Approved by the Resolution of Board of National Bank of Tajikistan of February 25, 2006 No. 70

The instruction No. 148 about procedure for conducting checks of banks and other non-bank financial organizations (their branches) by authorized representatives of National Bank of Tajikistan

This Instruction establishes procedure for conducting checks of banks and other non-bank financial organizations of their branches based on article 47 of the Law "About National Bank of Tajikistan".

1. General provisions

1.1. Checks of banks and other non-bank financial organizations (their branches) are carried out by National Bank of Tajikistan for implementation of functions of bank regulation and banking supervision.

1.2. This Instruction extends:

- on the banks operating in the territory of the Republic of Tajikistan and others non-bank financial the organizations (their branches);

- on the separate divisions of banks and other non-bank financial organizations located out of their location (additional offices, operational cash desks out of cash node, exchange points and other internal structural divisions);

- on their branches and representations which obtained the license of National Bank of Tajikistan for carrying out currency transactions (further - authorized bank), being outside the Republic of Tajikistan (in the presence of the agreement between National Bank of Tajikistan and banking supervisor authority of foreign state on cooperation in the field of supervision of activities of banks and other non-bank financial organizations (the memorandum of understanding in the field of banking supervision) further - the agreement or the memorandum;

- on the subsidiary banks and other affiliated non-bank financial organizations of authorized banks and other non-bank financial organizations which are outside the Republic of Tajikistan (in the presence of the agreement or the memorandum).

1.3. Main objective of carrying out by National Bank of Tajikistan of checks of banks and other non-bank financial organizations, their branches is assessment on site of general condition, or the separate directions them activities, including: assessment of compliance with law of the Republic of Tajikistan and regulations of National Bank of Tajikistan, assessment of reliability of accounting and the reporting, determination of the extent of risks, assets, liabilities, quality evaluation of assets, size and sufficiency of own means (capital), assessment of risk management systems and the organization of internal control, financial condition and perspectives of activities, and also identification of the actions menacing to interests of creditors and investors.

The checks of banks and other non-bank financial organizations (their branches) which are carried out by National Bank of Tajikistan do not carry out tasks of the inspections which are carried out by auditing organizations and the documenting audits performed according to the legislation of the Republic of Tajikistan for collection of proofs on criminal and another matters.

1.4. Checks of banks and other non-bank financial organizations (their branches), are carried out with the frequency established by the legislation of the Republic of Tajikistan and regulations of National Bank of Tajikistan and determined taking into account:

- financial condition;

- risk exposures;

- estimates of risk management systems, organizations of internal control;

- reliability of accounting and reporting;

- results of the previous checks;

Checks of banks and other non-bank financial organizations (their branches), are carried out at least once a year.

1.5. Checks of banks and other non-bank financial organizations (their branches), are carried out by authorized representatives (employees) of National Bank of Tajikistan (further - authorized representatives of National Bank of Tajikistan).

1.5.1. Checks of banks and other non-bank financial organizations (their branches), are carried out based on the document confirming powers of authorized representatives of National Bank of Tajikistan for conducting check (further - the order on conducting check).

In the order on conducting check the members of the authorized representatives of National Bank of Tajikistan forming working group with indication of the head of working group and workgroup members are determined.

The order on conducting check is constituted in duplicate in standard form according to appendix 1 to this Instruction.

1.5.2. In case of need, including changes of members of working group, amendment to the order on the conducting check which is integral part of the order on conducting check is drawn up.

Amendment to the order on conducting check is constituted in duplicate in standard form according to appendix No. 2 to this Instruction.

1.6. Treat the officials of National Bank of Tajikistan having rights to charge conducting checks, including to sign orders on conducting checks;

- The chairman of National Bank of Tajikistan, the First Deputy Chairman of National Bank of Tajikistan, the vice-chairman of National Bank of Tajikistan supervising the structural division of National Bank of Tajikistan performing functions of banking supervision;

- the head of department of territorial office of National Bank of Tajikistan - right to sign of orders on conducting checks of banks and other non-bank financial organizations (their branches), supervision for which activities exercises this department of territorial office of National Bank of Tajikistan;

The order on conducting check based on board decision of National Bank of Tajikistan or the order of the Chairman of National Bank of Tajikistan on conducting check of foreign subsidiary bank of authorized bank, branch and representative office of authorized bank the Chairman of National Bank of Tajikistan, the First Deputy Chairman of National Bank of Tajikistan, the vice-chairman of National Bank of Tajikistan supervising the structural divisions of National Bank of Tajikistan performing functions of banking supervision, person has the right to sign, them replacing.

The order on conducting repeated check of banks and other non-bank financial organizations (their branches), including based on motivated board decision of National Bank of Tajikistan, the Chairmen of National Bank of Tajikistan, the First Deputy Chairman of National Bank of Tajikistan, the vice-chairman of National Bank of Tajikistan supervising the structural divisions of National Bank of Tajikistan performing functions of banking supervision, person having the right to sign, replacing them.

1.7. Check of banks and other non-bank financial organizations (their branches) begins with the moment of presentation by the head of working group of the order on conducting check (further - start date of check).

