Regulation on the Procedure for Syndicated Lending in the Kyrgyz Republic

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Creation date: 2025-12-31

Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic of May 18, 2022 No. 2022-P-12/31-1-(BS)

REGULATION

on the procedure for carrying out syndicated lending in the Kyrgyz Republic

(As amended by the Resolutions of the Board of the National Bank of the Kyrgyz Republic of August 30, 2023 No. 2023-P-12/55-1, December 8, 2023 No. 2023-P-12/76-1, July 5, 2024 No. 2024-P-12/28-2, October 23, 2025 No. 2025-P-12/55-3-(NPA))

1. General Provisions

2. This Regulation applies to commercial banks and microfinance companies attracting time deposits (deposits) that participate in syndicated lending (hereinafter - banks) and regulates relations arising from their joint lending to a borrower.

Furthermore, this Regulation contains norms according to which funds of legal entities (residents, non-residents), including international organizations, are issued in the form of syndicated loans on behalf of banks.

(As amended by the Resolution of the Board of the National Bank of the Kyrgyz Republic of July 5, 2024 No. 2024-P-12/28-2)

2. The purpose of this Regulation is to define the procedure for carrying out syndicated lending in the Kyrgyz Republic.

3. For the purposes of this Regulation, the following definitions are used:

organizing bank - a bank that is necessarily a lender and acts as the initiator in searching for partners to participate in syndicated lending based on the borrower's loan application, as well as acting as responsible for organizing the work on providing the syndicated loan (preparation of drafts and conclusion of the syndicated loan agreement, loan agreement, pledge agreement);

borrower - a legal entity (resident, non-resident). In the case where the borrower is a non-resident, the utilization of the syndicated loan must be carried out within the territory of the Kyrgyz Republic;

large project - a project aimed at the socio-economic development of the Kyrgyz Republic, including the development of industrial production and the trade sector, where the amount of the syndicated loan exceeds 15 percent of the size of the net aggregate capital of the organizing bank;

syndicated lending - joint lending to a borrower by a bank (or several banks) for large projects in its own name and by legal entities (residents, non-residents), including international organizations, whose funds are issued in the form of a syndicated loan on behalf of the bank, on contractual terms in accordance with the requirements of the National Bank, except in cases where funds of international organizations are issued to banks within the framework of special financing programs for banks by international organizations;

syndicated loan agreement - an agreement concluded between all participants in the process of providing the syndicated loan;

participants - commercial banks, including the organizing bank, microfinance companies attracting time deposits (deposits), the State Development Bank of the Kyrgyz Republic, participating in the process of providing the syndicated loan, as well as legal entities (residents and non-residents), including international organizations, whose funds are issued in the form of syndicated loans on behalf of the bank, except in cases where funds of international organizations are issued to banks within the framework of special financing programs for banks by international organizations.

4. A syndicated loan is provided for the purpose of financing large projects, including large investment projects, with the exception of refinancing. At the same time, a syndicated loan cannot be used directly or indirectly to purchase shares (stakes) of participants.

Participants have the right to assign claims on their share of the loan to other participants in accordance with the terms of the syndicated loan agreement.

5. Syndicated lending is carried out on the conditions of repayability, costliness, security, timeliness, and targeted use, the issuance of which is carried out based on a loan agreement concluded between the borrower and the bank(s) (hereinafter - loan agreement). The loan agreement is concluded after the signing of the syndicated loan agreement.

6. The term of the syndicated loan, the size of its interest rate, and the size of penalties (fines, penalties) are determined in accordance with the terms of the syndicated loan agreement, the loan agreement, as well as the requirements of the legislation of the Kyrgyz Republic.

7. The organizing bank, after concluding the syndicated loan agreement, in the established manner, provides to the National Bank within 5 (five) calendar days a notification about the signing of the syndicated loan agreement with a copy of the syndicated loan agreement signed by the participants.

8. Syndicated lending is carried out in accordance with the internal credit policy and credit strategy of the bank, approved by their board of directors, which are an integral part of the general credit strategy of the bank.

