RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of January 31, 2018 No. 2018-P-12/4-6-(BS)

About modification and amendments in some regulatory legal acts of National Bank of the Kyrgyz Republic

According to Articles 4, 20 and 68 Laws "About National Bank of the Kyrgyz Republic, Banks and Banking Activity" Board of National Bank of the Kyrgyz Republic decide:

1. Make changes and additions to the following regulatory legal acts of National Bank of the Kyrgyz Republic (are applied):

- the resolution of Board of National Bank of the Kyrgyz Republic "About approval of Regulations of activities of the microfinancial organizations performing transactions by the Islamic principles of banking and financing" of May 30, 2014 No. 24/11;

- the resolution of Board of National Bank of the Kyrgyz Republic "About approval of provisions of National Bank of the Kyrgyz Republic" of October 17, 2014 No. 45/1.

2. This resolution becomes effective after fifteen days from the date of official publication.

3. To legal management:

- publish this resolution on the official website of National Bank of the Kyrgyz Republic;

- after official publication to send this resolution to the Ministry of Justice of the Kyrgyz Republic for entering into the State register of regulatory legal acts of the Kyrgyz Republic.

4. To management of methodology of supervision and licensing to bring this resolution to the attention of the microfinancial organizations, their associations (associations), OYuL "Association of Islamic Finance", regional managements and representative office of National Bank of the Kyrgyz Republic in Batken Province.

5. To impose control of execution of this resolution on the board member of National Bank of the Kyrgyz Republic Dzhusupova Т.Дж.

Appendix

to the Resolution of Board of National Bank of the Kyrgyz Republic of January 31, 2018 No. 2018-P-12/4-6-(BS)

Changes and amendments in some regulatory legal acts of National Bank of the Kyrgyz Republic

1. Bring in the resolution of Board of National Bank of the Kyrgyz Republic "About approval of Regulations of activities of the microfinancial organizations performing transactions by the Islamic principles of banking and financing" of May 30, 2014 No. 24/11 the following changes and amendments:

in Regulations of activities of the microfinancial organizations performing transactions by the Islamic principles of banking and financing, approved by the above-stated resolution:

- declare content/table of contents invalid;

- state Item 1 in the following edition:

"1. These rules of regulation of activities of the microfinancial organizations performing transactions by the Islamic principles of banking and financing (further - Rules), extend the action to the microfinancial organizations performing transactions according to the Islamic principles of banking and financing and also to the microfinancial organizations having "Islamic window" (further - IFI).";

- state Item 2 in the following edition:

"2. The purpose of these rules is establishment according to the laws of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic, banks and banking activity" and "About the microfinancial organizations in the Kyrgyz Republic" the economic standard rates and requirements obligatory for accomplishment and observance of IFI.";

- state Item 7 in the following edition:

"7. IFIs shall perform financial accounting of the transactions and create the financial reporting according to requirements of National Bank.";

- in the third offer of Item 8-1 the word is "applied" shall be be replaced with words "it can be applied";

- the paragraph one of Item 8-2 to state in the following edition:

"For the purpose of these rules wholesale financing is understood as the assets bearing in themselves credit risk, provided to FKO for the subsequent provision of financing to clients with respect for the principles and conditions conforming to standards of Sharia for the purpose of promotion of financial services and support of entrepreneurial activity.";

- Rules to add with Item 8-3 of the following content:

"8-3. IFIs shall perform clerical work on state and/or on official languages. All internal documents, including agreements, contracts, agreements with partners, it is necessary to draw up on state or on official languages. At the same time execution of contracts with partners on state and/or official and on foreign the languages having equal legal force is allowed. Execution of agreements in foreign language is allowed only in the presence of the translation into the state or official language certified in accordance with the established procedure.";

- Rules to add with Item 10-1 of the following content:

"10-1. The equity relation indicator to the amount of the authorized capital is equal to IFC which authorized capital exceeds the size of the authorized capital established for newly created IFC and also at least 150 percent, have the right to issue financing to the same client or group of the connected persons, in the maximum cumulative amount of financing no more than two percent from the size of the operating registered authorized capital of IFC, except for financings on transaction of idzhar мунтахийя биттамлик.

