Summary of the text from Tengri AI This text is generated by AI - Starting from March 2025, the Kazakhstan Deposit Guarantee Fund (KFDG) will stop setting maximum rates for deposits in tenge.
- Banks will be able to independently determine deposit rates based on market conditions.
- Maximum rates were abolished for most banks in 2024, with restrictions remaining only for less capitalized banks.
- KFDG will monitor banks that significantly exceed market rates through additional contributions.
- Maximum rates for deposits in foreign currency will remain in place for all banks.
- The reform aims to create conditions for competition and the development of the deposit market.
- The retention of control mechanisms should prevent sharp fluctuations in market rates.
From March 2025, the Kazakhstan Deposit Guarantee Fund (KFDG) will cease to establish maximum rates for tenge deposits and will publish information on actual market rates, as reported by Tengrinews.kz.
This means that banks will be able to independently determine the level of remuneration for deposits, based on market conditions.
Previously, KFDG limited maximum rates to prevent aggressive deposit attraction by banks. However, with the development of the banking sector, the regulator decided to abandon strict controls and move towards more flexible regulation. In 2024, maximum rates were already abolished for most banks, except for those with lower capitalization. Now, these restrictions are being lifted for all market participants.
At the same time, maximum rates for deposits in foreign currency will still be set for all banks.
KFDG clarified that previously, starting from early 2024, maximum rates for tenge deposits were set only for certain banks.
"The next step towards liberalization is the abolition of maximum rates for tenge deposits for less than well-capitalized banks. As of March 1, 2025, KFDG will not set maximum rates for tenge deposits, and less than well-capitalized banks will determine their deposit policies in the same market conditions as other banks.
However, if less than well-capitalized banks significantly (more than the market rate + spread) raise their deposit rates, this imposes additional risks on the banking system. As a result, such banks, in addition to the systemic risk contribution, will also pay an increased contribution proportional to the degree of excess and the volume of attraction," the message notes.
The fund expects that the reform will provide more freedom for banks in setting remuneration rates for their deposits.
"This will create conditions for healthy competition among banks and give a new impetus for the development of the retail deposit market, especially in segments where there are few banks. For example, the volumes of attracting term and savings deposits with terms over 12 months are currently insignificant but have potential for growth," commented KFDG head Adil Utembaev.
He noted that despite the abolition of the "ceiling" on rates for tenge deposits, the presence of an additional flexible fee in the form of a systemic risk contribution and increased contributions will act as a balancing element and discourage banks from excessively raising deposit rates, aligning with KFDG's goal of promoting financial stability.
What does this all mean?
For depositors, this could mean more options when choosing a deposit. Some banks may offer higher rates, while others may provide more stable conditions. However, rates may now change more rapidly, both upwards and downwards, depending on the economic situation.
To prevent too sharp a rise in rates, KFDG has retained control mechanisms. Banks that significantly exceed the average level will pay additional contributions, which should help keep the market stable.
Earlier, we reported on the response of the National Bank of Kazakhstan to the request of Majilis deputies who demanded a reduction of the base rate to 10-12 percent.
