Banks that misuse National Fund money will be fined

    Penalties will be imposed on Kazakh banks if they misuse resources provided by the National Fund, Tengrinews reports, citing Lyazzat Ibragimova, chairman of the Damu Fund, a government arm for the development of business in Kazakhstan.
    “If the banks use the funds for purposes other than those they were provided for, various types of penalties will be applied. (...) The process will be monitored, and if a bank is found to be misusing the money, the funding will be called off," she said.
    The Baiterek National Holding and the Damu Fund have signed agreements with 13 Kazakh banks to place KZT 100 billion tenge ($550 million) allocated fr om the National Fund to finance SMEs to develop the country's processing industry.
    "The banks are not allowed to take any kind of commissions when considering projects, even a maintenance fee. This is intended to reduce the burden on the entrepreneurs applying for loans," she explained.
    If an entrepreneur who is found eligible for the state support program by a bank stops repaying the loan, the bank that issued the loan will be fined for misjudging the client. The size of the fine will be determined by the fund for each case individually.
    She noted the main problem for entrepreneurs applying for loans is a lack of sufficient amount of property for collateral, especially for those needing a brand new loan, rather than an extension.
    "An entrepreneur could assume that his property offered as collateral is worth 100 million tenge ($550 thousand), but the bank might evaluate it at only 80 million tenge ($440 thousand). For these cases, we will provide additional support, but the choice remains with the entrepreneur. We are ready to provide a guarantee of up to 1.85 billion tenge ($10 million). This is to ensure our companies can buy good equipment they need," Ibragimova said.
    She reminded that to be eligible for the program a company must qualify as a small or medium-sized business, it should operate in a processing industry, and should have no overdue loans or tax debts.
    "The interest rate on these loans for entrepreneurs will be at 6% per annum, and the lim it of per one company has been set to KZT 1.8 billion ($9.89 million)," she said.
    The lending program includes all major banks in Kazakhstan:
    Kazcommertsbank and BTA Bank will share $110 million they got from the fund for the program.
    - Halyk Bank of Kazakhstan and Tsesnabank received $110 million each.
    - Bank CenterCredit received $44 million.
    - ATF Bank and Temirbank received $38.5 million each.
    - Sberbank of Russia received $33 million.
    - Eurasian Bank received $16.5 million.
    - Nurbank, Bank RBK, AsiaCreditBank and Kazinvestbank received $11 million each.
    - DeltaBank received $5.5 million.
    The funds were allocated on the basis the size of the bank, its financial stability, its SME loan portfolio and the size of the branch network, according to www.tengrinews.kz.