Regulation on Minimum Requirements for Credit Risk Management in Commercial Banks and Other Financial-Credit Organizations Licensed by the National Bank of the Kyrgyz Republic

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Date of creation: 2026-04-30

Approved

by the Resolution of the Board of the National Bank of the Kyrgyz Republic of June 30, 2010 No. 52/4

REGULATION

on minimum requirements for credit risk management in commercial banks and other financial-credit organizations licensed by the National Bank of the Kyrgyz Republic

(In the edition of the Resolutions of the Board of the NB KR of November 16, 2011 No. 64/2, February 15, 2012 No. 8/2, April 25, 2012 No. 18/8, October 12, 2012 No. 40/3, October 31, 2012 No. 41/10, November 16, 2012 No. 43/1, December 27, 2012 No. 51/3, October 23, 2013 No. 39/5, November 27, 2013 No. 45/16, April 15, 2015 No. 22/6, April 15, 2015 No. 22/7, June 10, 2015 No. 31/2, September 16, 2015 No. 53/11, February 10, 2016 No. 7/3, August 24, 2016 No. 35/4, September 28, 2016 No. 40/6, February 22, 2017 No. 6/4, May 17, 2017 No. 19/11, December 26, 2018 No. 2018-P-12/58-10, April 24, 2019 No. 2019-P-12/22-4, June 19, 2019 No. 2019-P-12/32-3, February 26, 2020 No. 2020-P-12/8-8, March 24, 2020 No. 2020-P-12/15-6, March 25, 2020 No. 2020-P-12/16-3, November 25, 2020 No. 2020-P-12/67-2, December 23, 2020 No. 2020-P-12/73-11, December 28, 2020 No. 2020-P-12/75-3, March 31, 2021 No. 2021-P-12/14-5, September 15, 2021 No. 2021-P-12/51-1, December 21, 2022 No. 2022-P-12/81-8, December 28, 2022 No. 2022-P-12/83-7, April 5, 2023 No. 2023-P-12/22-3, August 30, 2023 No. 2023-P-12/55-1, December 8, 2023 No. 2023-P-12/76-1, December 20, 2023 No. 2023-P-12/80-4, January 17, 2024 No. 2024-P-12/1-3, July 5, 2024 No. 2024-P-12/28-2, August 14, 2024 No. 2024-P-12/36-1, September 25, 2024 No. 2024-P-12/46-3, October 31, 2024 No. 2024-P-12/58-2-(NPA), November 27, 2024 No. 2024-P-12/63-1-(NPA), March 12, 2025 No. 2025-P-12/10-2-(NPA), June 18, 2025 No. 2025-P-12/28-1-(NPA), October 23, 2025 No. 2025-P-12/55-3-(NPA), October 23, 2025 No. 2025-P-12/55-4-(NPA), November 12, 2025 No. 2025-P-12/60-4-(NPA), March 4, 2026 No. 2026-P-12/15-3-(NPA)), April 23, 2026 No. 2026-P-12/25-2-(NPA)

1. General Provisions

2. This Regulation applies to all commercial banks, the specialized financial-credit organization JSC "Financial Company of Credit Unions," and microfinance companies attracting term deposits (hereinafter referred to as "banks").

(In the edition of the Resolution of the Board of the NB KR of January 17, 2024 No. 2024-P-12/1-3)

2. The purpose of this Regulation is to define the minimum requirements for forming an adequate credit risk management system in banks.

2-1. This Regulation applies to other assets carrying credit risk (including correspondent accounts, securities, interbank placements, etc.).

(In the edition of the Resolution of the Board of the NB KR of December 26, 2018 No. 2018-P-12/58-10)

3. Credit risk is the risk of clients failing to fulfill their obligations in accordance with the terms and conditions of the contract.

Credit risk is present in all types of bank activities where a positive result depends on the borrower or client fulfilling their obligations to the bank as provided for in agreements and/or contracts.

The goal of credit risk management is to determine the degree of the bank's exposure to credit risk, identify the causes of its occurrence, and determine internal and external trends of risk increase, on the basis of which credit risk can be forecasted, and to take necessary measures to minimize it to an acceptable level.

3-1. Refinancing is the conclusion of a corresponding new contract for the full or partial repayment of an existing asset.

(In the edition of the Resolution of the Board of the NB KR of February 22, 2017 No. 6/4)

3-2. Blank loans are loans that are not secured by real estate, movable property, guarantees, suretyship, property rights, right of claim, and other instruments provided for by the legislation on pledge and regulatory legal acts of the National Bank as collateral for loans, except for overdrafts on payment cards within salary projects and overdrafts on payment cards issued to pensioners.

