On Banks and Banking Activity in the Republic of Kazakhstan (стр. 6 )

  9. The procedure for licensing of bank operations and other transactions, carried out by the organizations, which conduct certain types of bank operations established by this Article shall be defined by the normative legal act of the authorized body, except for the cases, mentioned in paragraph 7 of this Article, when the licensing procedure shall be defined by the normative legal act of the National Bank.
  10. The normative legal acts of the authorized body or the National Bank may define additional requirements to the banks and the organizations, which carry out certain types of bank operations, associated with obtaining licenses for certain types of activities.

  11. Banks, in addition to the bank operations under paragraph 2 of this Article, shall have a right to carry out the following operations under the license of the authorized body:
  1) purchase, acceptance as pledge, accounting for, safe custody and sale of the affined precious metals (gold, silver, platinum, metals of platinum group) in bullion, coins of precious metals;
  2) purchase, acceptance as pledge, accounting for, safe custody and sale of jewellery items, which contain precious metals and precious stones;
  3) transactions in bills of exchange; acceptance of bills of exchange for collection, rendering of services associated with payment on bills of exchange by payers, as well as payment on the domiciled bills of exchange in accordance with the intermediary procedure;
  4) leasing;
  5) issue of own securities (except for shares);
  6) factoring transactions: purchase of the claims to payment of goods (work, services) by the buyers with acceptance of a non-payment risk;
  7) forfeiting transactions (forfeiting): payment of the debt obligations of buyers of goods (works, services) through purchase of a non-recourse bill of exchange;
  8) trust operations: management of funds, claims under the mortgage loans and affined precious metals in the interests of and by the order of a trustee;
  9) safe custody: services on storage of the securities, issued in the documentary form, documents and valuables of customers, including lease of safe boxes, cabinets and premises.
  12. Banks shall have a right to perform the following types of professional activities in the securities market:
  1) brokerage refers to dealing with the state securities of the Republic of Kazakhstan and the countries, which have the minimum required rating of one of the rating agencies, or without such a rating under the decision of the authorized body, with derivative securities, which list and procedure for purchase of the basic assets are defined by the authorized body;
  2) dealership refers to dealing with the state securities of the Republic of Kazakhstan and the countries, which have the minimum required rating of one of the rating agencies, or without such a rating under the decision of the authorized body, as well as with derivative securities, which list and procedure for purchase of the basic assets are defined by the authorized body, and with another securities in the cases, specified in Article 8 of this Law;
  3) custodial;
  4) transfer and agent operations.
 A license for the performance by banks of one or several compatible types of the above mentioned professional activities in the securities market shall be issued by the authorized body.
   The list of rating agencies and the minimum required rating set out in subparagraph 1) and 2) of this paragraph shall be defined by the authorized body.
  13. Only the banks, which are participants of the system of obligatory guaranteeing of deposits, as well as the and National Mail Operator in accordance with the normative legal act of the Republic of Kazakhstan regulating its activity, shall have a right to carry out the bank operations specified in subparagraph 2) paragraph 2 of this Article, on the basis of a license, issued by the authorized body.
  14. The rules of this article shall not apply to the activities of Islamic banks, mentioned in Article 52-1 of this Law.
  Reference. Article 30 is stated in the wording of the RK Law dated 23.12.2005 N 107 (enactment procedure, see art. 2 of the Law N 107); dated 07.07.2006 N 178 (effective since the date of official publication); with amendments, inserted by the RK Laws dated 12.01.2007 N 222 (effective upon expiry of 6 months since the date of official publication); dated 23.10.2008 N 72-IV (enactment procedure, see art. 2); dated 10.12.2008 N 101-IV (effective since 01.01.2009); dated 12.02.2009 N 133-IV (enactment procedure, see art. 2); dated 13.02.2009 N 135-IV (enactment procedure, see art. 3).

