THE RESOLUTION OF BOARD OF THE AGENCY OF THE REPUBLIC OF KAZAKHSTAN ON REGULATION AND DEVELOPMENT OF THE FINANCIAL MARKET

of May 28, 2021 No. 68

About modification of some regulatory legal acts of the Republic of Kazakhstan concerning regulation of the financial market

According to Item 1 of article 250 of the Code of the Republic of Kazakhstan "About taxes and other obligatory payments in the budget" (Tax code), Items 1-1 and 3 of article 42 of the Law of the Republic of Kazakhstan "About banks and banking activity in the Republic of Kazakhstan", the subitem 5) Item 1 of article 9 of the Law of the Republic of Kazakhstan "About state regulation, control and supervision of the financial market and the financial organizations", the subitem 2) Item 3 of article 16 of the Law of the Republic of Kazakhstan "About the state statistics", subitem 4-2) of part one of article 27 of the Law of the Republic of Kazakhstan "About microfinancial activities" Board of the Agency of the Republic of Kazakhstan on regulation and development of the DECIDES: financial market

1. Approve the List of regulatory legal acts of the Republic of Kazakhstan concerning regulation of the financial market to which changes are made, according to appendix to this resolution (further – the List).

2. To provide to department of methodology and prudential regulation of the financial organizations in the procedure established by the legislation of the Republic of Kazakhstan:

1) together with Legal department state registration of this resolution in the Ministry of Justice of the Republic of Kazakhstan;

2) placement of this resolution on official Internet resource of the Agency of the Republic of Kazakhstan on regulation and development of the financial market after its official publication;

3) within ten working days after state registration of this resolution submission to Legal department of data on execution of the action provided by the subitem 2) of this Item.

3. To impose control of execution of this resolution on the supervising vice-chairman of the Agency of the Republic of Kazakhstan on regulation and development of the financial market.

4. This resolution becomes effective since July 1, 2021 and is subject to official publication.

It is approved Ministry of Finance of the Republic of Kazakhstan

It is approved Bureau of national statistics of the Agency on strategic planning and reforms of the Republic of Kazakhstan

Appendix

to the Resolution of Board of the Agency of the Republic of Kazakhstan on regulation and development of the financial market of May 28, 2021 No. 68

The list of regulatory legal acts of the Republic of Kazakhstan concerning regulation of the financial market to which changes are made

1. Bring in the resolution of Board of National Bank of the Republic of Kazakhstan of May 30, 2016 No. 144 "About establishment of prudential standard rates and other regulations and limits, obligatory to observance, for Islamic banks, their normative values and technique of calculations of prudential standard rates and other regulations and limits, obligatory to observance, for Islamic banks" (it is registered in the Register of state registration of regulatory legal acts at No. 13939) the following changes:

in Normative values and technique of calculations of prudential standard rates and other regulations and limits, obligatory to observance, for the Islamic banks approved by the specified resolution:

state Item 34 in the following edition:

"34. The extent of risk on one borrower (R), including bank, is calculated as the amount of requirements in type:

1) loans, deposits, receivables, securities (except for the investments specified in Item 8 of Standard rates);

2) the contingent and possible obligations calculated according to the Table of the contingent and possible obligations of bank weighed on degree of credit risk according to appendix 5 to Standard rates;

3) the securitized assets relating to borrowers on whom the bank has no written confirmation of authorized body on application of the framework approach of securitization;

4) securitization line items;

5) the credits according to transactions of securitization with special finance company of Fund of Stressful Assets joint-stock company;

6) the requirements for correspondent accounts to resident banks of the Republic of Kazakhstan and nonresident banks of the Republic of Kazakhstan weighed taking into account credit risk according to the Table of the assets of bank weighed on degree of credit risk of investments according to appendix 2 to Standard rates;

minus requirements to the borrower in type:

the assets financed by the funds raised under the agreement on the investment deposit;

the amounts of the reserves created according to IFRS, and also the providing amounts according to obligations of the borrower in type:

the deposits made available to bank as providing this obligation;

the government securities of the Republic of Kazakhstan issued by the Government of the Republic of Kazakhstan and National Bank of the Republic of Kazakhstan;

"AA" on the international scale of the Standard & Poor agency "s or rating assessment of similar level of one of other rating agencies is not lower than the government securities issued by the central governments of the foreign states having sovereign rating;

the affined precious metals;

guarantees of the Government of the Republic of Kazakhstan;

guarantees of joint-stock company "National welfare fund "Samruk-Kazyna" and joint-stock company "National managing holding "Bayterek";

the securities issued by bank and provided as providing on the acquired bank to securities on which issuer is the joint-stock company "National welfare fund "Samruk-Kazyna", joint-stock company "National managing holding "Bayterek", or their affiliated organizations and on which at bank the right to unconditional collection of such providing is had;

the insurance contracts containing Items on unconditional and irrevocable obligation fulfillment on insurance payment, concluded with the national company which is performing functions on export support, and having the state warranty of the Government of the Republic of Kazakhstan.

