Residents of the Urals region swiftly acquired supposed wealth, only to find themselves overwhelmed by mounting debt.
In a significant move to safeguard consumers, Kazakhstan has taken action against illegal microloan practices in the city of Uralsk. A network of branches operating under the brand "Quick Money" has been identified as providing loans without a license for five years, charging exorbitant interest rates.
The illegal microloans, which have been in operation since 2016, charged a fee of 1.5 percent per day, five times higher than the permitted maximum of 0.3 percent. This has led to concerns about the exploitation of poorly educated citizens and deception, as highlighted by critics.
The illegal income from these practices is estimated to have amounted to 917 million tenge, and the total number of loan agreements exceeded 1.5 billion tenge. More than 47,000 loans were issued at inflated interest rates, a fact that underscores the extent of the issue.
The investigation into the illegal microloans is ongoing, and with the court's approval, the property of the suspects, including commercial premises and an apartment, has been seized.
To address such issues, Kazakhstan has recently updated its regulations for obtaining microloans. Key points include caps on Annual Effective Interest Rates (AEIR), restrictions on loans to conscripts, and protections against fraudulent loan issuance.
As of June 16, 2025, new limits on AEIR for microloans and other loan types were introduced. This aims to prevent excessively high interest rates that could burden borrowers. Starting September 1, 2025, credit institutions must verify if a loan applicant is currently serving in the military by accessing data shared by the Ministry of Defense. Loans to conscripts will be denied, or payment deferrals offered if they already have loans.
To protect themselves from illegal microloan practices, individuals are advised to ensure that any microloan provider complies with the new legal caps on interest rates and is registered with financial regulators. They should also be vigilant about unauthorized use of their personal data, especially since fraud involving conscripts' identities taking loans without consent has been reported.
Confirming that lenders verify borrower information through official credit bureaus, especially regarding conscript status or existing loans, is also crucial. Lastly, reporting any suspicious or illegal lending activity to the relevant financial supervisory authorities can help enforce regulations and protect consumers.
According to Nikman, the system was created by the state but is currently geared towards profit-making, which is sad. However, the recent regulatory updates collectively aim to safeguard consumers in the microloan market.
Despite these measures, some argue that banning lending altogether could lead to an economic collapse, similar to countries like Afghanistan or Syria. However, the focus remains on ensuring fair and transparent practices in the microloan sector, balancing the need for access to credit with consumer protection.
- The illegal microloan practices, falling under the category of general-news and crime-and-justice, have been centered around the "Quick Money" network in Uralsk, Kazakhstan.
- In the realm of finance and business, Kazakhstan's recent regulatory updates for microloans aim to curb excessively high interest rates and protect consumers, addressing concerns stemming from practices like the one in Uralsk.
- As part of the microloan industry, the new regulations prevent lenders from issuing loans to conscripts, and also enforce the verification of borrower information through official channels to combat fraud and deception.