  Article 31. General Requirements to the Operations Carried Out by Banks
 
  1. Banks shall have a right to carry out banking activities only in the availability of the rules, which define the general terms for the performance of transactions and the internal rules.
  2. The rules of the general terms for transactions shall be approved by the Board of Directors of the given bank and contain the following information and procedures:
  а) limiting amounts and terms of accepted deposits and granted loans;
  b) limiting interest rates on deposits and loans;
  c) terms for payment of remuneration on deposits and loans;
  d) requirements to the acceptable pledge;
  e) rates and tariffs for the bank operations;
  f) rights and obligations of a bank and its customer, their responsibilities;
  f-1) rights and obligations of an Islamic bank and its customer, conditions of the performance of bank operations by an Islamic bank and associated risks;
  g) any other terms, requirements and restrictions, which the Board of Directors of a bank considers necessary for incorporation into the general provisions on transactions.
  *****les of the general terms for the performance of operations by an Islamic bank, taking into account the requirement, set out in paragraph 3 Article 52-2 of this Law.
  3. The internal rules of a bank shall specify the following information:
  а) structure, objectives, functions and authorities of a bank's subdivisions;
  b) structure, objectives, functions and authorities of an internal audit service, a credit committee and another permanently operating bodies;
  c) rights and obligations of executive officers of the structural subdivisions;
  d) authorities of executive officers and employees of banks at the performance of transactions for and on behalf of the bank.
   4. The procedure for record-keeping of the documentation on crediting and the list of required documents shall be defined by the normative legal acts of the authorized body.
  5. A bank shall be responsible for illegal actions (negligence) of a person, rendering services based on the contract (agreement) on customer acquisition, on the performance of inspections for compliance with the bank’s requirements, transfer of the customers’ documents to the bank on the conditions of the effective contract (agreement) between the bank and the mentioned person.
  A contract (agreement) between a bank and a person, rendering services on customer acquisition, on the performance of inspections for compliance with the bank’s requirements, transfer of the customers’ documents to the bank, shall be subject to acknowledgement by a customer and in a mandatory manner shall contain the provisions on the bank’s liability for illegal actions of the person, rendering services, mentioned in part 1 of this paragraph, in relation to the bank’s customer.
  Reference. Article 31 with amendments, inserted by the RK Laws dated 11.07.1997 N 154; dated 16.07.1999 N 436; dated 16.05.2003 N 416; dated 19.02.2007 N 230 (enactment procedure, see art. 2); dated 23.10.2008 N 72-IV (enactment procedure, see art. 2); dated 12.02.2009 N 133-IV (enactment procedure, see art. 2).

  Article 32. Bank’s Obligation on Disclosure of the General Terms for the Performance of Transactions
 
  1. The general terms for the performance of transactions shall be public information and may not constitute commercial or banking secret.
 This provision shall not apply to the terms for specific transactions, which are either referred to the banking secrecy in accordance with this Law, or referred by a bank to the category of commercial secrets in accordance with current legislation.
  2. Banks shall be obliged to provide the Rules of the General Terms for the Performance of Transactions at first request of a customer.
  3. Banks shall not have a right to deny submission of information on possible risks, associated with the performance of transactions to a customer.
  4. (excluded by the Law dated 19th of February 2007 N 230 (enactment procedure, see art.2).
   5. Islamic banks shall be obliged to explain customers the particular features of bank operations, mentioned in Article 52-5 of this Law and associated risks.
  Reference. Article 32 with amendments, inserted by the RK Laws dated 11.07.1997 N 154; dated 23.12.2005 N 107 (enactment procedure, see art. 2 of the Law N 107); dated 19.02.2007 N 230 (enactment procedure, see art. 2); dated 12.02.2009 N 133-IV (enactment procedure, see art. 2).

  Article 33. Contractual Nature of Relations between a Bank and a Customer
 
  1. Relations between banks, as well as between banks and their customers shall be carried out on the basis of the agreements, unless otherwise is established by the legislation of the Republic of Kazakhstan.
  2. Customers of a bank shall have a right to open accounts in another banks upon notification of a creditor bank, unless otherwise is established by the legislation of the Republic of Kazakhstan.
  Reference. Article 33 is amended by the RK Law dated 11th of July 1997 N 154.

  Article 34. A Bank’s Borrowing Transaction 
  1. Excluded by the RK Law dated 23.12.2005 N 107 (enactment procedure, see art. 2 of the Law N 107).
  1-1. The mandatory provision for conclusion of an agreement on granting of loan is the availability of a written consent of a borrower for submission by a bank, a mortgage organization, a broker and (or) a dealer with the right to maintain the customers’ accounts as a nominal holder, or a subsidiary organization of the national management holding in sphere of agricultural industrial complex of comprehensive information on such an entity and the concluded transaction (borrowing transaction) into the database of the credit bureau, as well as information, associated with the performance of obligations by the parties.
  2. Bank’s borrowing transactions shall be carried out in accordance with its Rules of Internal Credit Policy, approved by a bank’s Management Board, a mortgage organization, a broker and (or) a dealer with the right to maintain the customers’ accounts as a nominal holder or a subsidiary organization of the national management holding in sphere of agricultural industrial complex.
  3. A body, carrying out the internal credit policy, shall be a bank’s credit committee.
  4. The Rules of internal credit policy shall be elaborated for the purposes of risk mitigation at the performance of borrowing transactions and shall define the following:
  а) the terms for granting loans to legal entities and individuals;
  b) the terms for granting loans to a bank’s executive officers and employees;
  c) the organisational structure, functions and authorities of a credit committee;
  d) responsibility of a credit committee’s members;
  e) limits of loans;
  f) the procedure for approval of loan agreements.
  5. Provisions, established in paragraphs 2-4 of this Article, shall apply to the bank operations, associated with issue of guarantees and suretyships, mentioned in subparagraphs 3), 4) and 5) paragraph 1 Article 52-5 of this Law.
  6. The particular features and limitations of the bank’s borrowing and any other operations of an Islamic bank shall be established by Article 4-1 of this Law.
  Reference. Article 34 with amendments, inserted by the RK Laws dated 11.07.1997 N 154; dated 16.07.1999 N 436; dated 02.03.2001 N 162 (see art. 2); dated 16.05.2003 N 416; dated 06.07.2004 N 572; dated 23.12.2005 N 107 (enactment procedure, see art. 2 of the Law N 107); dated 07.07.2006 N 178 (effective since the date of official publication); dated 12.02.2009 N 133-IV (enactment procedure, see art. 2); dated 13.02.2009 N 135-IV (enactment procedure, see art. 3).