On one borrower do not join in calculation of risk:

requirements to the Government of the Republic of Kazakhstan, National Bank of the Republic of Kazakhstan, joint-stock company "National welfare fund "Samruk-Kazyna", to joint-stock company "National managing holding "Bayterek", special finance company of Fund of Stressful Assets joint-stock company, the requirements of bank to the borrower which are written off from balance of bank, the requirement of bank to the borrower on which 100 (hundred) percent of reserves according to IFRS are created;

requirements of bank to the affiliated organization;

during the period from July 1, 2021 to December 31, 2021 inclusive requirements in the form of the money which is fees in guarantee or reserve funds of the clearing organization (the central partner), mid-flight fees, complete and (or) partial ensuring obligation fulfillment according to the bargains concluded in trade system of stock exchange by method of open tenderings and (or) with participation of the central partner;

requirements of bank to the legal entity, earlier being the subsidiary bank which performed restructuring and transaction on simultaneous transfer of assets and obligations to parent bank according to the Law on banks.";

in the Management on forming of provisions (reserves) under asset impairment of bank in the form of loans and receivables according to appendix 1:

state Item 9 in the following edition:

"9. On individual loans availability of any event which is objective confirmation of impairment is estimated:

1) availability at the borrower (co-borrower) of internal rating (point) corresponding to impairment level according to internal technique (internal models) of bank;

2) availability of considerable financial straits of the borrower according to the following signs:

for physical persons:

lack of opportunity is regular and (or) to timely make loan payments;

permanent and considerable deterioration in level of the income or solvency of the borrower (co-borrower);

lack of the credit folder;

credit history of the borrower (co-borrower) for the last 5 (five) years or other information on solvency of the borrower (co-borrower) confirm untimely obligation fulfillment before bank or insolvency of the borrower (co-borrower), except as specified, when the delay amount on principal debt and (or) the added remuneration does not exceed (did not exceed) 5 000 (five thousand) tenges, and (or) the maximum term of delay does not exceed (did not exceed) 90 (ninety) days;

lack of labor employment or business activity;

availability of the factors which caused to the borrower (co-borrower) material damage or not allowing it to continue other business activity;

availability of high probability that the borrower (co-borrower) will not be calculated with bank according to the obligations;

for legal entities:

the permanent and (or) essential deteriorations in financial condition of the borrower (the debtor, the co-borrower) observed from the analysis of the financial reporting, statements on cash flows, monitoring reports and other public sources;

growth of losses in dynamics for preceding period constitutes at least 12 (twelve) months;

adverse value of the coefficients calculated according to internal technique of bank according to financial condition of the borrower, the low level of solvency, big dependence on borrowed funds;

availability of negative equity;

stable decrease in market share (in the presence of information), lack of confidence at bank that accepted by the borrower (the debtor, the co-borrower) measures are effective for stabilization of financial condition;

provision to the borrower (the debtor, the co-borrower) of loan for the purpose of repayment of earlier granted loan in connection with deterioration in financial condition of the borrower (the debtor, the co-borrower);

for legal entities with target use of borrowing facilities "the investment purposes" (investment loan):

permanent and (or) essential deteriorations in financial condition of the borrower (co-borrower), that is level of the income, solvency and losses since the beginning of crediting has considerable adverse variations from the level provided by the business plan of the debtor and influences implementation of the business plan;

decrease in market share (in the presence of information);

the measures taken by the borrower (co-borrower) are not effective for stabilization of financial condition;

sanitation availability for the term of no more than 1 (one) year;

availability of force majeur circumstances, and also other circumstances which caused to the borrower (co-borrower) material damage, but did not entail the termination of its activities.

In the presence of the internal rating model developed and tested with participation of the international organizations (experts) in the field of modeling of rating estimates or their specialized divisions, the bank for the purposes of determination of availability of considerable financial straits of the borrower uses internal rating.

