Policy and Basic Principles of Antimonopoly Regulation, Competition Development, and Consumer Rights Protection in the Banking Services Market of the Kyrgyz Republic

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Creation date: 2024-07-26

Approved

by the Resolution of the Board of the National Bank of the Kyrgyz Republic

of March 2, 2005 No. 4/1

POLICY AND BASIC PRINCIPLES

of antimonopoly regulation, competition development, and consumer rights protection in the banking services market of the Kyrgyz Republic, provided by commercial banks, non-bank financial and credit organizations, payment system operators and payment organizations, and other legal entities licensed and regulated by the National Bank of the Kyrgyz Republic

(In the edition of the Resolutions of the Board of the NBKR of November 16, 2012 No. 43/1, March 27, 2013 No. 9/12, February 19, 2014 No. 4/5, December 28, 2016 No. 51/3, June 15, 2017 No. 2017-P-12/25-12, December 28, 2022 No. 2022-P-12/83-8, January 17, 2024 No. 2024-P-12/1-3, July 5, 2024 No. 2024-P-12/28-2-(NPA))

1. General Provisions

1.1. (Lost force in accordance with the Resolution of the Board of the NBKR of June 15, 2017 No. 2017-P-12/25-12)

1.2. The National Bank of the Kyrgyz Republic (hereinafter - the National Bank) exercises control over the activities of commercial banks, non-bank financial and credit organizations, payment system operators and payment organizations, and other legal entities providing banking services based on a license (certificate) issued by the National Bank, to ensure their compliance with antimonopoly legislation and normative legal acts of the National Bank on competition development, pricing, and consumer rights protection (hereinafter - antimonopoly legislation) in the banking services market of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NBKR of January 17, 2024 No. 2024-P-12/1-3, July 5, 2024 No. 2024-P-12/28-2-(NPA))

1.3. This Policy defines the actions that will be applied by the National Bank in the field of antimonopoly regulation, competition development, and consumer rights protection in the banking services market of the Kyrgyz Republic, provided by commercial banks, non-bank financial and credit organizations, payment system operators and payment organizations, and other legal entities licensed and regulated by the National Bank.

(In the edition of the Resolutions of the Board of the NBKR of December 28, 2016 No. 51/3, December 28, 2022 No. 2022-P-12/83-8)

1.4. This Policy regulates relations between commercial banks, non-bank financial and credit organizations, other legal entities (hereinafter - FCOs), payment system operators and payment organizations, licensed and regulated by the National Bank, affecting competition in the banking services market of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2022 No. 2022-P-12/83-8)

2. Basic Terms and Definitions

2.1. (Lost force in accordance with the Resolution of the Board of the NBKR of December 28, 2022 No. 2022-P-12/83-8)

2.2. The following terms and definitions are used in this Policy:

anti-competitive agreements (coordinated actions) - an agreement in written form contained in a document or several documents, as well as an oral agreement, the proof of which may be an analysis of changes in the situation in the banking services market;

banking services - operations and services provided by FCOs, payment system operators and payment organizations to legal and physical persons in accordance with the legislation of the Kyrgyz Republic;

dominant position in the banking services market - an exclusive position of an FCO, payment system operator or payment organization, giving the opportunity to exert decisive influence on the general conditions for providing banking services and/or making it difficult for other FCOs, payment system operators and payment organizations of the Kyrgyz Republic to access the banking services market;

competition in the banking services market - free competition between FCOs, payment system operators and payment organizations, in which their independent actions limit the ability of each of them to unilaterally influence the general conditions for carrying out activities in the banking services market, including with respect to service segments;

monopolistic activity in the banking services market - abuse by FCOs, payment system operators and payment organizations, or a group of persons, of their dominant position, agreements or coordinated actions contradicting antimonopoly legislation, actions (inaction) of FCOs, payment system operators and payment organizations (a group of persons) aimed at preventing, limiting or eliminating competition;