In this regard, the borrower's property rights, as well as the bank's right of claim to future inflows of funds, goods, inventory, accounts receivable, or other future assets of the borrower, excluding rights of a personal nature, including the right to receive wages, pensions, or the right to receive personal services, are recognized as collateral for loans provided that such rights are confirmed by existing contracts or other documents. In the absence of confirmation, such loans are considered blank loans.

Blank loans are issued exclusively to a creditworthy borrower based on an assessment of the level of their income/analysis of solvency in accordance with the regulatory legal acts of the National Bank.

Note: Changes introduced by the Resolution of the Board of the National Bank No. 2026-P-12/15-3-(NPA) of March 4, 2026, apply to loans issued after the date of entry into force of the specified resolution.

(In the edition of the Resolution of the Board of the NB KR of March 4, 2026 No. 2026-P-12/15-3-(NPA))

3-3. Cooling-off period is the period of time after signing a loan agreement, during which the bank does not transfer funds to the borrower. During this period, the borrower has the right to refuse to receive the loan.

(In the edition of the Resolution of the Board of the NB KR of November 27, 2024 No. 2024-P-12/63-1-(NPA))

3-4. Women's entrepreneurship is entrepreneurial activity in accordance with the legislation of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NB KR of June 18, 2025 No. 2025-P-12/28-1-(NPA))

3-5. Self-prohibition on concluding a credit transaction (hereinafter - self-prohibition) is an independent expression of will of a natural person to establish a prohibition on concluding a loan agreement or another agreement providing for the provision of funds and/or other property on loan (hereinafter - loan agreement) by a financial-credit organization in accordance with the requirements of the Law of the Kyrgyz Republic "On the Exchange of Credit Information".

Establishment of self-prohibition, as well as removal of self-prohibition, is carried out by a natural person free of charge, independently, via the state portal of electronic services of the Kyrgyz Republic or by another method determined by the National Bank. The established self-prohibition does not have retroactive effect with respect to loan agreements concluded with credit organizations before the establishment of this self-prohibition. Information about the self-prohibition on concluding loan agreements is sent to credit bureaus at the choice of the natural person who established the self-prohibition. Banks ensure inter-system integration with existing credit bureaus for the purpose of obtaining information about the self-prohibition (removal of prohibition) on concluding loan agreements.

The procedure for determining the terms of the start, action, and end of the action of self-prohibition, the form of establishment and requirements for self-prohibition (removal of prohibition) are regulated by the Rules for regulating the activities of credit bureaus in the territory of the Kyrgyz Republic, approved by the Resolution of the Board of the National Bank of September 28, 2016 No. 40/5.

(In the edition of the Resolution of the Board of the NB KR of October 23, 2025 No. 2025-P-12/55-3-(NPA))

3-6. Total cost of a consumer loan – the aggregate size of all expenses of the borrower under the contract related to obtaining and servicing a consumer loan, including interest (markup), commissions, and other mandatory payments, as well as the increase in the cost of goods (works, services) resulting from the provision of a consumer loan.

3-7. Consumer loan – a loan provided by a bank on terms of term, repayment, and cost, including for the purpose of paying for goods, works, or services with subsequent payment by the borrower in installments (deferred payment) within the framework of a consumer loan agreement. A consumer loan is provided to natural persons for personal, family, or household purposes not related to entrepreneurial activity and profit generation. For the purposes of this Regulation, loans and installments related to the acquisition, construction, or completion of residential real estate secured by real estate are not considered consumer loans. Consumer loans may be provided without accrual of interest (markup) by agreement of the parties.

(In the edition of the Resolution of the Board of the NB KR of April 23, 2026 No. 2026-P-12/25-2-(NPA))

4. For the purposes of this Regulation, loans are understood as assets and off-balance sheet obligations, including factoring, leasing, and other assets carrying credit risk. Cross-border loans are loans issued to residents/non-residents for financing activities exclusively outside the Kyrgyz Republic, while the concept of resident/non-resident corresponds to the concept defined in the legislation of the Kyrgyz Republic.

Contract financing represents a credit product in the form of short-term financing (up to one year) of working capital for the fulfillment of the client's obligations under a contract with counterparties.

Financing against warehouse receipts – loans issued to holders of double warehouse receipts and/or their separate parts (warehouse receipt or pledge certificate (warrant)), of the established legislative sample (security). The term of the issued loan must not exceed the storage period of the product at the commodity warehouse from which the double warehouse receipt was issued (issued).

(In the edition of the Resolutions of the Board of the NB KR of October 12, 2012 No. 40/3, June 10, 2015 No. 31/2, December 26, 2018 No. 2018-P-12/58-10, March 25, 2020 No. 2020-P-12/16-3)

5. The provisions of this regulatory act, as well as other regulatory acts of the National Bank of the Kyrgyz Republic (hereinafter referred to in the text as the National Bank), must be fully used in the internal documents of the bank regulating its credit policy.