The international organizations (experts) in the field of modeling of rating estimates are recognized:

Standard & Poor "s Financial Services LLC;

Fitch Ratings Inc.;

Moody "s Investors Service;

Fair, Isaac and Company (FICO);

Experian plc.;

Deloitte Touche Tohmatsu Limited;

Ernst & Young Global Limited;

KPMG;

PricewaterhouseCoopers International Limited;

3) overdue debt availability on principal debt and (or) remuneration over 90 (ninety) calendar days;

4) restructuring of loan one and more time for the last 12 (twelve) months. Restructuring of loan is understood as any change of procedure and terms of the contract of loan in connection with deterioration in financial condition of the borrower. Any of the following cases belongs to restructuring:

change of the payment schedule on loan, including provision or prolongation of grace period on loan payments for repayment of principal debt and (or) remuneration, prolongation of term of loan, delay of one or more loan payment, write-off or forgiveness of part of principal debt and (or) remuneration on loan, capitalization of overdue payments on remuneration, change (converting) of loan currency from one currency on another with capitalization of overdue debt on remuneration;

provision of new loan for debt repayment on the operating loan in bank, including in other banks. The new and operating loans contain impairment sign in the form of restructuring;

increase in credit limit in case of overdue debt availability;

decrease in rate of remuneration on loan;

decrease in debt on loan due to mortgage providing.

For the purposes of this subitem is not recognized the event which is objective confirmation of impairment of loan, the restructuring which is carried out for the purpose of implementation of state programs.

During the period from April 1, 2021 to December 31, 2021 inclusive the borrower is not recognized quality being in financial difficulties if on the basis of assessment of the actual indicators of financial condition of the borrower the bank predicts that cash flows of the borrower will be sufficient for covering of contractual commitments before bank (including principal debt and remuneration) on loan on which the payment deferral in connection with introduction of rationing quarantine arrangements is granted, in case of simultaneous accomplishment of the following conditions:

the loan is referred to category of financial assets, provisions (reserves) on which are created in the amount equal to the twelve-monthly expected credit losses, before provision of payment deferral on loan;

after the end of the period of payment deferral on loan the borrower will continue to fulfill timely the obligations according to the new repayment schedule of loan within 180 (hundred eighty) days after the end of the period of payment deferral;

5) availability at bank of information on outstanding overdue debt on principal debt and (or) remuneration of the borrower (co-borrower) over 90 (ninety) calendar days in other banks;

6) inappropriate use of the loan issued by bank (except for the loans issued on replenishment of current assets);

7) lack of information allowing to determine financial condition of the borrower (co-borrower) - the legal entity within 6 (six) months from the reporting date established for provision of information according to internal documents of bank;

8) availability at bank of information on force majeur, and also other circumstances which put to the borrower (co-borrower) essential material damage or do not allow it to continue the activities, for example, about deprivation or suspension of the license for types of activity;

9) high probability of bankruptcy or other financial reorganization, and also involvement into legal proceedings of the borrower (co-borrower) which worsen its financial condition;

10) repayment of principal debt and remuneration on the loan issued for the term of more than 3 (three) years is performed at the end of loan term;

11) availability of information on the death of the borrower (co-borrower) of the physical person;

12) availability of information on lack of labor employment or business (entrepreneurial) activity of the borrower (co-borrower) of physical person.";

To state the table of the assets of bank weighed on degree of credit risk of investments according to appendix 2 in edition according to appendix 1 to this List of regulatory legal acts of the Republic of Kazakhstan concerning regulation of the financial market to which changes are made (further – the List);

The table of the contingent and possible obligations of bank weighed on degree of credit risk according to appendix 5 to state in edition according to appendix 2 to the List.

2. Bring in the resolution of Board of National Bank of the Republic of Kazakhstan of September 13, 2017 No. 170 "About establishment of normative values and techniques of calculations of prudential standard rates and other regulations and limits, obligatory to observance, the size of the capital of bank and Rules of calculation and limits of open foreign exchange position" (it is registered in the Register of state registration of regulatory legal acts at No. 15886) the following changes:

in Normative values and techniques of calculations of the prudential standard rates and other regulations and limits, obligatory to observance, the size of the capital of bank approved by the specified resolution:

state Item 2 in the following edition:

"2. In Standard rates the following concepts are used:

1) book value - the amount on which the loan is recognized the balance sheet after deduction of the provisions (reserves) created on them;

2) homogeneous loans - group of loans with similar characteristics of credit risk;

3) individual loans - loans on which provisions (reserves) are calculated on each such loan;

4) investment loan (credit) - I will jam (credit), conforming to the following requirements:

the term of loan (credit) constitutes 5 (five) and more years;

terms of the contract of loan (credit) establish prohibition on complete early repayment. Partial repayment of loan is performed in the terms and procedure provided by the business plan of the borrower;

the loan (credit) is granted the legal entity according to its business plan providing realization of complex of the actions directed to creation, expansion and upgrade of production of goods, production and transport infrastructure;

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