RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of April 26, 2017 No. 17/13

About modification of 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 to the following regulatory legal acts of National Bank of the Kyrgyz Republic it (is applied):

- the resolution of Board of National Bank of the Kyrgyz Republic "About approval of new edition 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 approval of the Instruction for determination of standards of adequacy of the capital of the banks performing transactions according to the Islamic principles of banking and financing" of December 28, 2009 No. 51/4.

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

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, OYuL "Union of Banks of Kyrgyzstan", National bank of development of the Kyrgyz Republic, 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 April 26, 2017 No. 17/13

Changes 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 new edition 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 following changes:

in the name of the word of "new edition" to exclude;

in Item 1 of the word "new edition of the Instruction" to replace with the word "Instruction";

in the Instruction for determination of standards of adequacy of the capital of commercial banks of the Kyrgyz Republic approved by the above-stated resolution:

- in all text of the Instruction and Appendix abbreviation of "NBKR" shall be replaced with words "National Bank" in different case forms;

- state Item 4.3 in the following edition:

"4.3. Depending on degree of credit risk, and also from type of certain partners / partners balance sheet assets are divided into the following categories:

1) Category 1 (degree of credit risk - 0%):

a) banknotes and coins of the Kyrgyz Republic, the states which are members of EEU and OECD and the states, 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".

Note: OECD - Organization for Economic Cooperation and Development. The list of state members of OECD is posted on the official site by www.oecd.org.;

b) requirements to National Bank;

c) requirements to the Government of the Kyrgyz Republic (the securities issued by the Government of the Kyrgyz Republic and other requirements);

d) requirements to the Central (national) Banks of the states 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" or being members of OECD;

e) requirements to the governments of the states 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" or being members of OECD (the securities issued by the governments);

e) assets (or their part) with the providing expressed in national currency of the Kyrgyz Republic, and which is on the separate deposit account.

Note: According to the Provision "About Classification of Assets and the Corresponding Allocations to Reserve on Covering of Potential Losses and Losses", approved by the resolution of Board of National Bank No. 18/3 of July 21, 2004;

g) assets (or their part) with the providing expressed in currency of the states which are members of EEU and OECD, and also the states 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" and being on the separate deposit account.

2) Category 2 (degree of credit risk - 10%):

a) the assets (or their part) provided with securities at the current market price which are issued by the Government of the Kyrgyz Republic;

b) the assets (or their part) provided with securities at the current market price which are issued by the governments of the states 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" or being members of OECD.

3) Category 3 (degree of credit risk - 20%):

a) cash assets in settlings with banks and other financial credit institutions of the Kyrgyz Republic;

b) gold and other certified precious metals in standard ingots;

c) cash assets in settlings with banks and other financial credit institutions of the states 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" or being members of OECD;

d) requirements to banks and other financial credit institutions of the Kyrgyz Republic, and all assets based on guarantees of data of institutes;

e) requirements to banks and other financial credit institutions of the states 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" or being members of OECD who are not the affiliated organizations in relation to the reporting bank, and all assets based on guarantees of data of institutes.

4) Category 4 (degree of credit risk - 50%):

a) the credits to physical persons for purchase or construction of housing on one family and guaranteed by the first mortgages on such housing. Only such loans which are issued to persons intending to live in this house or the apartment, i.e. this housing belong to this category (or its part) it will not be used in other purposes (sale, lease, etc.).

If these credits are delayed over 30 days, restructured or passed into the status of not charge, they are specified in category 5 with degree of credit risk of 100%.

Note: According to the Procedure for giving of the status of not charge of interest income approved by the resolution of Board of National Bank of the Kyrgyz Republic of April 28, 2004 No. 11/2;

b) gold and other certified precious metals in measuring ingots.

5) Category 5 (degree of credit risk - 100%):

a) the banknotes and coins which did not enter category 1;

b) requirements to the governments and Central Banks of the states having long-term sovereign credit rating are 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" or not being members of OECD (the securities issued by the governments of these states and other requirements);

c) cash assets in settlings with banks and others financial and credit to the organizations of the states having long-term sovereign credit rating are 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" or not being members of OECD;

d) requirements to banks and other financial credit institutions of the states 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" or being members of OECD who are the affiliated organizations in relation to the reporting bank;

e) requirements to banks and other financial credit institutions of the states having long-term sovereign credit rating are 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" or not being members of OECD;

e) requirements to private sector (the commercial, consumer, mortgage and other credits, except specified in categories 3 and 4);

g) fixed assets and other property of bank;

h) investments and financial participation minus the provided deductions provided by the subitem "b" of Item 3.9;

i) all other assets which did not enter the previous categories.";

- state Item 8.3 in the following edition:

"8.3. Share dividends are charged and paid following the results of financial year.

Note: Financial year the period inclusive is considered from January 1 to December 31.";

- Notes to the Instruction to recognize invalid.

2. Introduce in the resolution of Board of National Bank of the Kyrgyz Republic "About approval "Instructions for determination of standards of adequacy of the capital of the banks performing transactions according to the Islamic principles of banking and financing" of December 28, 2009 No. 51/4 the following changes:

in the Instruction for determination of standards of the adequacy of the capital of the banks performing transactions according to the Islamic principles of banking and financing, approved by the above-stated resolution:

- in all text of the Instruction to replace the word of "organization" with the word of "organization" in the corresponding case forms;

- state Item 20 in the following edition:

"20. Assessment of sufficiency (adequacy) of the capital within this Instruction is carried out concerning credit risk, i.e. the risk relating to different types of assets and consisting in impossibility of ensuring complete or partial return of assets with the client.";

- state Item 22 in the following edition:

"22. Depending on degree of credit risk all balance sheet assets are divided into five categories, according to Item 24 of this Instruction. At the same time, the main criteria of credit risk according to which balance sheet assets belong to this or that category are: type of the partner, country accessory of the partner from the point of view of transfer risk, providing asset, guarantee and duration of action of asset.";

- declare Item 23 invalid;

- state Item 24 in the following edition:

"24. Depending on degree of credit risk, and also from type of certain partners / partners balance sheet assets are divided into the following categories:

Category 1 (degree of credit risk - 0%):

a) banknotes and coins of the Kyrgyz Republic and the states which are members of EEU and OECD and also the states 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".