unfair competition in the banking services market - actions of FCOs, payment system operators and payment organizations that contradict antimonopoly legislation and business customs, establish an unjustified advantage in providing banking services and caused or may cause losses to other FCOs, payment system operators and payment organizations - competitors in the banking services market or damage their business reputation;

improper advertising activity in the banking services market - activity of FCOs, payment system operators and payment organizations violating the general and/or special requirements of the legislation of the Kyrgyz Republic in the field of advertising, the Law of the Kyrgyz Republic "On Banks and Banking Activity" and normative legal acts of the National Bank;

banking services market - the sphere of activity of FCOs, payment system operators and payment organizations on the territory of the Kyrgyz Republic or its part, determined based on the place of provision of the banking service to consumers.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2022 No. 2022-P-12/83-8)

3. Dominant Position of FCOs, Payment System Operators, Payment Organizations

(Name of the section in the edition of the Resolution of the Board of the NBKR of March 27, 2013 No. 9/12)

3.1. Dominant position is determined for any type of banking services provided by FCOs, payment system operators and payment organizations on the territory of the Kyrgyz Republic.

(In the edition of the Resolutions of the Board of the NBKR of March 27, 2013 No. 9/12, December 28, 2016 No. 51/3)

3.2. In the event that the dominant position of an FCO, payment system operator or payment organization affects the quality of the service provided to the consumer, or may lead to the emergence of financial risk and/or a monopolistic position in the banking services market, or increases the cost of services, or establishes a restriction on free pricing, the National Bank has the right to establish corresponding restrictions in accordance with the normative legal acts of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2016 No. 51/3)

3.3. The dominant position of an FCO, payment system operator or payment organization in the banking services market is a violation of antimonopoly legislation if it was achieved by:

a) unjustified refusal to conclude a contract with consumers of banking services;

b) forcing the consumer to conclude a contract only upon inclusion in it of unfavorable, unacceptable to the consumer, or unrelated to the subject of the contract conditions;

c) establishing monopolistically high (low) prices for the services provided, which are determined in accordance with the legislation of the Kyrgyz Republic;

d) creating obstacles to access to the banking services market for other FCOs, payment system operators and payment organizations;

e) exerting a negative influence on the general conditions for providing banking services in the banking services market, as well as infringing on the rights of consumers.

(In the edition of the Resolutions of the Board of the NBKR of March 27, 2013 No. 9/12, December 28, 2016 No. 51/3, December 28, 2022 No. 2022-P-12/83-8)

4. Unfair Competition

4.1. FCOs, payment system operators and payment organizations in the course of their activities must not engage in unfair competition, which may cause losses to other FCOs, payment system operators or payment organizations - competitors in the banking services market, or damage their business reputation, or lead to a violation of consumer rights. Among such actions, in particular, are:

a) dissemination of false, inaccurate or distorted information about another FCO, payment system operators and payment organizations;

b) violation of the forms and methods of advertising activity in accordance with the legislation in the field of advertising, the Law of the Kyrgyz Republic "On Banks and Banking Activity", normative legal acts of the National Bank of the Kyrgyz Republic;

c) obtaining, using and disclosing information constituting official or commercial secret without the consent of its owner, except for cases provided for by the legislation of the Kyrgyz Republic;

d) attracting clients by misleading them by providing knowingly false, inaccurate, undisclosed or distorted information about the banking services provided, including entailing additional expenses for consumers;

e) other forms of actions contradicting the legislation of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2022 No. 2022-P-12/83-8)

5. Anti-competitive Agreements (Coordinated Actions) of FCOs, Payment System Operators or Payment Organizations Limiting Competition in the Banking Services Market

(Name of the section in the edition of the Resolution of the Board of the NBKR of March 27, 2013 No. 9/12)

5.1. Agreements and coordinated actions of FCOs, payment system operators and payment organizations must not contain conditions aimed at limiting competition in the banking services market, namely:

a) collusion between FCOs, payment system operators and payment organizations with the aim of fixing certain prices in the banking services market;

b) division of the banking services market by territorial principle, by types of banking services provided, by consumers of banking services;

c) limiting access to the banking services market for new FCOs, payment system operators and payment organizations or eliminating existing ones from it;

d) establishing unjustified barriers for the entry of other FCOs, payment system operators and payment organizations into certain payment systems.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2016 No. 51/3)

5.2. Agreements concluded with economic entities must not contain conditions that lead to an unjustified change in prices for the main types of banking services (opening an account, cash and settlement services, etc.), to price differentiation for economic entities due to geographical location or the absence on the market of other financial and credit organizations or payment system operators and payment organizations.