9. The bank must develop internal procedures regulating the order and conditions for issuing syndicated loans, in the development of which the bank must be guided by the requirements established in the regulatory legal acts of the National Bank.

10. In syndicated lending, banks must comply with economic standards and requirements established by the National Bank, including when issuing a syndicated loan within the value of established standards.

Syndicated loans cannot be issued to persons affiliated with banks.

11. The syndicated loan agreement must contain at least the following:

1. description of the structure and targeted purpose of the syndicated loan;

2. definition and composition of participants, including the organizing bank, who signed this agreement;

3. the total amount of the syndicated loan issued, including the share of each participant;

4. the term and conditions for providing the syndicated loan, including when issuing the loan in tranches;

5. the interest rate of the syndicated loan;

6. conditions for distribution among participants of interest payments, commissions, and rewards;

7. conditions for interaction of participants in cases when:

a) a participant is a legal entity (resident or non-resident), including an international organization. Participants in syndicated lending who are not banks transfer funds to the bank for the purpose of providing them to the borrower within the framework of a syndicated loan on behalf of the bank on contractual terms in accordance with the requirements of the legislation of the Kyrgyz Republic;

b) the syndicated loan is issued by participant-banks, then they have the right:

• to conclude a multilateral loan agreement and a pledge agreement with the borrower; or

• to transfer their rights to the organizing bank:

(1) to conclude a loan agreement and a pledge agreement;

(2) to conduct an analysis of the borrower's solvency, monitoring of the loan (including monitoring of targeted use, monitoring of the condition of collateral) and further administration of this loan;

8. the requirement of each participant to collateral;

9. conditions for conducting an assessment of the value of collateral by independent qualified appraisers, having qualification certificates, in accordance with the requirements of legislation, or by an appraiser of one of the participant banks, having a qualification certificate by agreement of the participants;

10. the procedure for repayment of the syndicated loan, including the order of satisfaction of the claims of each participant in case of insufficient funds of the borrower and violation of the terms of payment of loan installments according to the schedule (for example, conditions of interaction of participants when repaying the borrower's debt on this loan, including in case of insufficient funds, making loan payments with violation of terms, etc.), commissions and other payments, penalties, fines;

11. conditions for interaction of participants regarding the order of acceptance, distribution (realization) of collateral;

12. conditions for interaction of participants, including legal entities (residents, non-residents), international organizations for obtaining the necessary approvals by the parties;

13. conditions for interaction of participants in conducting certain events (including monitoring of the syndicated loan);

14. liability of participants, including the organizing bank, for organizing the work on providing the syndicated loan in case of non-fulfillment of the requirements and conditions provided for by this agreement;

15. conditions for exchanging information, including containing bank secrecy, rights and obligations of participants, methods of resolving conflict situations;

16. conditions for the occurrence of force majeure;

17. a condition providing for succession in the event of the departure of one or more participants, in accordance with the legislation of the Kyrgyz Republic;

18. other conditions.

The syndicated loan agreement concluded by the participants, as well as other agreements concluded, for example, by the bank and an international organization, must be drawn up in the state language and, if necessary, in the official language (if necessary, the text of the agreement may be translated into another language).

(As amended by the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 8, 2023 No. 2023-P-12/76-1)

2. Organization of Syndicated Lending

3. The organization of syndicated lending begins from the moment the organizing bank receives the borrower's loan application for organizing syndicated lending on the terms provided for by this Regulation.

4. The bank must establish a procedure for considering applications for syndicated loans, which is an integral part of the organization of syndicated lending, and minimum requirements imposed on the borrower must also be established.

