RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of December 11, 2024 No. 2024-P-12/66-1-(NPA)

About introduction of amendments to 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

According to Articles 5, "About National Bank of the Kyrgyz Republic" the Board of National Bank of the Kyrgyz Republic decides 9 and 64 constitutional Laws of the Kyrgyz Republic:

1. Make changes to 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 it (is applied).

2. This resolution becomes effective after 15 (fifteen) days from the date of official publication.

3. To legal management:

- from the date of receipt of the relevant documents within 3 (three) working days to 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 inclusion in the State register of regulatory legal acts of the Kyrgyz Republic.

4. To management of methodology of supervision within 3 (three) working days from the date of official publication to bring this resolution to the attention of Consolidation of legal entities "Association of the microfinancial organizations" and the microfinancial organizations.

5. To department "Secretariat of Board" within 3 (three) working days to bring this resolution to the attention of management of supervision of the non-bank organizations, regional managements and Representative office of National Bank of the Kyrgyz Republic in Batken Province.

6. To impose control of execution of this resolution on the board member of the National Bank of the Kyrgyz Republic supervising management of methodology of supervision.

Appendix

to the Resolution of Board of National Bank of the Kyrgyz Republic of December 11, 2024 No. 2024-P-12/66-1-(NPA)

Changes 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

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:

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

in chapter 1:

- state Item 1 in the following edition:

"1. These rules regulate activities of the microfinancial organizations licensed and regulated by National Bank of the Kyrgyz Republic performing transactions by the Islamic principles of banking and financing (further - Rules), including the microfinancial organizations having "Islamic window" (further - IFI).";

- state Item 3 in the following edition:

"3. IFIs can establish higher requirements for economic standard rates, according to the domestic policy of risk management, without breaking at the same time the values established for IFI in regulatory legal acts of National Bank of the Kyrgyz Republic.";

- in Item 6 of the word "Microfinancial Organizations" to replace with the word of "IFI";

- to state paragraph two of Item 8-2 in the following edition;

"IFI which is engaged in wholesale financing is meant as IFI in which the share of wholesale financing constitutes more than 70 (seventy) percent from its portfolio on financing.";

in chapter 2:

- in the name of the word "attraction of money" shall be replaced with words "acceptance of deposits";

- the fifth Item 9 to state the paragraph in the following edition:

"-the maximum cumulative amount of the financing provided to the same client or group of the connected persons in the amount of no more than 3 (three) percent from the minimum size of the authorized capital for the newly created IFC (which is not attracting term deposits from physical persons and legal entities);";

- the ninth Item 12 to declare the paragraph invalid;

- add Chapter with Item 12-1 of the following content:

"12-1. Value of the standard rate of the minimum size of equity needs to be maintained at the level of at least 100 (hundred) percent from the minimum size of the authorized capital.

The norm of the minimum size of equity is determined on formula:

CK / UK * 100%,

where:

SK - equity of IFC for date of assessment (according to Item 12 of these rules);

UK - the minimum authorized capital for newly created IFC, not performing the acceptance of deposits established by the resolution of Board of "About the Minimum Size of the Authorized Capital of Non-bank Financial Credit Institutions" National Bank of 05.10.2022 No. 2022-P-33/61-2-(NFKU).";

- in Item 13 to "transaction" to replace the word with the word to "agreement";

- add Chapter with Item 13-4 of the following content:

"13-4. The maximum amount of investments into property (fixed assets) shall not exceed 80 (eighty) percent of the size of equity of IFC.

The property is understood as property (including the under construction / established real estate, vehicles, etc.) which belongs to IFC or is at the disposal of IFC according to the lease agreement and/or is used/will be used as fixed asset.";

- state Item 15 in the following edition:

"15. IFC, not performing acceptance of the deposits having the right to borrow means from legal entities and physical persons - founders (shareholders) of IFC and legal entities.