Check of banks and others non-bank financial the organizations (their branches) comes to the end after transfer of the inspection statement to bank and other non-bank financial organization (their branches) (further - the inspection statement) for acquaintance to governing bodies based on the protocol of reception-transmission of the inspection statement (further - date check completion).

1.8. Check of banks and others non-bank financial the organizations (their branches) is performed for the period activities of bank and other non-bank financial organization (their branches) which cannot exceed five calendar years of activities preceding year of conducting check (further - the checked period).

1.8.1. Check of banks and others non-bank financial the organizations (their branches), performed according to the petition of bank and other non-bank financial organization, is carried out on questions, for the period and to terms which are coordinated with banks and other non-bank financial organizations.

1.9. The National Bank of Tajikistan has no right to carry out more than one inspection on the same questions for the same accounting period of activities of bank and other non-bank financial organization (their branches), except as specified, if such inspection is carried out:

- in communication by reorganization or liquidation of banks and other non-bank financial organizations;

- on motivated board decision of National Bank of Tajikistan. Such board decision of National Bank of Tajikistan can be made according to the procedure of control of activities of territorial department of National Bank of Tajikistan performing or based on the petition of the relevant structural division of National Bank of Tajikistan for the purpose of assessment of financial condition and quality of assets and liabilities of bank and other non-bank financial organization. For the specified purposes the petition of structural division of National Bank of Tajikistan shall contain instructions on the revealed signs of unstable financial condition if these signs created real threat to interests of creditors and bank depositors and other non-bank financial organization. The specified signs shall come to light and be estimated according to the techniques established by regulations of National Bank of Tajikistan.

1.9.1. Conducting repeated check of banks and others non-bank financial the organizations (their branches) for the same questions for the same accounting period of activities (further repeated check of banks and other non-bank financial organizations (their branches) based on motivated board decision of National Bank of Tajikistan, is performed with the assistance of representatives of central office of National Bank of Tajikistan.

1.9.2. In case of conducting repeated check of banks and other non-bank financial organizations (their branches), in the order the checked period and the questions which are subject to check are specified conducting check.

1.10. The official of National Bank of Tajikistan who signed the order on conducting check based on the message of the head of working group can make the decision on suspension of check in the presence of the circumstances testimonial of objective impossibility of continuation of check, including in cases:

- threats of life and to health of the head and workgroup members;

- counteractions to conducting check;

- other bases interfering conducting check.

1.10.1. The notification on suspension of check of banks and other non-bank financial organizations (their branches) constituted in standard form according to appendix No. 3 to this Instruction goes to heads of banks and other non-bank financial organizations (their branches).

1.10.2. The official of National Bank of Tajikistan who made the decision on check suspension makes the decision on check renewal.

1.10.3. In case of renewal of check of banks and other non-bank financial organizations (their branches) amendment to the order on the conducting check constituted in standard form according to appendix No. 2 to this Instruction is in case of need drawn up.

1.11. The official of National Bank of Tajikistan who signed the order on conducting check can make the decision on the termination of check in the presence of the circumstances testimonial of inexpediency or objective impossibility of continuation of conducting check, including in case of identification during check of the facts and circumstances testimonial of availability:

- the bases for response at banks and others non-bank financial the organizations of the license for banking operations according to article 48 of the Law "About National Bank of Tajikistan";

- the bases for appointment of temporary administration on management according to article 48 of the Law "About National Bank of Tajikistan";

- threats to legitimate interests of creditors and investors and banking system stability of the Republic of Tajikistan according to article 49 of the Law "About National Bank of Tajikistan".

In case of acceptance by the official of National Bank of Tajikistan who signed the order on conducting check, the decision on the check termination results of check are drawn up according to Item 7.8. this Instruction.

1.12. The information necessary for implementation by National Bank of Tajikistan of functions of bank regulation and banking supervision received during check in addition to data of the reporting provided to National Bank of Tajikistan, which is basis for estimates and conclusions of National Bank of Tajikistan about general condition, or about separate activities of banks and other NFO (further - supervising information), and also other supervising information on the elicited facts and circumstances of their activities capable to exert impact on financial condition, size and sufficiency of own means (capital) and accomplishment of prudential regulations of activities belongs to results of check of banks and other non-bank financial organizations (their branches) or to cause emergence of other bases for application to banks and other non-bank financial organizations of measures, 49 Laws of the Republic of Tajikistan provided by Articles 48, "About National Bank of Tajikistan", including:

- unreliable information about financial condition and property status of banks and other non-bank financial organizations owing to violation of established procedure of conducting financial accounting and misstatement of the accounting, statistical and financial reporting (further - unauthenticity of accounting and the reporting);

- the facts (events) of non-compliance with the laws published according to them regulations and instructions of National Bank of Tajikistan, non-presentation of information, representation of incomplete or unreliable information (further - violations in activities of banks and others non-bank financial the organizations (their branches);

- circumstances of activities of banks and other non-bank financial organizations (their branches), the actions (failure to act) of workers or governing bodies which are not violations of the law of the Republic of Tajikistan, regulations of National Bank of Tajikistan, but negatively influencing or capable to exert negative impact on financial condition, on the accepted risks or creating premises for emergence of violations and additional risks (further - shortcomings of activities of banks and other non-bank financial organizations (their branches).

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