Regulation on Mandatory Reserves

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Date created: 2025-10-13

Approved By the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated March 13, 2019 No. 2019-P-07/10-1-(DKP)

REGULATION on Mandatory Reserves (As amended by the Resolutions of the Board of Directors of the National Bank of the Kyrgyz Republic dated January 27, 2021 No. 2021-P-07/4-4-(DKP), and October 8, 2025 No. 2025-P-07/50-7-(DKP))

CHAPTER 1. General Provisions

1. This Regulation establishes requirements for banks regarding the deposit of mandatory reserves at the National Bank of the Kyrgyz Republic (hereinafter – the National Bank), defines the size of mandatory reserves, and sets forth the calculation and compliance procedures for commercial banks and the State Development Bank of the Kyrgyz Republic (hereinafter – the bank) with respect to mandatory reserve requirements (hereinafter – MRR), as well as the calculation and collection of penalties for non-compliance with MRR. The requirements of this Regulation apply to commercial banks conducting operations in accordance with Islamic banking and financing principles, including within the "Islamic window", taking into account their operational specifics and terminology used in banking operations.

2. Mandatory reserves are one of the monetary policy instruments and are used by the National Bank to regulate the overall liquidity level in the banking system, short-term interest rates, and the volume of monetary aggregates.

3. Depending on monetary policy objectives, the following mandatory reserve requirement standards are established by individual resolutions of the Board of Directors of the National Bank:

• sizes of mandatory reserves (different percentage values may be established for various categories of liabilities included in the calculation base);
• the size of the minimum threshold level relative to the volume of mandatory reserves;
• composition, ratio, and size of assets included in reserve assets for compliance with MRR;
• compensation rate for compliance with mandatory reserves;
• sizes of penalties for non-compliance with MRR and the minimum threshold level relative to the volume of mandatory reserves. (As amended by the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated January 27, 2021 No. 2021-P-07/4-4-(DKP))

4. The base period for compliance with mandatory reserve requirements consists of four calendar weeks (28 days).

5. The list and structure of liabilities included in the calculation base are approved by the Board of Directors of the National Bank.

6. Banks are required to comply with mandatory reserve requirements during the validity period of their license for conducting banking operations.

CHAPTER 2. Definitions and Terms

7. For the purposes of this Regulation, the following terms are used: Base Period – the period during which a bank is required to comply with mandatory reserve requirements in accordance with this Regulation. Calculation Period – the period for which the calculation base is determined to establish the volume of mandatory reserves. Mandatory Reserves – the sum of funds that a bank is required to deposit during the base period into reserve assets under conditions established by the National Bank. Mandatory Reserve Requirements – the requirements for a bank to deposit mandatory reserves into reserve assets in accordance with established standards. Minimum Threshold Level of Mandatory Reserves – the volume of funds that a bank is required to maintain daily in reserve assets to fulfill mandatory reserve requirements. Size of Mandatory Reserves – the coefficient (in percent) applied to the calculation base for calculating mandatory reserves. Calculation Base – liabilities in national and foreign currencies, as well as other bank liabilities accounted for on its deposit and other accounts. Reserve Assets – bank assets designated by the National Bank for crediting toward compliance with mandatory reserve requirements. (As amended by the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated January 27, 2021 No. 2021-P-07/4-4-(DKP))

CHAPTER 3. Procedure for Calculating Mandatory Reserves

8. Mandatory reserves are calculated once per four-week period on the first working day of the current base period and are determined based on the average daily calculation base for the previous base period and the size of mandatory reserves established by the Board of Directors of the National Bank. The established value of mandatory reserves remains valid for the four weeks of the base period, according to the annual mandatory reserve schedule approved by the Monetary Policy Committee of the National Bank. (As amended by the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated October 8, 2025 No. 2025-P-07/50-7-(DKP))

9. When calculating mandatory reserves:

• the som equivalent of currency liabilities included in the calculation base is calculated using the official exchange rate of foreign currencies against the som established by the National Bank;
• the som equivalent of clients' metal accounts is calculated based on the latest London Precious Metals Association (LPMA) fixing, derived via the cross-rate of the official USD/som exchange rate established by the National Bank on the day preceding the report preparation date.

10. The calculation of mandatory reserves is performed using the following formula: where OR_t – mandatory reserves for the current base period; OB_{t-1} – bank liabilities included in the calculation base for each day of the previous base period; P – size of mandatory reserves established by the Board of Directors of the National Bank; D_{t-1} – number of calendar days of the previous base period taken into account for mandatory reserves, as defined in paragraph 4 of this Regulation.

11. The calculation performed in accordance with paragraph 10 of this Regulation, certified by the signature of the bank's head, is submitted to the National Bank in the form specified in Appendix 1 to this Regulation on the first working day of the new base period by 12:00. Upon request by the National Bank, the bank submits the calculation in electronic form. For various categories of liabilities subject to differentiated MRR sizes, mandatory reserve calculations must be submitted separately for each category according to Appendix 1 to this Regulation. The total volume of mandatory reserves is calculated as the sum of mandatory reserves across all liability categories. (As amended by the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated October 8, 2025 No. 2025-P-07/50-7-(DKP))

12. In case of late submission of the calculation or submission of unreliable information, the bank bears responsibility in accordance with the regulatory legal acts of the National Bank.