The markup/return rate on the means borrowed from founders (shareholders) shall not exceed discount rate of National Bank more than on 5 (five) percent points.";

- add Chapter with Item 15-2 of the following content:

"15-2. Forms of the financial reporting and data on investments, borrowings from founders, shall be signed by the chairman of the board of IFC or other person officially having the right of the first signature and also person responsible for preparation and submission of data.";

in chapter 4:

- in the name of the word "attraction of money" shall be replaced with words "acceptance of deposits";

- state Item 22 in the following edition:

"22. IFC, the performing transactions on acceptance of deposits, shall observe the economic standard rates established by National Bank, including:

- the minimum size of the paid authorized capital;

- minimum size of equity (M 1);

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

- the maximum extent of risk on one client (M 3);

- standard rate of liquidity (M 4);

- standard rate of restriction of risk on return of deposits (M 5);

- the maximum extent of risk on transactions with the affiliated and tied with IFC faces;

- the maximum total debt of one employee of IFC on the financing provided by the company;

- maximum cumulative amount of investments into IFI, leasing companies and banks;

- amount of investments into non-state debt securities;

- maximum amount of investments into property (fixed assets).";

- add Chapter with Item 22-1 of the following content:

"22-1. Microfinance companies have the right to attract only term deposits from physical persons and legal entities for the term of at least 30 days.";

- the paragraph one of Item 23 to state in the following edition:

"23. IFC, the performing transactions on acceptance of deposits, have no right:";

in chapter 5:

- in the name of the word "attraction of money" shall be replaced with words "acceptance of deposits";

- state Item 24 in the following edition:

"24. Requirements to the authorized capital of the microfinance companies performing transactions on acceptance of term deposits are established by the resolution of Board of "About the Minimum Size of the Authorized Capital of Non-bank Financial Credit Institutions" National Bank of 05.10.2022 No. 2022-P-33/61-2-(NFKU).";

- state Item 25 in the following edition:

"Value of the standard rate of the minimum equity (M 1) need to be supported at the level of at least 100 (hundred) percent from the minimum size of the authorized capital.

The standard rate of the minimum equity of IFC (M 1) it is determined by formula:

M1 = CK / UK * 100%,

where:

SK - equity of IFC for date of assessment (Item 12 of these rules);

UK - the minimum authorized capital for newly created IFC, performing the acceptance of deposits established by the resolution of Board of "About the Minimum Size of the Authorized Capital of Non-bank Financial Credit Institutions" National Bank of 05.10.2022 No. 2022-P-33/61-2-(NFKU).";

- in Item 27:

in the fourth paragraph to "transaction" to replace the word with the word to "agreement";

in the eleventh paragraph in official language to replace the word "one" with the word "one";

- in Item 28:

in the second paragraph of the word "money" to replace with the word "deposits";

state the fifth paragraph in the following edition:

"ABOUT - obligations of IFC, including the attracted deposits, calculations for which come within 30 days from the moment of assessment.";

state the eighth paragraph in the following edition:

"-structure and stability of deposit base (terms of return of deposits, concentration of sources, policy of determination of size of rate of return)";

- in Item 29:

in the first paragraph of the word of "money" to replace with the word of "deposits";

in the fourth paragraph of "money" to replace with the word of "deposits";

- state Item 30 in the following edition:

"30. IFC, the attracting deposits, shall perform 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 and the housing and savings credit company faces", the Kyrgyz Republic approved by the resolution of Board of National Bank of June 15, 2017 No. 2017-P-12/25-6-(NPA). The maximum cumulative 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 (sixty) percent of equity of IFC;

The total debt of one employee of IFC to whom the IFC provided financing shall not exceed 5 (five) percent from the size of equity of IFC and is determined by formula:

SZS / CK * 100% <= 5%,

where:

SZS - total debt of one employee of IFC to whom the IFC provided financing for date of assessment;

SK - equity of IFC for date of assessment.

The IFC has no right to provide financing to the affiliated or tied with IFC faces if the total amount of all financing and their substitutes provided to all to the affiliated and/or tied with IFC faces exceeds 60 (sixty) percent from equity of IFC.

