The Kazakh government is moving to toughen regulation of the banking sector, in particular to limit the influence of shareholders on banks, the financial watchdog said on Thursday.

Yelena Bakhmutova, head of the Financial Oversight Agency, presented a draft law introducing a raft of amendments into banking and financial regulations.

"It is proposed that shareholders' influence on banks should be limited, specifically that no one person may own, directly or indirectly, more than a 25% stake in a bank," she said.

She added that the proposed rule did not apply to bank holdings.

Bank holdings will be prohibited from participation in other than financial organizations.

The government also seeks to limit "banks' interference in activities of their subsidiaries and dependent organizations by setting a limit on the number of their representatives on the boards of these organizations to one-third."

Bakhmutova said the amendments were essentially aimed at "cutting the banks off from directly or indirectly affiliated structures" and ensuring that banks only engage in banking activity.

ASTANA, September 2 (RIA Novosti)