CHAPTER 4. Procedure for Fulfilling Mandatory Reserve Requirements

13. Overall compliance with MRR for the entire base period is monitored upon completion of the four-week period. MRR is considered fulfilled if the cumulative difference between reserve assets and the volume of mandatory reserves over the base period is positive or equal to zero.

14. At the same time, on a daily basis, the bank is required to maintain the volume of funds in National Bank-designated reserve assets at no less than the minimum threshold level of mandatory reserves. (As amended by the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated January 27, 2021 No. 2021-P-07/4-4-(DKP))

15. (Ceased to be in force in accordance with the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated January 27, 2021 No. 2021-P-07/4-4-(DKP)).

16. When fulfilling MRR, the bank is charged a fee for compliance with mandatory reserves. The size of the compliance fee for reserve assets is determined based on the compensation rate and the volume of mandatory reserves.

17. In cases where a bank fails to meet mandatory reserve requirements both overall for the base period and on a daily basis, a penalty for non-compliance with MRR is levied in accordance with the conditions specified in Chapter 5 of this Regulation.

CHAPTER 5. Procedure for Calculating and Collecting Penalties for Non-Compliance with Mandatory Reserve Requirements

18. The penalty amount for non-compliance with MRR is calculated based on the size of the MRR non-compliance penalty and the average daily negative deviation of the bank's reserve assets from mandatory reserves over the base period.

19. The calculation of the MRR non-compliance penalty is performed using the following formula: where Sh_n – penalty for non-compliance with mandatory reserve requirements; Os – average daily deviation of reserve assets from mandatory reserves; P_sh – size of the MRR non-compliance penalty established by the Board of Directors of the National Bank; D – number of calendar days of the base period, as defined in paragraph 4 of this Regulation. (As amended by the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated January 27, 2021 No. 2021-P-07/4-4-(DKP))

20. The penalty amount for non-compliance with the minimum threshold level of mandatory reserves is calculated based on the size of the penalty for non-compliance with the minimum threshold level and the daily negative deviation of funds in National Bank-designated reserve assets from mandatory reserves. (As amended by the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated January 27, 2021 No. 2021-P-07/4-4-(DKP))

21. The calculation of the penalty for non-compliance with the minimum threshold level of mandatory reserves is performed using the following formula: where Sh_n – penalty for non-compliance with the minimum threshold level of mandatory reserves; Om – daily deviation of National Bank-designated reserve assets from mandatory reserves; P_sh – size of the penalty for non-compliance with the minimum threshold level of mandatory reserves established by the Board of Directors of the National Bank; D – number of days of non-compliance with the minimum threshold level of mandatory reserves. (As amended by the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated January 27, 2021 No. 2021-P-07/4-4-(DKP))

22. In case a bank submits unreliable information regarding cash balances in ATMs in national currency, the volume of mandatory reserves is recalculated from the beginning of the base period excluding cash balances in national currency ATMs, and for one year from the date of violation detection, the bank's cash balances in national currency ATMs are not included in the MRR compliance calculation.

23. Collection of penalties for non-compliance with MRR and the minimum threshold level of mandatory reserves is carried out without acceptance (unilateral deduction) within two working days after the corresponding notification is sent, unless otherwise provided by the bank's correspondent account agreement with the National Bank.

24. A bank's non-compliance with MRR may serve as grounds for conducting a targeted inspection at that bank.

25. Systematic (more than twice) consecutive or repeated non-compliance with MRR within three months may serve as grounds for introducing a special regime at that bank.

CHAPTER 6. Special Conditions

26. The penalty for non-compliance with MRR may not be charged, unless otherwise provided by the corresponding resolution of the Board of Directors of the National Bank, in the following cases:

• during the period when a direct banking supervision regime or temporary administration regime is in effect at the bank;
• suspension of operations of the Batch Clearing System, Automated Trading System, and Real-Time Gross Settlement System due to force majeure events that led to non-compliance with MRR. (As amended by the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated January 27, 2021 No. 2021-P-07/4-4-(DKP))

27. The Board of Directors of the National Bank, in order to protect the integrity and ensure the stability of the banking system, prevent systemic risk, maintain bank liquidity, and protect depositors' interests, has the right to review MRR sizes, calculation procedures, and compliance regulations for individual commercial banks experiencing financial difficulties that may pose potential threats to depositors' funds and banking system stability.

Appendix 1 to the Regulation "On Mandatory Reserves", approved by the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated March 13, 2019 No. 2019-P-07/10-1-(DKP) (As amended by the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated October 8, 2025 No. 2025-P-07/50-7-(DKP))

Appendix 2 to the Regulation "On Mandatory Reserves", approved by the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated March 13, 2019 No. 2019-P-07/10-1-(DKP) (Ceased to be in force in accordance with the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated January 27, 2021 No. 2021-P-07/4-4-(DKP)).

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