RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of June 15, 2017 No. 2017-P-12/25-5

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

According to articles 7 and 43 of the Law "About National Bank of the Kyrgyz Republic" Board of National Bank of the Kyrgyz Republic decides:

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 "Rules of creation and/or acquisition of the subsidiary or dependent companies by commercial banks of the Kyrgyz Republic" of June 10, 2009 No. 26/3;

- the resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Regulations on the economic standard rates and requirements obligatory for accomplishment by the commercial banks and financial credit institutes licensed by National Bank of the Kyrgyz Republic" of July 21, 2004 No. 18/1;

- the resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Instruction for determination of standards of adequacy of the capital of commercial banks of the Kyrgyz Republic" of July 21, 2004 No. 18/2;

- the resolution of Board of National Bank of the Kyrgyz Republic "About new edition of the Instruction "About crediting restrictions" of September 15, 2004 No. 24/4;

- the resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Instruction "About limits of the financing performed according to the Islamic principles of banking and financing" of October 12, 2012 No. 40/1;

- ceased to be valid according to the Resolution of Board of National Bank of the Kyrgyz Republic of 14.08.2019 No. 2019-P-12/42-1-(NPA);

- the resolution of Board of National Bank of the Kyrgyz Republic "About some regulatory legal acts of National Bank of the Kyrgyz Republic" of August 25, 2005 No. 26/5;

- the resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Provision "About the Periodic Regulating Report of the Banks Performing Transactions according to the Islamic Principles of Banking and Financing" of March 30, 2011 No. 20/4;

- the resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Provision "About the Periodic Regulating Report of the Microcredit Company / Mikrocreditnogo Agencies" and the Provision "About the Periodic Regulating Report of Microfinance Company" of May 27, 2009 No. 25/3;

- the resolution of Board of National Bank of the Kyrgyz Republic "On" regulations of activities of microfinance companies in the territory of the Kyrgyz Republic" of February 19, 2003 No. 4/2.

2. This resolution becomes effective on June 22, 2017.

3. To legal management:

- publish this resolution on the official site 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 commercial banks, National bank of development of the Kyrgyz Republic, OYuL "Union of Banks of Kyrgyzstan", JSC Finance Company of Credit Unions, the microfinancial organizations, credit unions, 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 June 15, 2017 No. 2017-P-12/25-5-(NPA)

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 "Rules of creation and/or acquisition of the subsidiary or dependent companies by commercial banks of the Kyrgyz Republic" of June 10, 2009 No. 26/3 the following changes and amendments:

in Rules of creation and/or acquisition of the subsidiary or dependent companies by commercial banks of the Kyrgyz Republic approved by the above-stated resolution:

- state Item 1.1 in the following edition:

"1.1. These rules of creation and/or acquisition of the subsidiary or dependent companies by commercial banks of the Kyrgyz Republic extend to all commercial banks (further - banks), and National bank of development of the Kyrgyz Republic taking into account the features provided by the Law of the Kyrgyz Republic "About National bank of development of the Kyrgyz Republic".";

- state Item 1.3 in the following edition:

"1.3. Creation or acquisition of the subsidiary or dependent company by bank is performed based on the written permission of National Bank of the Kyrgyz Republic (further - National Bank).";

- state Item 1.4 in the following edition:

"1.4. Banks have no right to create and/or acquire the subsidiary or dependent companies if:

1) registration and/or implementation of activities of such companies is supposed in offshore zones which list is determined by National Bank, and also in the states and in the territories concerning which there are international sanctions accepted by the UN Security Council obligatory for the Kyrgyz Republic.

Note: The list of offshore zones is approved by the resolution of Board of "About Establishment of Requirements for Determination of Subjects and the List of Offshore Zones" National Bank of April 16, 2003 No. 13/2;

2) such companies are registered and/or perform the activities in offshore zones, and also in the states and in the territories concerning which there are international sanctions accepted by the UN Security Council obligatory for the Kyrgyz Republic;

Such companies have 3) as participants/cofounders of the legal entities registered or who are in the territory of offshore zones and also in the states and in the territories concerning which there are international sanctions accepted by the UN Security Council obligatory for the Kyrgyz Republic;

4) participants/cofounders of such companies are participants/cofounders of the legal entities registered in offshore zones, and also in the states and in the territories concerning which there are international sanctions accepted by the UN Security Council obligatory for the Kyrgyz Republic;