5. The organizing bank, in order to conduct an analysis of the borrower's solvency and determine the feasibility of issuing a syndicated loan, must request from him the following documents on paper or in the form of an electronic document:

• completed loan application: type of activity, size of working capital, structure of income (revenue) by currency (for loans in foreign currency), loan repayment plan and main business partners if any, etc.;

• copies of constituent documents, notarized or stamped by the legal entity and signed by the head in the case when, in accordance with legislation, notarization of copies is impossible;

• business plan with mandatory indication of the forecast of cash inflows (cash flow), which must cover the entire term of the syndicated loan;

• financial reporting of the borrower for the last reporting year with confirmation by an external auditor (if the borrower is required to undergo annual audit, in accordance with the legislation of the Kyrgyz Republic) and interim financial reporting (if the borrower is required to provide according to the legislation of the Kyrgyz Republic);

• management reporting;

• guarantees (sureties) with indication of the guarantor (surety), amount of guarantee (surety), etc. (if participants require the provision of a guarantee (surety), as well as the financial reporting of the guarantor (if the guarantor is a legal entity));

• certified copy of the certificate of state registration of a legal entity;

• information about the borrower stored in the electronic database of legal entities, branches (representative offices);

• list of pledged property, the types of which must also be indicated in the pledge agreement when it is further drawn up, as well as documents confirming ownership rights (if collateral is movable/immovable property), rights of use and other documents in accordance with the internal documents of participants;

• other documents necessary for the bank, including for assessing the borrower's solvency (contracts, agreements, recommendation letters, extracts from state registers, information from credit bureaus, etc.), which may be provided in the form of an electronic document or on paper.

(As amended by the Resolutions of the Board of the National Bank of the Kyrgyz Republic of August 30, 2023 No. 2023-P-12/55-1, October 23, 2025 No. 2025-P-12/55-3-(NPA))

15. The organizing bank negotiates with interested parties and sends them an invitation to participate in the issuance of a syndicated loan. The procedure for disclosing confidential information (including information that may constitute a commercial or other legally protected secret) must be provided for in the internal documents of the bank and comply with the established requirements of the legislation of the Kyrgyz Republic.

Each participant and borrower has the right to independently invite interested parties to participate in syndicated lending.

16. Each bank or organizing bank (if participants transferred their rights to the organizing bank) conducts an analysis of the client's solvency and other activities (analysis of the business plan and risk of non-repayment of the loan) to determine the feasibility of issuing a syndicated loan to the client. At the same time, each bank has the right to establish additional requirements for studying the borrower's solvency.

17. Each bank, in order to make a decision on issuing or refusing to issue a syndicated loan, prepares a conclusion in which the feasibility of providing or the reasons for refusing the borrower the issuance of a syndicated loan are indicated. At the same time, the bank must notify the organizing bank of the decision made in accordance with the procedure established by the bank.

18. Procedure for Documentation, Issuance, and Repayment of Syndicated Loan

19. For participation in syndicated lending, participants draw up and sign a syndicated loan agreement.

20. The loan agreement and the pledge agreement may be drawn up in the state language and, if necessary, in the official language. At the same time, the text of these agreements must be clear and accessible for perception and understanding by the borrower.

The credit file is kept and stored at the organizing bank. Copies of the credit file may be stored at each participant.

(As amended by the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 8, 2023 No. 2023-P-12/76-1)

20. The loan agreement must contain at least the following:

1. names of the parties;

2. the total amount of the syndicated loan issued, including the share of each participant;

3. the term of the syndicated loan;

4. the targeted purpose of the syndicated loan;

5. the interest rate of the syndicated loan, the size of commission payments and the size of penalties (fines, penalties), according to the terms of the syndicated loan agreement;

6. description of commissions and rewards in accordance with the established requirements of the regulatory legal acts of the National Bank;

7. the procedure for repayment of the syndicated loan, according to the terms of the syndicated loan agreement, as well as the procedure for repayment of commissions and other payments, penalties, fines in accordance with the legislation of the Kyrgyz Republic;

8. conditions for collateral security;

9. conditions for early repayment of the syndicated loan within the established requirements of the legislation of the Kyrgyz Republic, including in case of non-targeted use of the syndicated loan by the borrower;

10. rights/obligations and liability of the parties in case of non-fulfillment of the requirements and conditions provided for by the loan agreement;

11. procedure for making changes to the loan agreement, including conditions in case of change in the composition of parties (guarantors, pledgors, creditors) and their interaction;

12. conditions for the occurrence of force majeure;

13. other conditions.

