2.2.18. Providing Credit
2.2.18.1. General description
Providing Credit is listed in section 18 of Schedule 1 of GEN.
It means providing a Credit Facility to another Person, i.e. providing any facility which includes any arrangement or agreement which extends monetary credit whether funded or unfunded to a Person including:
(a) any loan or syndicated loan;
(b) mortgage;
(c) overdraft;
(d) financial lease;
(e) letter of credit;
(f) financial guarantee;
(g) trade finance;
(h) transaction finance;
(i) project finance; or
(j) asset finance.
A Person does not carry on the Regulated Activity of Providing Credit if the Credit Facility is to be provided by the Authorised Person in the course of carrying on one or more of the following activities: (a) Dealing in Investments as Agent; (b) Arranging Deals in Investments; (c) Managing Investments; (d) Managing a Collective Investment Scheme; (e) Providing Custody.
An Authorised Firm is a Credit Provider if it is authorised to conduct the Regulated Activity of Providing Credit and it is not a Bank. Credit Providers may raise funds from capital markets or money markets using debt instruments of any type but must not accept Deposits.
Where an Authorised Firm is providing brokerage services pursuant to its licence for Dealing in Investments as Agent, it may in the ordinary course of that business also be necessary to provide margin lending facilities to its Clients. In doing so the Authorised Firm will not be considered to be Providing Credit to its Client.
Where an Authorised Firm is Effecting Contracts of Insurance or Carrying Out Contracts of Insurance, it may in the ordinary course of that Insurance Business be necessary to provide an instalment contract to a Client with respect to the payment of an insurance premium. In doing so the Authorised Firm will not be considered to be Providing Credit to its Client.
An Authorised Firm authorised to carry on the regulated activity of Providing Credit is subject to prudential supervision and must comply with AIFC Banking Business Prudential Rules.
Currency regulation
Currency transactions related to providing credit can be processed only in foreign currency and will be performed via AIFC Banks and via second-tier banks. For more details of transactional implications see Chapter 4 of PERG.
The table below illustrates currency regulation implications if services are offered to residents of Kazakhstan that are not AIFC Participants.
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Are you planning to offer your services to legal entities or natural persons – residents of Kazakhstan that are not AIFC Participants? |
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Yes:
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Your services will be subject to the AIFC Rules on Currency Regulation: |
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Name of allowed activity: |
Provision of loans to legal entities of the Republic of Kazakhstan.
Note: provision of loans to natural persons of the Republic of Kazakhstan is prohibited.
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Relevant reference to Schedule 2 to the AIFC Rules on Currency Regulation: |
1.2 in the list of financial services. |
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Type of currency: |
Foreign currency |
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Transaction: |
Foreign currency transactions can be performed both via AIFC Banks and second-tier banks |
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Currency reporting: |
No specific reporting for a financial service. Transactional reporting may be applicable (see Chapter 4 of PERG for more details).
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No: |
Subrule 3.3.2 of AIFC Rules on Currency Regulation applies. |
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For more details see Chapter 4 of PERG.
2.2.18.2. Exclusions
An Authorised Firm does not Provide Credit where the provision of the Credit Facility is incidental to or in connection with the trading of Investments, or conducting Insurance Business.
An operator of the Crowdfunding Platform does not Provide Credit to the extent that it Operates a Loan Crowdfunding Platform.
A Person does not Provide Credit to the extent that the Person operates a loyalty or rewards programme where a participant earns points or other monetary value from acquiring goods or services, which the participant can use to receive a discount on, or purchase, further goods or services.
Also see list of exclusions in 2.1.5. PERG.