The National Bank of Kyrgyzstan proposes tightening consumer lending regulations

The National Bank of Kyrgyzstan has submitted proposed amendments to the regulations governing lending for public comment. The main objective of these changes is to strengthen oversight of borrowers’ debt burdens and reduce the risk of over-indebtedness among the population.

The proposed amendments affect banks, microfinance organizations, and credit unions. Financial institutions will be required to assess customers’ solvency more thoroughly before issuing consumer loans. A key tool will be the calculation of the debt burden ratio—the ratio of monthly payments on all obligations to the borrower’s income.

Under the proposed regulations, banks will be able to issue consumer loans in the national currency only if they comply with established debt-to-income thresholds. Specifically, it must not exceed:

• 50% if the borrower’s average monthly income is less than 100,000 KGS;
• 60% if income is between 100,000 and 200,000 KGS;
• 70% if income exceeds 200,000 KGS.

Thus, the regulator is effectively introducing a differentiated system for assessing solvency. Consequently, the lower the income, the stricter the requirements for the debt-to-income ratio become.

Furthermore, if the debt-to-income ratio exceeds 60%, the lender will be required to warn the customer in writing in advance about the risks of potential default. In such cases, a loan may only be issued if there is confirmation that the borrower understands the financial consequences.

The regulator also proposes to strengthen transparency requirements for lending. Financial institutions are required to disclose the full cost of the loan, including interest, fees, and other mandatory payments. This will allow citizens to better understand the true cost of borrowed funds and compare the terms of different lenders.

Particular emphasis is placed on preventing excessive debt burdens. The proposed amendments enshrine the principle of responsible lending—banks and microfinance companies must implement risk assessment systems designed to prevent situations where a borrower accumulates multiple loans simultaneously.