The central bank chairman disputed PM's appeal

/IRBIS, August 4, 04/ - The head of the National Bank (central bank of Kazakhstan) Anvar Saidenov disputed opinion of the prime minister of Kazakhstan that called for reform of Kazakh banking sector and the financial system Reuters informed. "I think that in general, regulation of banking system was initially formed in right way, and to say about necessity of breaking the regulation system and revision of its basic principles is not rightfully" Reuters quoted Anvar Saidenov. In July this year the prime minister of Kazakhstan Danial Akhmetov stated that the government is not satisfied with low competition in the banking sector, where two thirds of assets falls on three largest banks - Kazkommertsbank, TuranAlem and Halyk Bank. The PM also noted that loan interest rates are too high and undermine development of small-scale business and hinders industrial program of the government. Reuters also quoted Anvar Saidenov as saying that he could not understand government's discontent about high interest rates. "My approach is following: regulating bodies must not promote realization of one or another programs - this is business of the government" Reuters quoted. "The task for financial supervision agency as a regulator does not relate to creation inside of the banking system of a stimulus for development of one or another sectors", he added. " To state that banks must obligatory grant loans at a certain interest rate to small-scale business seems to be wrongfully." "If the government wants to grant such loans it must give partial guaranties over loans through special institutions, for instance, Small-scale Business Development Fund or (state owned) Development Bank of Kazakhstan", advised Anvar Saidenov. In his opinion, reforms are needed but they needed only to further develop existing system that proved to be effective. [2004-08-04]