5) members of the company are persons for whom restrictions with the Law "About National Bank of the Kyrgyz Republic, Banks and Banking Activity" are set.";

- state Item 1.5 in the following edition:

"1.5. The amount of any investments, including any financial investments and the credits in each non-bank organization, including during creation and/or acquisition of the subsidiary or dependent company, shall constitute less than fifteen percent of own (regulating) capital of bank. At the same time the general amount of such investments cannot exceed sixty percent of own (regulating) capital of bank. For the purpose of these rules own (regulating) capital of bank is meant as the net total capital which is calculated according to the Instruction for determination of standards of sufficiency (adequacy) of the capital of commercial banks of the Kyrgyz Republic.

Note: Requirements and restrictions when implementing investments are set according to article 113 of the Law of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic, banks and banking activity in the Kyrgyz Republic".";

- declare Item 1.6 invalid;

- state Item 2.4 in the following edition:

"2.4. The subsidiary and dependent companies of bank are created in any form of business, the stipulated by the legislation Kyrgyz Republic.";

- in Item 3.1:

to state paragraphs of the fifth or seventh in the following edition:

"-on activities of bank and its officials working in bank at the time of the appeal to National Bank for receipt of written consent there are no decisions recognizing them as falling under unhealthy and unsafe banking practice;

- creation or acquisition of the subsidiary or dependent company will not lead to violation of economic standard rates and requirements of National Bank, and also to involvement of bank in unhealthy and unsafe banking practice;

- creation or acquisition of the subsidiary or dependent companies does not pose threat for interests of investors and other creditors of bank and is caused by interests of bank, but not private interests of the affiliated and tied with bank faces;";

add with paragraphs the ninth or tenth the following content:

"-officials of bank and its target subsidiary or dependent company, their shareholders (founders) have faultless goodwill;

- in bank the regime of direct banking supervision is not introduced.";

- to state the subitem 10 of Item 3.4 in the following edition:

"10) data on the corrective actions and sanctions accepted within the last two years concerning the subsidiary or dependent company acquired by bank licensed and regulated from authorized state body or data on lack of similar corrective actions and sanctions;";

- to state paragraphs of the fifth and sixth of Item 5.1 in the following edition:

"-availability of not eliminated corrective actions and sanctions against the subsidiary or dependent company acquired by bank within the last two years from authorized state body;

- applications of corrective actions concerning bank during the period of time of consideration by National Bank of documents for issue of permission to creation or acquisition of the subsidiary or dependent company;";

- after Item 8.5 of the Note 1-4 to recognize invalid.

2. Bring in the resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Regulations on the economic standard rates and requirements obligatory for accomplishment by the commercial banks and financial credit institutes licensed by National Bank of the Kyrgyz Republic" of July 21, 2004 No. 18/1 the following changes and amendments:

- in the name of the resolution of the word "and the financial credit institutes licensed by National Bank" to exclude;

- in Item 1 of the word "and the financial credit institutes licensed by National Bank" to exclude;

in the Regulations on the economic standard rates and requirements obligatory for accomplishment of the Kyrgyz Republic by commercial banks approved by the above-stated resolution:

- in all text abbreviation of "NBKR" shall be replaced with words "National Bank" in the corresponding cases;

- in all text shall be replaced with words the word of "adequacy" "sufficiency (adequacy)";

- in all text the word "standard rate of liquidity" in different numerical and case forms shall be replaced with words "the standard rate (indicator) of liquidity in the corresponding numbers and cases";

- in all text of the word "bank rooms" in different numerical and case forms shall be replaced with words "real estate" in the corresponding numbers and cases;

- Item 1.1. state in the following edition:

"1.1. The provision extends to all commercial banks, including the commercial banks performing transactions according to the Islamic principles of banking and financing including the banks having "Islamic window" taking into account the special terminology applied by them in case of banking operations and on National bank of development of the Kyrgyz Republic (further in the text "banks")".;

- to state the name of Chapter 2 in the following edition:

"2. The maximum extent of risk on one borrower or group of the connected borrowers (To 1)";

- state Items 2.1-2.4 in the following edition:

"2.1. The maximum extent of risk on one borrower or group of the connected borrowers who are not connected with bank shall not exceed the following values:

- for borrowers or group of the connected borrowers, except banks (K1.1) - 20%;

- for banks (K1.3) - 30%.