Note: OECD - Organization for Economic Cooperation and Development. The list of state members of OECD is posted on the official site by www.oecd.org.;

b) requirements to National Bank;

c) requirements to the Government of the Kyrgyz Republic (the Islamic securities issued by the Government of the Kyrgyz Republic and other requirements);

d) requirements to the Central (national) Banks of the states 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" or being members of OECD;

e) requirements to the governments of the states 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" or being members of OECD (the Islamic securities issued by the governments);

e) assets (or their part) with the providing expressed in currency of the Kyrgyz Republic, and which is on the separate account.

Note: According to the Provision "About Classification of Assets and the Corresponding Allocations to Reserve on Covering of Potential Losses and Losses when Implementing Transactions according to the Islamic Principles of Banking and Financing" approved by the resolution of Board of National Bank of the Kyrgyz Republic of December 28, 2009 No. 51/6;

g) assets (or their part) with the providing expressed in currency of the states which are members of EEU and OECD, and also the states 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" and being on the separate deposit account.

Category 2 (degree of credit risk - 10%):

a) the assets (or their part) provided with Islamic securities on the current market value which are issued by the Government of the Kyrgyz Republic;

b) the assets (or their part) provided with Islamic securities at the current market price which are issued by the governments of the states 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" or being members of OECD.

Category 3 (degree of credit risk - 20%):

a) cash assets in settlings with banks and other financial credit institutions of the Kyrgyz Republic;

b) the gold and other certified precious metals in standard ingots which are not prohibited by the standards of Sharia approved by the Organization of financial accounting and audit for Islamic financial institutions (AAOIFI);

c) cash assets in settlings with banks and other financial credit institutions of the states 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" or being members of OECD;

d) requirements to banks and other financial credit institutions of the Kyrgyz Republic, and all assets based on guarantees of data of the organizations;

e) requirements to banks and other financial credit institutions of the states 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" or being members of OECD who are not the affiliated organizations in relation to the reporting bank, and all assets based on guarantees of data of the organizations.

Category 4 (degree of credit risk - 50%):

a) the financing provided to physical persons for purchase or construction of housing on one family and guaranteed by the first pledge on such housing. Only such assets which are issued to persons intending to live in this house or the apartment, i.e. this housing belong to this category (or its part) it will not be used in other purposes (sale, lease, etc.).

If the delay on these assets constitutes over 30 days, or they are restructured or passed into the status of not charge, they are specified in category 5 with degree of credit risk of 100%.

Note: According to the Procedure for giving of the status of not charge of interest income approved by the resolution of Board of National Bank of the Kyrgyz Republic of April 28, 2004 No. 11/2;

b) the gold and other certified precious metals in measuring ingots which are not prohibited by the standards of Sharia approved by the Organization of financial accounting and audit of dm of Islamic financial institutions (AAOIFI).

Category 5 (degree of credit risk - 100%):

a) the banknotes and coins which did not enter category 1;

b) requirements to the governments and Central Banks of the states having long-term sovereign credit rating are 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" or not being members of OECD (the securities issued by the governments of these states and other requirements);

c) cash assets in settlings with banks and others financial and credit to the organizations of the states having long-term sovereign credit rating are 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" or not being members of OECD;

d) requirements to banks and other financial credit institutions of the states 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" or being members of OECD who are the affiliated organizations in relation to the reporting bank;

e) requirements to banks and other financial credit institutions of the states having long-term sovereign credit rating are 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" or not being members of OECD;

e) requirements to private sector (the assets placed according to the Islamic principles of banking and financing):

- the assets placed under agreements of mudarab, musharak. At the same time, pledge (real and personal estate) which shall be implementable in the terms established by regulatory legal acts of National Bank of the Kyrgyz Republic acts as providing under such agreements. Pledge cost in case of its realization shall be sufficient for payment of the main amount of financing to bank and the possible costs connected with pledge realization.

The cost of pledge shall be confirmed with the conclusion of the independent appraiser according to the standards of assessment of property obligatory to application by all subjects of estimative activities in the Kyrgyz Republic approved by the order of the Government of the Kyrgyz Republic of April 3, 2006 No. 217. Independent assessment of mortgage property on annual basis is the mandatory requirement for reference of asset to this category. In case of reduction in cost of providing, deterioration in its quality that can result in difficulties in case of pledge realization, the assets placed under agreements of mudarab, musharaka are specified in category 6 with risk degree of 400%. Proceeding from practice of implementation by bank of transactions under agreements of mudarab, musharak, National Bank additional requirements and restrictions to carrying out by databank of transactions, including to mortgage providing can be established;

- other assets placed according to the Islamic principles of banking and financing, except for the assets specified in categories 3, 4 and 6;

g) fixed assets and other property of bank;

h) investments and financial participation minus the provided deductions provided by the subitem "b" of Item 18 of this Instruction;

i) all other assets which did not enter the previous categories.

Category 6 (degree of credit risk - 400%):

- the assets placed under agreements of mudarab, musharak, except for the assets specified in categories 1-5.".

 

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