Credits Under New Rules: CBA Tightens Requirements for Borrowers and Limits Debts

The Central Bank is tightening regulations in the retail lending sector to limit the growth of citizens' debt burden and reduce the use of hidden financial schemes. The new measures by our monetary authorities effectively close off the familiar mechanisms that banks and borrowers have been using over recent years, writes the newspaper "Kaspi."

The time when a bank loan could be obtained with a single click on a smartphone, and a client's creditworthiness was assessed based on their attractive social media profile or indirect card spending, is becoming a thing of the past. The Board of the Central Bank has approved changes to credit risk management rules. So next month promises to be a turning point for the domestic financial sector.

The stated goals are, frankly speaking, ambitious. The main bank intends to protect the population from ill-considered debts, bring the economy out of the shadows, and make commercial banks play fair. And since the new requirements will come into effect as early as mid-November, let us examine: what does this mean for ordinary citizens and businesses?

A crisis of behavioral models

Until recently, banks used so-called scoring, or behavioral models, in their lending approaches. And if a citizen earned income unofficially — for example, receiving part of their salary in an envelope or working as a freelancer — the bank would analyze their activity, calculate projected income, and approve the loan.

Now the CBA is introducing clearer rules. After all, if actual income can be verified, using mathematical projections is no longer desirable. Financial institutions have been obligated to rely only on facts — extracts from state information systems and official documents. So from now on, only certificates of official salary, pensions, scholarships, social benefits, and interest on deposits will be taken into account. And if you work off the books, obtaining a large consumer loan or auto loan will become virtually impossible.

Meanwhile, the fintech sector is searching for alternative legal instruments. According to representatives of the Azericard processing center, a fundamentally new credit risk assessment model has been developed jointly with Mastercard, based on actual cashless card transactions. As the payment services provider assures, currently about 43% of the population has a credit history, while the rest do not for various reasons. But these people have bank cards, and the transactions on them reflect their income and expenses in detail. The new model analyzes spending patterns.

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