  Article 35. Repayment of Loans
 
  1. Repayment of loans may be ensured by a penalty, pledge, guarantee, warranty or by any other means, established by the legislation or the agreement.
  2. In the case of high credibility and reliability of a client, a bank shall have a right to adopt the decision to grant a loan without any security (blank credit).
 A bank shall not have a right to grant a blank loan to one borrower or to accept an unsecured conditional obligation in the amount, exceeding average annual value of assets of the given borrower less the borrowed funds, obtained by this borrower from the banks and the organisations, which perform separate types of banking operations. Average annual value of the borrower’s assets shall be calculated for the period from the beginning of a given reported year till the date of receipt of this loan.
  3. In the cases, established by the pledge agreement, as well as by the legislative acts, a bank shall have a right to sell the pledged property in the obligatory non-judicial manner through sales (auctions).
  4. The provisions established by paragraphs 1-3 of this Article shall apply to the security of bank operations, associated with issue of guarantees and suretyships.
  Reference. Article 35 is amended by the RK Law dated 16th of July 1999 N 436; dated 10th of July 2003 N 483 (effective since 1st of January 2004).

  Article 36. Measures Applicable to an Insolvent Borrower
 
 A creditor bank shall have the following rights in relation to its borrower, which does not execute the borrower's obligations under the credit agreement:
 not to grant new credits;
 to impose claims without a borrower's consent to the funds kept in any accounts of the borrower (provided this is stipulated in the loan agreement);
  to appeal to the court with a claim to recognise an insolvent borrower as a bankrupt in accordance with legislation of the Republic of Kazakhstan.
  Reference. Article 36 is amended by the RK Law dated 11th of July 1997 N 154 and dated 29th of June 1998 N 236.

  Article 37. Statute of Limitations With Regards to Claims and Actions
 
 Statute of limitations with regards to claims and actions shall not apply to the banks' claims against their borrowers with regard to the improper execution of loan agreements.
  Reference. Article 37 is stated in the wording of the RK Law dated 11th of July 1997 N 154.

  Article 38. Payments and Transfers of Funds
 
  1. Banks shall perform payments and transfers of funds in the territory of the Republic of Kazakhstan in accordance with the procedure, established by the legislation.
  2. In the case of improper performance of payments and transfers of funds, a bank shall be held responsible in accordance with the legislation of the Republic of Kazakhstan and an agreement, concluded with the client (depositor).
  3. International payments and transfers of funds shall be carried out by banks in the forms, through the methods and in accordance with the procedure, used in the international banking practice, and which do not contradict current legislation of the Republic of Kazakhstan.
  4. A bank shall have a right to withdraw cash from the clients' (depositors') accounts without their consent, provided there are documents, which confirm forgery of the payment documents, and in case if payment by mistake has been discovered.
  Reference. Article 38 was amended by the RK Laws dated 11th of July 1997 N 154; dated 16th of July 1999 N 436.

  Article 39. Rates and Tariffs
 
  1. Interest rates and commissions, as well as tariffs for rendering of banking services shall be independently established by banks and organizations, carrying out certain types of bank operations.
  1-1. In a bank’s loan agreements, concluded with individuals, including the agreements on mortgage loans, second-layer banks, organizations, carrying out certain types of bank operations, shall set fixed or floating interest rate.
  A fixed interest rate is not subject to change in a unilateral manner and is unchangeable within the period, defined in the agreement, taking into account the provisions of this paragraph. The minimum period of validity of a fixed interest rate shall be not less than three years.
  Upon consent of the parties a fixed interest rate maybe changed towards decrease or replaced by a floating rate within the validity period of the agreement.
  The procedure for calculation and the terms of application of a floating interest rate shall be defined by the normative legal act of the authorized body.
  Second-layer banks, organizations, carrying out certain types of bank operations, shall not have a right to increase the amount and the procedure for calculation of tariffs, commissions and any other expenses for loan servicing, fixed at the date of conclusion of a bank’s loan agreement in a unilateral manner.
  2. Banks, except for Islamic banks, organizations, carrying out certain types of bank operations shall indicate interest rates in a true, annual, efficient, comparable manner of calculation, which procedure shall be established by the authorized body in the agreements, concluded with customers, as well as at distribution of information on the rates of financial services, including its publications.
  In case of incompliance with the requirements, set out in paragraphs 1-1 and 2 of this Article, the authorized body shall have a right to impose sanctions, established by Article 47 of this Law to a bank, an organization, carrying out certain types of bank operations.
  Reference. Article 39 is stated in the wording of the RK Law dated 19.02.2007 N 230 (enactment procedure, see art. 2); with amendments, inserted by the RK Laws dated 23.10.2008 N 72-IV (enactment procedure, see art.2); dated 12.02.2009 N 133-IV (enactment procedure, see art. 2).