In brief
On 25 December 2025, the Parliament of the Republic of Kazakhstan adopted the new Law "On Banks and Banking Activities in the Republic of Kazakhstan" ("New Law"), which has been submitted to the president for signature. The law will enter into force 60 calendar days after it is signed and officially published. The New Law replaces the previous framework dating back to 1995 and introduces key changes aimed at strengthening the stability of the banking system, fostering competition and promoting innovation. These changes include (i) introducing proportional regulation with basic and universal licenses, (ii) making it possible for traditional banks to open "Islamic windows," and (iii) establishing a legal foundation for the digital tenge and digital financial assets.
Key takeaways
Banks should review their licensing strategy in light of the new two-tier system and prepare for requirements related to digital financial assets. Institutions planning to offer Islamic banking products should consider organizational and accounting segregation of these activities. Market participants in the digital finance space should closely monitor forthcoming regulations on the digital tenge and digital financial assets, as these may create new opportunities beyond the current restrictions under the Law on Digital Assets.
In more detail
The New Law represents a fundamental restructuring of Kazakhstan's banking regulatory framework, replacing legislation that has been in force for nearly three decades and amended more than 140 times. It consolidates fragmented provisions, eliminates outdated requirements and introduces modern approaches aligned with international standards, while addressing emerging trends such as fintech, Islamic finance and digital technologies. Below are the key provisions:
1. Proportional regulation and licensing system: The law introduces a two-tier licensing regime — basic banking license and universal banking license — designed to create a more competitive and flexible environment. Currently, all banks operate under a single universal license, which imposes uniform prudential requirements regardless of size or business model, limiting market access for smaller institutions.
The basic license will allow banks to conduct a limited range of operations under simplified prudential norms and reporting obligations. It is expected that the minimum capital requirement will be set at KZT 10 billion, with reduced liquidity requirements. Banks holding a basic license will be prohibited from engaging in certain types of transactions with nonresidents, establishing foreign subsidiaries, conducting complex financial instrument transactions or lending to affiliated parties. It is expected that an asset cap of KZT 500 billion will apply. Exceeding this threshold will require the bank to transition to a universal license within a prescribed time frame.
The universal license retains the full scope of permitted banking operations and stringent requirements for capital, liquidity and risk management. This proportional approach aligns with international practice and aims to lower entry barriers, enhance competition and improve access to banking services.
2. Islamic banking operations: The law significantly expands the legal framework for Islamic finance, which currently accounts for less than 0.5% of Kazakhstan's banking assets. Previously, Islamic banking was limited to stand-alone institutions, reducing efficiency and accessibility. The New Law introduces the possibility for banks with a universal license to provide Islamic banking services through "Islamic windows" without creating a separate legal entity, subject to obtaining additional authorization.
To ensure compliance with Sharia principles, banks must maintain organizational and accounting segregation of Islamic activities and establish a Sharia board. The law also allows the conversion of an Islamic bank into a conventional bank with an Islamic window, including provisions for transferring assets and contracts. Branches of foreign Islamic banks will be permitted to engage in certain investment activities. These measures aim to promote the growth of Islamic finance and diversify Kazakhstan's financial market.
3. Digital finance and the digital tenge: The adoption of the New Law is synchronized with a comprehensive reform of financial legislation, which introduces the digital tenge and establishes the National Digital Financial Infrastructure (including a unified QR code and an interbank payment system). As part of this integration, the New Law authorizes financial institutions to open accounts in digital tenge and, subject to licensing requirements, to issue and service digital financial assets. A critical innovation is the introduction of digital financial assets as a new legal category, which will also include stablecoins.
While the AIFC regime remains in place for unsecured digital assets, the new provisions signal a systemic convergence of digital instruments with the traditional banking sector. Implementing these innovations will require banks to carefully harmonize their processes with the updated legislation on digital assets and payment systems.
4. Consumer protection and data showcase: The New Law significantly strengthens imperative consumer protection mechanisms and introduces new technological standards for oversight. For early repayment of loans by individuals, it establishes an absolute prohibition on penalties or fees, eliminating any previously existing time restrictions or moratoriums on penalty-free repayment.
To enhance the security of remote channels, the New Law mandates biometric identification of customers for online loan agreements, a measure that was previously only regulated at the level of secondary legislation. For real-time risk monitoring, banks must integrate with a unified "Data Showcase" information system, with an implementation deadline set for 1 January 2027. Furthermore, the New Law reaffirms and strengthens the existing prohibition on unilateral amendments to loan agreement terms and the introduction of new commissions within current agreements.
These changes establish a modern regulatory framework for banking activities, focused on stability, competition and digitalization. A series of implementing regulations is expected in the near future to clarify operational details, particularly regarding digital assets and Islamic banking operations.