Financing of Small and Medium-Sized Private Enterprises Based on Islamic Finance Principles

Target Segment

Subjects of micro, small, and medium private entrepreneurship (MSMEs)

Target Use

1) Commercial credit without a condition for the subsequent sale of the goods to a third party or under the terms of a subsequent sale of the goods to a third party (Murabaha):

- Investments (equipment, special-purpose machinery, commercial vehicles, as well as passenger cars manufactured in the Republic of Kazakhstan). All specified types of property must be domestically produced (manufactured in the Republic of Kazakhstan). At the same time, a cost limit not exceeding **3,500 (three thousand five hundred) MCI** per unit applies to passenger cars, with the exception of the purchase of vehicles intended for cargo transportation, which have a body or cargo platform separated from the cab;

- Financing of working capital/current assets (through a Commodity Murabaha transaction);

- Refinancing/replacement of the source of financing for existing MSME financing lines issued no earlier than 01.01.2025.

2) Islamic leasing (Ijarah) with the Partner's obligation to transfer ownership of the leased asset to the MSME or the MSME's obligation to purchase the leased asset, while financing for MSMEs under sale-and-leaseback (returnable) and secondary Islamic leasing is permitted:

- Financing of MSME leasing transactions in accordance with concluded financial leasing agreements under the terms of Product 2 and the Credit Agreement. Financing for MSMEs under sale-and-leaseback and secondary leasing is permitted;

- Refinancing/replacement of the source of financing for existing MSME leasing loans issued no earlier than January 1, 2025.

**Leased Asset** - property acquired by the Partner from the seller under a sale and purchase agreement for subsequent transfer to the MSME under a financial leasing agreement. The leased asset may include equipment, special-purpose machinery, commercial vehicles, as well as passenger cars manufactured in the Republic of Kazakhstan. All specified types of property must be domestically produced (manufactured in the Republic of Kazakhstan)6. At the same time, a cost limit not exceeding 3,500 (three thousand five hundred) MCI per unit applies to passenger cars, with the exception of the purchase of vehicles intended for cargo transportation, which have a body or cargo platform separated from the cab.

Maximum financing limit amount per MSME subject

1) For Second-Tier Banks (STBs):

- for investments, no more than 7,000,000,000 (seven billion) tenge (inclusive) per MSME/per group of related MSMEs, taking into account existing obligations under all programs of conditional placement of Fund resources;

- for replenishment of working capital (hereinafter - RWC) - no more than 3,500,000,000 (three billion five hundred million) tenge (inclusive) per MSME/per group of related MSMEs, taking into account existing obligations under all programs of conditional placement of Fund resources;

The maximum amount of the financing limit per MSME/group of related MSMEs, taking into account existing obligations under all programs of conditional placement of Fund resources, should not exceed 7,000,000,000 (seven billion) tenge.

2) For leasing companies:

- no more than 1,000,000,000 (one billion) tenge per MSME.

The aggregate outstanding principal debt of MSMEs to leasing companies should not exceed 1,000,000,000 (one billion) tenge.

Profit (Income) Rate on Islamic Leasing/Commercial Credit

1) For STBs - no more than **12.6%** (twelve point six percent) per annum;

2) For leasing companies – no more than **17%** (seventeen percent) per annum.

Financing Term

1) For STBs - no more than 120 months, including:

- for investments, no more than 120 months,

- for financing working capital/current assets, no more than 36 months.

- Refinancing of debt/replacement of the source of financing for existing MSME loans – no more than the remaining term of the refinanced debt.

2) For leasing companies - no more than 84 months;

- Refinancing of debt/replacement of the source of financing for existing MSME leasing obligations – no more than the remaining term of the refinanced debt.

Grace period for repayment of leasing payments/payments on commercial credit

No more than **12 months**

Special Conditions

The prohibition condition "- acquisition of fixed assets of imported production for which there are no analogues among domestic producers, such as:

- finishing building materials;

- equipment, special-purpose machinery, and spare parts;

It is permitted to acquire domestically produced assets marked «Сделано в Казахстане» (Made in Kazakhstan) in accordance with the requirements of the national standards of the Republic of Kazakhstan ST RK 3836 «The marking sign «Қазақстанда жасалған». Technical requirements» and ST RK 3837 «Procedure for applying the marking sign «Қазақстанда жасалған»)" reflected in the line "Financing to one MSME is prohibited," comes into effect on **December 1, 2025**.

