Kazakhstan's Microfinance Law: Opportunities and Future Challenges

In 1997, the Kazakhstan Government approved and passed a central bank regulation allowing local legal entities to apply for non-bank financial institution (NBFI) licenses, which allowed the first microfinance organizations in the country to apply for and secure a license. The central bank remained concerned, however, about regulating a sector that would be operating in remote regions of the country, making them difficult to audit. Therefore, in 2003 the government also passed the "Law on Microlending Organizations" which allows for for-profit and non-profit organizations to register with the Ministry of Justice to conduct microlending. The author discusses the implications of these two regulations in Kazakhstan, especially as they relate to one MFI's strategic planning. The author advocates for an all encompassing law that allows for a range of microfinance activities within varying degrees of supervision.