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 and the housing and savings credit company faces", the Kyrgyz Republic approved by the resolution of Board of National Bank of June 15, 2017 to No. 2017-P-12/25-6-(NPA).";

- in Item 31:

the paragraph one to state in the following edition:

"31. The following requirements regarding the cumulative amount of investments into IFI, leasing companies and banks are established:";

in subitem 2 to "transaction" to replace the word with the word to "agreement";

- add Chapter with Item 32-1 of the following content:

"32-1. The maximum amount of investments into property (fixed assets) for IFC, deposits performing acceptance.

The maximum amount of investments into property (fixed assets) shall not exceed 20 (twenty) percent of the size of equity of IFC.

The property is understood as property (including the under construction / established real estate, vehicles, etc.) which belongs to IFC or is at the disposal of IFC according to the lease agreement and/or is used/will be used as fixed asset.";

- add Chapter with Item 32-2 of the following content:

"32-2. IFC, the attracting deposits having the right to borrow means from legal entities and physical persons – founders (shareholders) of IFC and legal entities.

The markup/return rate on the means borrowed from founders (shareholders) shall not exceed discount rate of National Bank more than on 5 (five) percent points.";

in chapter 6:

- state the name in the following edition:

"Chapter 6. Procedure for observance of IFC of economic standard rates and requirements and submission of data by them in National Bank";

- state Item 35 in the following edition:

"35. Shall provide to IFC in National Bank information on execution of economic standard rates according to the requirements and terms established within the periodic regulating reporting.";

- add Chapter with Item 35-1 of the following content:

"35-1. Annually, after carrying out substantive external audit by forces of independent external auditors, the IFC shall represent to National Bank one copy (copy) of the complete report of the external auditor without changes, including the letter to management, within 30 (thirty) days from the moment of submission of the report by the external auditor of IFC.";

- add Chapter with Item 38-1 of the following content:

"38-1. The IFC is shall within 5 (five) working days after the publication with appendix of 1 (one) copy (copy) of the publication provide to National Bank and/or with indication of the reference to the official website of IFC (the portal of news agency) in which the financial reporting, with application of a copy of the publication was published. The reference to the official Internet website / portal of news agency also shall be sent by e-mail to authorized structural division of National Bank.";

- add Chapter with Item 38-2 of the following content:

"38-2. If the IFC has obligations to the third parties, and also in case of availability of one of the following threats of stability of activities of IFC, the National Bank can limit dividend payout of IFC if:

It will lead 1) to violation of the economic standard rates established by National Bank;

2) the minimum size of the authorized capital and/or the minimum size of own (regulating) capital established by National Bank is not provided;

3) in the presence of losses of last years, and also in case of failure to meet requirements of regulatory legal acts of National Bank.

Note: Obligations to the third parties are understood as the money raised by IFC from legal entities and physical persons, untied with IFC, and directed to the main activities.";

in chapter 7:

- in Item 39 to replace the word "transactions" with the word "agreements";

- state Item 40 in the following edition:

"40. The maximum cumulative amount of financing issued to MKK to the same face or group of the connected persons shall be determined in the amount of no more than 10 (ten) percent from the minimum size of the authorized capital for newly created MKK, No. 2022-P-33/61-2-(NFKU) established by the resolution of Board of "About the Minimum Size of the Authorized Capital of Non-bank Financial Credit Institutions" National Bank of 05.10.2022.";

- in Item 42-1:

in the first paragraph to "transaction" to replace the word with the word to "agreement";

in subitem 3 to "transaction" to replace the word with the word to "agreement";

- add Chapter with Item 43-1 of the following content:

"43-1. MKK, including MKK which is engaged in wholesale financing has the right to borrow means from legal entities and physical persons - founders (shareholders) of MKK and legal entities.

The markup/return rate on the means borrowed from founders (shareholders) shall not exceed discount rate of National Bank more than on 5 (five) percent points.";

- state Item 44 in the following edition:

"44. The MKK which are engaged in wholesale financing and having obligations to creditors (including FKO), shall observe 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 (fifteen) percent.

