RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of January 20, 2016 No. 4/6

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 resolutions of Board of National Bank of the Kyrgyz Republic (are applied):

- About "Provisional rules of regulation of activities of microfinance companies in the territory of the Kyrgyz Republic" of February 19, 2003 No. 4/2;

- About approval of the Provision "About the Periodic Regulating Report of the Microcredit Company / Mikrocreditnogo Agency and Pawnshop" and the Provision "About the Periodic Regulating Report of Microfinance Company" of May 27, 2009 No. 25/3;

- "About new edition of Regulations of activities of credit unions in the Kyrgyz Republic" of May 4, 2005 No. 14/2;

- About approval "Regulations of activities of the microfinance companies performing transactions by the Islamic principles of banking and financing" of May 30, 2014 No. 24/11;

- About approval "Regulations of activities of the credit unions performing transactions by the Islamic principles of banking and financing" of July 16, 2014 No. 32/5;

- About approval of provisions of National Bank of the Kyrgyz Republic of October 17, 2014 No. 45/1;

- About approval of new edition of the Provision "About Classification of Assets and the Corresponding Allocations to Reserve on Covering of Potential Losses and Losses" of July 21, 2004 No. 18/3.

2. This resolution becomes effective since February 10, 2016, except for changes and amendments in resolutions of Board of National Bank of the Kyrgyz Republic "About the periodic regulating report of the microfinance companies performing transactions according to the Islamic principles of banking and financing", and "About the periodic regulating report of the microcredit companies and mikrocreditny agencies performing transactions according to the Islamic principles of banking and financing" of October 17, 2014 No. 45/1, which become effective since June 1, 2016.

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 inclusion in 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 Association of the microfinancial organizations, OYuL "Associations of Development of Islamic Economy, Finance and Industry", credit unions, the microfinancial organizations, Ekoislamikbank Ltd, OSOO OTs "Barakat", JSC Finance Company of Credit Unions, commercial banks, OYuL "Union of Banks of Kyrgyzstan".

5. To impose control of execution of this resolution on the vice-chairman of National Bank L.DZh. Orozbayeva.

Appendix

to the Resolution of Board of National Bank of the Kyrgyz Republic of January 20, 2016 No. 4/6

Changes and amendments in some resolutions of Board of National Bank of the Kyrgyz Republic

1. Bring in the resolution of Board of National Bank of the Kyrgyz Republic "About provisional rules of regulation of activities of microfinance companies in the territory of the Kyrgyz Republic" of February 19, 2003 No. 4/2 the following changes and amendments:

in the name and in all text of the resolution of the word "Provisional rules" to replace with the word of "Rule" in the corresponding cases;

in Regulations of activities of the microfinance companies in the territory of the Kyrgyz Republic approved by the above-stated resolution:

- in the name of the word of "microfinance companies" to replace with the word of "the microfinancial organizations".

- in Item 1.2.:

shall be replaced with words words of "microfinance companies" "the microfinancial organizations (further - IFI)";

"microfinance company" shall be replaced with words words "the microfinancial organization".

- in Items 1.3., 1.4., 1.7., 1.8. words of "microfinance companies" to replace with the word of "IFI".

- Items 1.5., 1.6. recognize invalid.

- Item 1.9. state in the following edition:

"1.9. The microfinancial organization performs internal audit to check reliability of accounts, to check and estimate adequacy and efficiency of the internal control system according to regulatory legal acts of the Kyrgyz Republic. For this purpose the microfinance company (further - IFC) shall, and the microcredit company (further - MKK) / the mikrocreditny agency (further - MKA) can create the service of internal audit.".

- add with Item 1.10. following content:

"1.10. IFIs which have the system importance for the microfinancial sector are considered backbone. Criteria of the system importance are determined by regulatory legal acts of National Bank. The special mode of regulation and supervision established by National Bank is applied to systemically important IFIs.".

- add with Item 1.11. following content:

"1.11. For the purpose of these rules the wholesale credit is understood as the loan granted to financial credit institutes for the subsequent provision of the microcredits for the purpose of promotion of financial services in regions and supports of entrepreneurial activity.

IFI, the engaged wholesale crediting, is meant as IFI in which the share of the wholesale credits constitutes more than 70 percent from credit portfolio.".

- in Item 2.1.:

state the eighth paragraph in the following edition:

"Microfinance companies shall have the domestic credit policy approved by the Board of directors. This domestic credit policy shall determine the main region of activities, and also the maximum cumulative size of the microcredit issued to the same person, but in the amount of no more than three percent from the minimum size of the authorized capital established by National Bank for the newly created IFC (which is not attracting term deposits from physical persons and legal entities).";

state the ninth paragraph in the following edition:

"For IFC, engaged in wholesale crediting, the maximum cumulative size of the microcredit issued to the same person shall not exceed 20 percent from the equity size.".

- Item 2.1.-1. state in the following edition:

"2.1.-1. Issue of the microcredit, over the maximum cumulative size of the microcredit issued to IFC to the same borrower or group of the connected persons stipulated in Item 2.1. these rules, except for the microfinance companies performing acceptance of term deposits from physical persons and legal entities and/or which are engaged in wholesale crediting creation of additional workplaces, according to article 2 of the Law of the Kyrgyz Republic "About the microfinancial organizations in the Kyrgyz Republic", in the following directions of crediting is allowed for the purposes of expansion/development of the operating business, including:

- trade;

- agricultural industry (including crop production, livestock production, procurement/conversion of agricultural products);

- services;

- transport;

- finance lease (leasing);

- industry;

- construction.

In case of issue of IFC of the microcredits specified in paragraph one of this Item accomplishment of the following conditions is necessary:

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

2) the amount of such microcredit, in case of observance of the established conditions, shall not be over 3000000 (three million) som (or equivalent in foreign currency);

3) there is relevant information from the Credit Information Bureau (CIB) of rather credit history of the applicant, including on the overdue loans which are earlier received by the applicant and also information on whether the applicant acts as the guarantor on any other credits;

4) there are 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, the certificate, etc.), and also assessment of solvency of the applicant confirmed with the conclusion of the responsible credit specialist or employee according to credit policy and/or other internal documents of the microcredit company is carried out;

5) the Questionnaire - the loan application of the applicant is provided, at the same time in the Questionnaire loan application the purposes of use of the credit with the corresponding calculations and forecasts shall be specified;

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