In case of issue of IFC of financing in the amount of, the specified in paragraph one of this Item, in addition to the conditions designated in Item 10 of this provision, except for subitems 2 and 6 of the specified Item accomplishment of the following conditions is necessary:

1) value of the markup/income on financing, except for values arrived on transactions of mudarab and ball / мушарака, shall not exceed the maximum permissible percent calculated proceeding from discount rate of National Bank of the Kyrgyz Republic plus 20 percent;

2) financing total volume in the amount of, the specified in paragraph one of this Item shall not exceed 50 percent from portfolio of financing of IFC;

3) the coverage ratio of debt of the client equal to the relation of comprehensive income of the client to monthly fee (payments) on the asset bearing in itself credit risk (on the main amount and markup), shall make at least 100 percent.";

- recognize Items 13-1,13-2 and 13-3 invalid;

- state Item 15 in the following edition:

"15. Quarterly, no later than the twentieth following for reporting shall represent to IFC to National Bank within the periodic regulating reporting information on execution of economic standard rates.";

- declare Item 15-1 invalid;

- in Item 22:

state the fourth paragraph in the following edition:

"-standard rate of sufficiency (adequacy) of the capital (M 2);";

paragraphs the twelfth and thirteenth to recognize invalid;

- to state the subitem 1 of Item 24 in the following edition:

"1) the minimum size of the authorized capital and condition on its forming for IFC, performing transactions on attraction of money, shall conform to the requirements established in the Provision "About Licensing of Activities of Microfinance Companies", the Kyrgyz Republic approved by the resolution of Board of National Bank;";

- to state paragraphs of the first and second of Item 26 in the following edition:

"Value of the standard rate of sufficiency (adequacy) of the capital (The m 2) needs to be supported at the level of at least 8 percent.

The norm of sufficiency (adequacy) of the capital of IFC is determined on formula:";

- in Item 30:

to state paragraphs of the first and second in the following edition:

"To transactions with the affiliated and tied with IFC faces the following restrictions are set:

IFC, the raising money, transactions with the affiliated and tied with IFC faces according to the Instruction "About requirements to transactions of the microfinance companies attracting deposits with the affiliated and tied with microfinance company faces", the Kyrgyz Republic approved by the resolution of Board of National Bank shall perform 1). The maximum extent of risk on transactions with the affiliated and tied with IFC faces expressed as the size of total debt of the affiliated and tied with IFC faces before IFC shall not exceed 60 percent of equity of IFC;";

add subitem 2 with the paragraph the eighth the following content:

"Transactions on financing provision to officials and the staff of IFC can be performed only on condition of observance of the requirements specified in the Instruction "About requirements to transactions of the microfinance companies attracting deposits with the affiliated and tied with microfinance company faces", the Kyrgyz Republic approved by the resolution of Board of National Bank.";

- recognize Items 32-1 and 32-2 invalid;

- state Item 35 in the following edition:

"35. Monthly, no later than the twentieth following for reporting shall represent to IFC to National Bank within the periodic regulating reporting information on execution of economic standard rates.";

- declare Items 36 and 37 invalid;

- in Item 42 of the word "Item 41" shall be replaced with words "Item 40";

- Rules to add with Item 42-1 of the following content:

"42-1. MKK which authorized capital exceeds the size of the authorized capital established for newly created MKK and also if the equity relation indicator to the amount of the authorized capital is equal to at least 150 percent, have the right to issue financing to the same client or group of the connected persons, in the maximum cumulative amount of financing no more than two percent from the size of the operating registered authorized capital of MKK, except for financings on transaction of idzhar мунтахийя биттамлик.

