposals began to be made by the bankers - for example, uniform requirements that borrowers need to meet not only in form, but also in content. In particular, the adoption of a common approach to the valuation of collateral. It was also suggested that all changes should first be run through a pilot project.
As a result of the meeting, the decision was taken to start implementing common standards in micro business lending.
The fact that changes need to be made was not disputed by anyone present.
Source:Forbes