(In the edition of the Resolutions of the Board of the NBKR of December 28, 2016 No. 51/3, December 28, 2022 No. 2022-P-12/83-8)

5.3. When agreeing with the National Bank, the ban does not apply to agreements or coordinated actions of FCOs, payment system operators and payment organizations, the conditions of which have as their goal:

a) unification of activity standards of FCOs, payment system operators and payment organizations - participants of agreements;

b) joint purchase of technical means for carrying out the main activity;

c) use of unified software and technical means for processing information and databases.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2016 No. 51/3)

5.4. The legislation of the Kyrgyz Republic may establish other conditions of agreements or coordinated actions of FCOs, payment system operators and payment organizations that are not subject to prohibition.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2016 No. 51/3)

5.5. FCOs, payment system operators and payment organizations must send a notification to the National Bank about all concluded agreements or adopted decisions on carrying out coordinated actions, as a result of which they may occupy a dominant position in the banking services market.

In the event of non-compliance by FCOs, payment system operators and payment organizations with the restrictions on the conditions of the agreement specified in paragraph 5.1 of this Policy, the National Bank may take measures to recognize it invalid in accordance with the legislation of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2016 No. 51/3)

6. Tasks and Functions of the National Bank on Antimonopoly Regulation, Competition Development and Consumer Rights Protection in the Banking Services Market

6.1. The main tasks of the National Bank are:

6.1.1. Facilitating the development of competition in the banking services market, including facilitating the introduction of new banking services and the development of banking and innovative technologies.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2016 No. 51/3)

6.1.2. Monitoring compliance with antimonopoly legislation in the banking services market, including when concluding agreements and carrying out coordinated actions by FCOs, payment system operators and payment organizations, when creating, reorganizing (merger, accession, transformation) of FCOs, payment system operators and payment organizations and acquiring shares of FCOs, payment system operators and payment organizations.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2016 No. 51/3)

6.1.3. Carrying out measures to protect consumer rights in accordance with the legislation.

6.2. The National Bank performs the following main functions:

6.2.1. Issues normative legal acts and instructions mandatory for compliance with antimonopoly legislation with respect to FCOs, payment system operators and payment organizations in accordance with the legislation of the Kyrgyz Republic.

(In the edition of the Resolutions of the Board of the NBKR of March 27, 2013 No. 9/12, December 28, 2016 No. 51/3)

6.2.2. Provides recommendations to executive bodies, local self-government bodies on conducting measures aimed at developing competition in the banking services market.

6.2.3. Establishes facts of violation of antimonopoly legislation and other normative legal acts on competition development in the banking services market and takes appropriate measures on them.

6.2.4. Upon appeal by consumers of banking services, considers facts of violation of their rights within the powers established by the legislation of the Kyrgyz Republic.

7. Powers of the National Bank

7.1. In order to exclude monopoly in the banking services market, the National Bank has the right:

7.1.1. To establish pricing principles for FCOs, payment system operators and payment organizations in the event of their monopolistic position in accordance with the legislation of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2016 No. 51/3)

7.1.2. To provide explanations on issues of application of antimonopoly legislation in the banking services market.

7.1.3. Within the framework of state programs, to determine for FCOs, payment system operators and payment organizations the category of consumers subject to mandatory service, in order to protect the rights of users of banking services, in accordance with the legislation of the Kyrgyz Republic. Participation in state programs is determined independently by FCOs, payment system operators and payment organizations.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2016 No. 51/3)

7.1.4. To request from subsidiary FCOs a letter-guarantee from the parent FCO approving its opening.

7.1.5. (Lost force in accordance with the Resolution of the Board of the NBKR of December 28, 2022 No. 2022-P-12/83-8)