In case of issue of MKK of financing in the amount of, the specified in paragraph one of this Item, in addition to the conditions designated in Item 42 this provision, except for subitems 2 and 7 of the specified Item accomplishment of the following conditions is necessary:

1) value of the markup/income on financing, except for values arrived on transactions of mudarab and ball / мушарака, shall not exceed the maximum permissible percent calculated proceeding from discount rate of National Bank plus 20 percent;

2) financing total volume in the amount of, the specified in paragraph one of this Item shall not exceed 50 percent from portfolio of financing of MKK;

3) the coverage ratio of debt of the client equal to the relation of comprehensive income of the client to monthly fee (payments) on the asset bearing in itself credit risk (on the main amount and markup), shall make at least 100 percent.";

- state Item 43 in the following edition:

"43. The funds raised by IFI from legal entities and founders (shareholders) shall correspond to the Islamic principles of banking and financing.";

- declare Item 43.1 invalid;

- first, second, third Item 44 to state paragraphs in the following edition:

"For the MKK which are engaged in wholesale financing and having obligations to creditors (including FKO) to establish the standard rate of sufficiency (adequacy) of the capital.

Value of the standard rate of sufficiency (adequacy) of the capital Sq.m needs to be maintained at the level of at least 15 percent.

The norm of sufficiency (adequacy) of the capital is determined on formula:";

- declare Item 48 invalid;

- Appendix to Regulations of activities of the microfinance companies performing transactions by the Islamic principles of banking and financing to declare invalid.

2. Bring in the resolution of Board of National Bank of the Kyrgyz Republic "About approval of provisions of National Bank of the Kyrgyz Republic" of October 17, 2014 No. 45/1 the following change:

1) in the Provision "About the Periodic Regulating Report of the Microcredit Companies and Mikrocreditny Agencies Performing Transactions according to the Islamic Principles of Banking and Financing" approved by the above-stated resolution:

- to state Section 7 of Appendix 2 in the following edition:

"Section 7. Data on observance of economic standard rates

Name of economic standard rates and requirements	Designation	Calculation of the standard rate	Actual value of the standard rate	The established value of the standard rate	Variation from the established standard rate
ECONOMIC STANDARD RATES FOR MKK
Standard rate of sufficiency (adequacy) of the capital of MKK	Sq.m	% CK/CA*100		at least 15%

Head of executive body	____________________________	___________________
	FULL NAME	signature
Chief accountant	____________________________	___________________
M.P.	FULL NAME	signature";

2) in  the Provision "About the Periodic Regulating Report of the Microfinance Companies Performing Transactions according to the Islamic Principles of Banking and Financing" approved by the above-stated resolution:

-  to state Section 10 of Appendix 2 in the following edition:

"Section 10. Data on observance of economic standard rates.

Name of economic standard rates and requirements	Designation	Calculation of the standard rate	Actual value of the standard rate	The established value of the standard rate	Variation from the established standard rate
Economic standard rates for IFC, not raising money
Minimum size of the authorized capital		% SK/UK*100		at least 100%
Maximum cumulative amount of investments		SI/SK*100 OF %		no more than 30%
The maximum amount of the financing issued to the same person, IFC, engaged in wholesale financing		% MK/CK*100		no more than 20%
Economic standard rates for IFC, raising money
Standard rate of the minimum size of equity	M1	% SK/UK*100		at least 100%
Standard rate of sufficiency (adequacy) of the capital	Sq.m	% CK/CA*100		at least 8%
The standard rate of the maximum extent of risk on one client	M3	% SZ/SK*100		no more than 5%
Standard rate of liquidity	M4	% LA/OB*100		at least 30%
The standard rate of restriction of risk on return of borrowed funds into accounts	M5	% K/B*100		at least 100%
The maximum extent of risk on transactions with the affiliated and tied with IFC faces		SZ of Af. Persons / СК*100%		no more than 60%
Total debt of employees of IFC		% SZS/SK*100		no more than 5%
Maximum cumulative amount of investments into IFI, leasing companies and banks		SI/SK*100 OF %		no more than 30%
General amount of investments into non-state debt securities		SI/SK*100 OF %		no more than 50%

Average values for the accounting period	1 month	2 month	3 month	In total
LA - Quick assets				0
ABOUT - Obligations				0
The standard rate of M4 = LA / ABOUT	% 0,0	% 0,0	% 0,0

Position: ____________________ Surname: ____________________ Signature: _________________".

 

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