2.2. The maximum extent of risk on one borrower or group of the connected borrowers connected with bank shall not exceed the following values:

- for borrowers or group of the connected borrowers, except banks (K1.2) - 15%;

- for banks (K1.4) - 15%.

2.3. The procedure of payments of the maximum extent of risk on one borrower or group of the connected borrowers who are not connected with bank is determined according to the Instruction about restrictions of crediting approved by the resolution of Board of National Bank.

2.4. The procedure of payments of the maximum extent of risk on one borrower or group of the connected borrowers connected with bank is determined according to Section 6 of the Instruction on restrictions of crediting and the Instruction on requirements to transactions of banks with the affiliated and tied with bank faces approved by the resolution of Board of National Bank.";

- to state the name of Chapter 3 in the following edition:

"3. Standards of sufficiency (adequacy) of the capital (To 2)";

- to state subitem 3.1.2 of Item 3.1 in the following edition:

"3.1.2. Minimum size of own (regulating) capital.";

- Item 3.2. state in the following edition:

"3.2. The coefficients of sufficiency (adequacy) of the capital based on weighing of assets and off-balance obligations on risk degree:

- coefficient of sufficiency of total (adequacy) of the capital (K2.1) - at least 12%;

- coefficient of sufficiency (adequacy) of the capital of the First level (K2.2) - at least 6%.";

- Item 3.4. state in the following edition:

"3.4. Standards of sufficiency (adequacy) of the capital and procedure for their calculation are determined according to the Instruction for determination of standards of sufficiency (adequacy) of the capital of commercial banks of the Kyrgyz Republic approved by the resolution of Board of National Bank.";

- to state the name of Chapter 4 in the following edition:

"4. The standard rate (indicator) of liquidity (To 3)";

- to state the subitem 1 of Item 4.2 in the following edition:

"1) LA - quick assets which treat:

- cash in cash desk and ATMs of bank in national and foreign currency;

- means on correspondent and other accounts, including in precious metals, in National Bank;

- means on correspondent accounts, including in precious metals, in banks;

- interbank deposits with repayment period of 7 days;

- the state treasurer bills of exchange and other highly liquid securities issued by the Government of the Kyrgyz Republic and National Bank (further - highly liquid securities). These securities in case of calculation of the standard rate (indicator) of liquidity are considered minus award (discount) and unrealized profit (losses);

- means on the depersonalized metal bank accounts;

- means of bank on metal accounts of safe custody;

- the highly liquid securities purchased under the repo-agreement;

- government securities, having long-term sovereign credit rating are not lower than level "A", s "Standard & Poor" appropriated by rating agency" or the equivalent score assigned to one of rating agencies "Japan Credit Rating Agency (JCR)", "Fitch Ratings", "Dominion Bond Rating Service (DBRS)" and "Moody" s Investors Service ".";

- in the subitem 2 of Item 4.2:

the fourth to add the paragraph with the offer of the following content:

"At the same time, obligations of bank according to transactions the SWAP and the forward, are considered on the basis of the net value of obligations minus requirements of Bank to the partner.";

add the subitem with the paragraph the fifth the following content:

"-obligations of bank on metal accounts poste restante or with completion date in the next 30 days.";

- state Item 4.3 in the following edition:

"4.3. The classified interbank placements when calculating the standard rate (indicator) of liquidity are not included quick assets.

Note: "Regulations on classification of assets and the corresponding allocations to reserve on the covering of potential losses and losses approved by the resolution of Board of National Bank.";

Item 4.5. add with the paragraph the second the following content:

"The interbank credits obtained by bank and having providing in the form of pledge of money and/or the deposit in bank partner are not included obligations of bank if the bank has the necessary procedures and the control system guaranteeing that the credit can be completely repaid due to pledge.";

- Item 4.8. state in the following edition:

"4.8. The standard rate (indicator) of short-term liquidity (K3.2) needs to be supported at the level of not lower than 35%.";

- Item 4.9. state in the following edition:

"4.9. The standard rate (indicator) of short-term liquidity (K3.2) is determined by formula:

K3.2 = (VLA / KOB) * 100, where:

1) VLA - highly liquid assets which treat:

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