DBK expands credit guarantee instruments for medium and large businesses

• 04.07.2024
• Press releases

DBK expands credit guarantee instruments for medium and large businesses

Development Bank of Kazakhstan JSC (a subsidiary of the «Baiterek» Holding) has presented new mechanisms for providing guarantees for medium and large businesses in second-tier banks (STB).

The mechanisms are approved by the rules for partial credit guarantees for private entrepreneurship entities (the rules), developed by DBK in cooperation with the Ministry of National Economy and approved by the Government of Kazakhstan's decree dated July 2, 2024, in fulfillment of the national action plan for implementing President Kassym-Jomart Tokayev's State of the Nation of Kazakhstan Address «Economic course of a Just Kazakhstan» dated September 1, 2023.

Under the rules, two new mechanisms are introduced into DBK's guarantee instruments:

• provision of DBK guarantees to entrepreneurial entities with risk commission subsidies;

• provision of DBK guarantees to business entities with concessional financing from STB.

DBK guarantees with subsidized risk fees will be provided to Kazakhstani entrepreneurs implementing the following projects:

• medium and large investment projects (including project financing) for the creation of new and modernization of existing productions using financial institutions' loans.

The guarantee amount ranges from 3.5 billion tenge to 20 billion tenge. The guarantee period is up to 10 years.

• export operations, where entrepreneurs use short-term STB financing to replenish working capital to increase export sales.

The guarantee amount ranges from 1 billion tenge to 7 billion tenge. The guarantee period is up to 3 years.

This mechanism involves paying the guarantee fee from the national budget. The DBK guarantee covers up to 90% of the loan amount received by the entrepreneur from STB.

By the end of the current year, DBK plans to provide guarantees for at least 100 billion tenge under this mechanism.

The guarantee mechanism with concessional STB financing is intended for long-term investment project lending by banks on preferential terms (at a rate not exceeding 11.5%). The risk fee for the partial DBK guarantee (up to 50% of the loan amount) is paid by STB from the loan remuneration. This mechanism comes into effect on January 1, 2025.

The new guarantee instruments will open up more opportunities for medium and large businesses to access capital from STB and help implement investment plans and export contracts. In turn, STB will be able to reduce credit risks and increase the number of financed projects by using high-quality collateral in the form of DBK guarantees. Overall, the synergy of cooperation between DBK and STB in structuring and financing long-term loans will contribute to increasing the availability of credit resources, stimulating the development of medium and large businesses to ensure economic growth.

This year, DBK has already approved the first deal under the new mechanism. It is the project of Innovative Complex «Sastobe» LLP, the construction of a plant for the production of caustic soda and polyvinyl chloride (PVC). The project will use the DBK guarantee mechanism in favor of Halyk Bank of Kazakhstan JSC for an amount of 15 billion tenge. The new plant in the Turkestan region will create 346 jobs for Kazakhstani specialists. At full production capacity, the plant will produce up to 100 thousand tons of caustic soda and 120 thousand tons of PVC per year. It is worth noting that there is no PVC production in Kazakhstan.

DBK invites STB and medium and large business entities to cooperate. Full information on the new guarantee mechanisms and application submission can be found on the bank's official website at www.kdb.kz or by contacting the Customer Service Directorate (contacts are provided on the website).

проспект Мәңгілік Ел, здание 55 А, н.п. 15Z05T3E2Астана