7.1.6. To make decisions:

a) on imposing a penalty in the form of a fine on FCOs, payment system operators and payment organizations and their officials in accordance with the Code of the Kyrgyz Republic on Offenses;

b) on addressing to the court with a statement on violations of antimonopoly legislation and other normative legal acts on competition development and consumer rights protection in the banking services market, including on recognizing agreements invalid in whole or in part that contradict antimonopoly legislation and other normative legal acts on competition development and consumer rights protection in the banking services market;

c) on addressing to the court for the transfer of profits obtained as a result of violation of antimonopoly legislation and other normative legal acts on competition development and consumer rights protection in the banking services market to the state budget;

d) on sending to the relevant law enforcement agencies a statement on violations of antimonopoly legislation and other normative legal acts on competition development and consumer rights protection in the banking services market, as well as materials for deciding on the initiation of a criminal case on signs of crimes related to violation of antimonopoly legislation and other normative legal acts on competition development and consumer rights protection in the banking services market.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2022 No. 2022-P-12/83-8)

7.1.7. To carry out other actions within the powers provided for by the legislation of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2016 No. 51/3)

7.2. The National Bank applies measures of influence with respect to FCOs, payment system operators and payment organizations and their officials for violation of antimonopoly legislation in accordance with the normative legal acts of the National Bank and the legislation of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2022 No. 2022-P-12/83-8)

8. Mechanism of Antimonopoly Regulation by the National Bank

8.1. In the process of supervisory activity on antimonopoly regulation, competition development and consumer rights protection in the banking services market, the National Bank uses methods combining the licensing regime, conducting external supervision and on-site inspections.

(In the edition of the Resolution of the Board of the NBKR of March 27, 2013 No. 9/12)

8.2. The dominant position of FCOs, payment system operators and payment organizations in the banking services market is determined in accordance with the Regulation "On Determining the Dominant Position in the Banking Services Market", approved by the Resolution of the Board of the National Bank of March 28, 2007 No. 16/5.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2022 No. 2022-P-12/83-8)

8.3. When conducting on-site inspections by the National Bank, an analysis of the pricing of banking services, the procedure for developing and approving tariffs for compliance with the internal pricing policy of FCOs, payment system operators and payment organizations is carried out, and the corresponding information is reflected in the general report on the results of the inspection of FCOs, payment system operators and payment organizations.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2016 No. 51/3)

8.4. The National Bank considers cases of non-compliance by FCOs, payment system operators and payment organizations with antimonopoly legislation based on information contained in both inspection reports and discovered in the process of carrying out external supervision and licensing in terms of:

• actions in making transactions contradicting antimonopoly legislation;

• violation of the pricing procedure, including establishing, maintaining monopolistically high (low) prices;

• establishing collusion for the purpose of limiting competition, the proof of which may be an analysis of changes in the situation in the banking services market;

• improper advertising activity in the banking services market;

• written statements by consumers of banking services with attached documents confirming the existence of facts of violation.

(In the edition of the Resolution of the Board of the NBKR of December 28, 2022 No. 2022-P-12/83-8)

8.5. Upon detection of violations by FCOs, payment system operators or payment organizations of antimonopoly legislation, as well as upon consideration of received statements, the National Bank may make a decision to conduct an unscheduled (complex or targeted) inspection in accordance with the established procedure and/or to apply a measure of influence in accordance with the legislation of the Kyrgyz Republic.

(In the edition of the Resolutions of the Board of the NBKR of March 27, 2013 No. 9/12, December 28, 2016 No. 51/3)

9. Final Provisions

9.1. On issues of antimonopoly regulation in the field of banking services, the National Bank may exchange information within the limits defined by the legislation on banking secrecy with the authorized antimonopoly body of the Kyrgyz Republic.

9.2. For the effective conduct of payments and settlements, the National Bank exercises supervision over the payment system, and also ensures FCOs fair and equal access to clearing and settlement services.

Contacts

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