Additional Conditions

1) Financing under commercial credit is provided against collateral security, according to the Partner's Collateral Policy. Partners may also accept collateral security for Islamic leasing according to the Partner's Collateral Policy.

2) The Partner insures the subject of the Islamic lease.

3) The MSME insures the fixed assets acquired under commercial credit, as well as the collateral security provided under the Islamic lease agreement or commercial credit agreement.

4) The MSME carries out the valuation of the collateral security in one of the independent appraisal companies.

5) Expenses related to the registration of the pledge agreement with the authorized registration body and the removal of the encumbrance are carried out at the expense of the MSME.

Financing is prohibited

- Financing of transactions for the acquisition of an existing business and real estate objects with the aim of continuing previously carried out activities, as well as sham and simulated transactions, is prohibited, except in cases of launching a new business or resuming previously terminated activities in priority areas;

- for the purpose of refinancing MSME leasing transactions;

- for sub-leasing;

- the acquisition of fixed assets of imported production for which there are no analogues among domestic producers, such as:

- finishing building materials;

- equipment, special-purpose machinery, and spare parts;

It is permitted to acquire domestically produced assets marked «Сделано в Казахстане» (Made in Kazakhstan) in accordance with the requirements of the national standards of the Republic of Kazakhstan ST RK 3836 «The marking sign «Қазақстанда жасалған». Technical requirements» and ST RK 3837 «Procedure for applying the marking sign «Қазақстанда жасалған»);

- for projects of entrepreneurs implemented under the types of activities specified in paragraph 4 of Article 24 of the Entrepreneurial Code of the Republic of Kazakhstan.

No. p/p

Code of the General Classifier of Economic Activities

Name

1. Manufacturing

1

10

Manufacture of food products

2

11.06

Manufacture of malt

3

11.07

Manufacture of soft drinks, mineral waters and other bottled waters

4

13

Manufacture of textiles

5

14

Manufacture of wearing apparel

6

15

Manufacture of leather and related products

7

16

Manufacture of wood and cork products, except furniture; manufacture of articles of straw and plaiting materials

8

17

Manufacture of paper and paper products

9

18

Printing and reproduction of recorded media

10

20

Manufacture of chemical products

11

21

Manufacture of basic pharmaceutical products and pharmaceutical preparations

12

22

Manufacture of rubber and plastic products

13

23

Manufacture of other non-metallic mineral products

14

24

Manufacture of basic metals

15

25

Manufacture of fabricated metal products, except machinery and equipment

16

26

Manufacture of computer, electronic and optical products

17

27

Manufacture of electrical equipment

18

28

Manufacture of machinery and equipment not elsewhere classified

19

29

Manufacture of motor vehicles, trailers and semi-trailers

20

30

Manufacture of other transport equipment

21

31

Manufacture of furniture

22

32

Other manufacturing

23

33

Repair and installation of machinery and equipment

2. Agriculture, forestry and fishing

24

01.63

Post-harvest crop activities

25

01.64

Seed processing for propagation

26

03.11

Marine fishing*

27

03.12

Freshwater fishing

03.22

Freshwater aquaculture

3. Waste collection and treatment

28

38

Waste collection, treatment and disposal; materials recovery

4. Transportation and storage

29

49.10

Passenger and freight transport by road**

30

49.11

Passenger rail transport, intercity

31

49.20

Freight rail transport

32

49.311

Bus transport

33

49.312

Tramway transport

34

49.313

Trolleybus transport

35

49.314

Subway transport

36

49.319

Other scheduled passenger land transport

37

49.39

Other passenger land transport n.e.c.

38

49.41

Freight transport by road

39

49.42

Removal services

40

50.10

Sea and coastal passenger water transport

41

50.20

Sea and coastal freight water transport

42

50.30

Inland passenger water transport

43

50.401

Inland freight water transport

44

50.402

Log floating

45

52

Warehousing and support activities for transportation

5. Accommodation and food service activities

46

55.10

Hotels and similar accommodation***

47

55.20

Holiday and other short-stay accommodation****

48

55.30

Campsites, caravan parks and residential parks

49

55.901

Dormitories in boarding schools

50

55.902

Student dormitories

6. Real estate activities

51

68.20.8

Renting (subleasing) and managing own or leased storage facilities

7. Education

52

85

Education*****

8. Human health and social work activities

53

86

Human health activities******

54

88.910

Day-care for children*****

9. Animal husbandry*******

55

01.41.0

Dairy cattle farming