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

M2 = CK / CA * 100%,

where:

SK - MKK equity for date of assessment;

SA - the amount of balance sheet assets for date of assessment minus deposit amount from the clients placed in FKO as pledge in the amount of the amount of borrowed funds of domestic currency deposits for the purpose of hedging of currency risks.";

- add Chapter with Item 45-1 of the following content:

"45-1. Value of the standard rate of the minimum size of equity needs to be maintained at the level of at least 100 (hundred) percent from the minimum size of the authorized capital.

The norm of the minimum size of equity of MKK is determined on formula:

CK / UK * 100%,

where:

SK - MKK equity for date of assessment according to Item 45 of these rules;

UK - the minimum authorized capital for newly created MKK established by the resolution of Board of "About the Minimum Size of the Authorized Capital of Non-bank Financial Credit Institutions" National Bank of 05.10.2022 No. 2022-P-33/61-2-(NFKU).";

- add Chapter with Item 45-2 of the following content:

"45-2. If MKK has obligations to the third parties, and also in case of availability of one of the following threats of stability of activities of MKK, the National Bank can limit payment of dividends/profit distribution of MKK if:

It will lead 1) to violation of the economic standard rates established by National Bank;

2) the minimum size of the authorized capital and/or the minimum size of own (regulating) capital established by National Bank is not provided;

3) in the presence of losses of last years, and also in case of failure to meet requirements of regulatory legal acts of National Bank.

Note: Obligations to the third parties are understood as the money raised by MKK from legal entities and physical persons, untied with MKK, and directed to the main activities.";

- in Item 47 to "transaction" to replace the word with the word to "agreement";

- add Chapter with Item 47-1 of the following content:

"47-1. Financing issue, including under the agreement of idzhar мунтахийя биттамлик, over the maximum amount of financing, to the same client issued to MKA or group of the connected persons, stipulated in Item 47 these rules, considering the purposes of article 2 of the Law of the Kyrgyz Republic "About the microfinancial organizations in the Kyrgyz Republic", it is allowed in the amount of no more than 2 (two) percent from equity (book value of the capital) of MKA, on the following purposes:

a) business creation (acquisition of the main and current assets for the organization of business activity) or the new direction in activities;

b) expansion and development acting business/activities, in case of accomplishment of one of the following questions:

- implementation of the new technologies aimed at technological updating, implementation of the innovative machinery and equipment;

- automation of business processes;

- creation of additional workplaces;

- increase in scales of production.

In case of issue of MKA of financing, including under the agreement of idzhar мунтахийя биттамлик, specified in paragraph one of this Item, accomplishment of the following conditions is necessary:

1) availability at MKA of the financing policy MKA developed according to the purposes and tasks with determination of specific types of products and procedure for the subsequent monitoring of target use of the provided financing;

2) availability of customer information (credit report) and at the discretion of MKA about the faces tied with the client (in the presence of their consent according to the legislation of the Kyrgyz Republic) in the existing credit bureaus;

3) availability of necessary documentary confirmations of solvency of the applicant (right of possession the assets generating the income of the applicant, the certificate of the salary about places of employment, the patent, or the decision of body of Tax Service on application/refusal of application of the tax discharge in trade zone with particular treatment, or the certificate, etc.), and also evaluating solvency of the applicant, confirmed with the conclusion of the responsible specialist in financing or the worker according to policy of financing and/or other internal documents MKA;

4) business plan availability on receipt of financing of the applicant, at the same time in the business plan the purposes of use of financing with the corresponding calculations and forecasts shall be specified.

If in portfolio of financing of MKA the share of the above-stated financing occupies 70 (seventy) and more percent, the restrictions specified in Item 47, data MKA do not extend.

If in portfolio of financing of MKA the share of the above-stated financing constitutes less than 70 (seventy) percent, that financing to 100 thousand som shall constitute 20 (twenty) and more percent from total portfolio of financing of MKA.".

 

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