The loan agreement concluded between the bank(s) and the borrower, as well as other agreements concluded, for example, between the bank(s) and an international organization, must be concluded in the state language and, if necessary, in the official language (if necessary, the text of the agreement may be translated into another language).

(As amended by the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 8, 2023 No. 2023-P-12/76-1)

21. In addition to the loan agreement, a pledge agreement is concluded, which must at least contain the following:

1. general description of the collateral(s), sufficient for its identification, with indication of the details of the title document for real estate or property subject to registration, as well as its (their) cost (taking into account its collateral coefficient);

2. the size and term of fulfillment of the obligation;

3. indication of which party has the pledged property;

4. conditions and procedure for conducting an assessment of the value of collateral according to the terms of the syndicated loan agreement and the requirements of legislation;

5. conditions and procedure for the transfer of the subject of collateral to the ownership of participants in case of non-repayment of the loan by the borrower;

6. obligations of the parties with respect to the collateral in accordance with the legislation of the Kyrgyz Republic;

7. other conditions.

22. In case of insufficiency of one type of collateral to cover the amount of the loan required by the participants, the borrower may provide for covering the missing part of the loan amount additionally one or several types of collateral by combining them.

23. The share equal to the amount of the syndicated loan provided to the borrower is reflected on the balance sheet of each participant in accordance with the terms of the syndicated loan agreement.

24. The borrower is responsible for untimely repayment of the syndicated loan and interest on it on the terms agreed upon in the loan agreement.

25. Security of Repayment and Procedure for Monitoring the Syndicated Loan

26. Repayment of the syndicated loan to participants is carried out in the order and terms established in the syndicated loan agreement, the loan agreement, the pledge agreement, and the legislation of the Kyrgyz Republic.

27. The amount of the payment made, insufficient to fully execute the monetary obligation, is repaid in the order of priority established in accordance with civil legislation and the terms of the syndicated loan agreement and loan agreement.

28. Each bank or organizing bank (if participants transferred their rights to the organizing bank) to ensure timely repayment of the loan, regular payment of interest, and early identification of problems throughout the entire period of loan use, in accordance with the established requirements in the regulatory legal acts of the National Bank, must conduct monitoring (including on-site):

• solvency of the borrower, including analysis of its economic and financial activities and fulfillment of its obligations in accordance with concluded contracts (for example, in accordance with production volume, non-productive expenses and losses, distribution costs, profit, dynamics of the availability of own working capital, condition of inventories of goods and materials, turnover of working capital, and movement on bank accounts, generalizing these indicators in the borrower's credit file);

• targeted use of the syndicated loan;

• condition of the collateral(s) for the syndicated loan;

• financial condition of the guarantor/surety.

The frequency of monitoring is also established in accordance with the requirements of the National Bank.

In accordance with the conditions established in the syndicated loan agreement, on-site monitoring is carried out on agreed days in the presence of each bank, if the syndicated loan agreement does not provide for another procedure for carrying out monitoring. At the same time, the date of monitoring must be agreed upon with the borrower and other banks (the condition of this agreement must be reflected in the syndicated loan agreement).

28. The bank has the right to demand early repayment from the borrower upon detection of cases of non-targeted use, according to the terms of the loan agreement and the requirements of the legislation of the Kyrgyz Republic.

29. In the event of recognition of the syndicated loan as problematic, it is necessary to be guided by the conditions established in the syndicated loan agreement, which must be aimed at returning the syndicated loan and must not negatively affect the process of repayment of the problematic loan.

30. For timely coverage of potential losses and damages, as well as for the purpose of determining the real financial condition and efficiency of work, banks are obliged to constantly conduct an assessment of the quality of their assets and create reserves to cover potential losses and damages in accordance with the requirements of the regulatory legal acts of the National Bank on classification.

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