6. Credit Policy and Credit Strategy of the Bank

(Name of the section in the edition of the Resolution of the Board of the NB KR of December 26, 2018 No. 2018-P-12/58-10)

6. Credit operations of the bank are carried out in accordance with its internal credit policy and credit strategy, approved by the Board of Directors of the bank.

The credit strategy may be included in the Business Plan of the bank as a separate/additional section.

(In the edition of the Resolution of the Board of the NB KR of December 26, 2018 No. 2018-P-12/58-10)

6-1. The credit strategy must at least take into account and include the following:

• target lending markets and their general characteristics that the bank plans to achieve (including the level of diversification, planned indicators in the assessment of the quality of the credit portfolio, etc.);
• main sources of financing for lending (the bank must indicate the sources of financing for lending, from which funds it is planned to lend, to increase the credit portfolio);
• requirement to conduct an analysis of indirect currency risk;
• ratio of the share of loans to the bank's assets;
• market conditions and the financial condition of the bank, as well as its risk appetite;
• expected rate of return and the size of the bank's capital;
• possible costs associated with the return of assets exposed to credit risk;
• short-term/medium-term/long-term plans of the bank;
• requirement to conduct an analysis of the credit portfolio, which will be carried out based on the bank's current credit portfolio. In addition to this, the bank must have a methodology for conducting such an analysis that will allow assessing credit risk and indirect currency risk;
• current adequate economic indicators of the bank;
• organizational structure of the bank, technical capabilities and potential (qualifications, staff size) of the personnel and management of the bank responsible for the credit activities of the bank. The relevant personnel must be informed about the credit strategy, and ensure the clarity of the bank's credit strategy.

(In the edition of the Resolution of the Board of the NB KR of December 26, 2018 No. 2018-P-12/58-10)

6-2. The Board of Directors periodically, but no less than once a year, reviews the financial and economic indicators affecting or provided for, embedded in the credit strategy, and if necessary, makes the necessary changes.

(In the edition of the Resolution of the Board of the NB KR of December 26, 2018 No. 2018-P-12/58-10)

6-3. The Board of Directors of the bank must ensure that the policy on appointments and remuneration in the bank does not contradict the credit risk management strategy.

(In the edition of the Resolution of the Board of the NB KR of December 26, 2018 No. 2018-P-12/58-10)

7. Credit policy defines the strategy, criteria, parameters, and procedures that bank employees must follow in activities related to the provision, documentation of loans, monitoring, and risk management.

The bank's credit policy must be based on the principles of responsible lending: honesty, transparency, reliability, partnership with borrowers, taking into account their economic interests and financial capabilities.

(In the edition of the Resolution of the Board of the NB KR of May 17, 2017 No. 19/11)

8. The credit policy must reflect all main provisions regarding the issuance of loans:

8.1. General provisions, including:

• composition of potential borrowers;
• types of loans depending on the purposes of lending and other conditions, including loans aimed at the development of women's entrepreneurship;
• quantitative lending limits;
• loan terms;
• criteria for assessing the creditworthiness of borrowers, as well as the procedure for calculating the debt burden indicator for consumer loans in accordance with the requirements of this Regulation;
• interest rates, including taxes established by the tax legislation of the Kyrgyz Republic, and methods for setting interest rates;
• requirements for borrower financial information;
• geographical restrictions;
• currency of issuance;
• loan concentration (by groups of borrowers, geographical feature, by industry, currency, and other factors);
• restrictions on loans issued to persons associated with the bank and affiliated persons;
• criteria for assessing the value and acceptability of collateral, including regarding risks associated with the fact that the subject of collateral is the borrower's/pledgor's only housing at the time of loan documentation;
• control over compliance with the procedure for preparing loan issuance;
• requirements for the bank to issue guarantee letters (Appendix 2).

Note: except for microfinance companies attracting term deposits;

• ratio of the credit portfolio to assets;
• specific weight of each type of loan in the credit portfolio;
• prohibition on adding accrued interest to the principal amount of the loan in the same bank for subsequent accrual of interest on the total amount of principal debt and added accrued interest (capitalization of interest);
• and others.

(In the edition of the Resolutions of the Board of the NB KR of November 16, 2011 No. 64/2, May 17, 2017 No. 19/11, December 28, 2020 No. 2020-P-12/75-3, April 5, 2023 No. 2023-P-12/22-3, June 18, 2025 No. 2025-P-12/28-1-(NPA), April 23, 2026 No. 2026-P-12/25-2-(NPA))

8.2. Procedure for loan documentation, including:

• forms of documents;
• procedure for issuing loans;
• procedure for loan approval;
• requirements for financial analysis;
• requirements for collateral and documentation (types of collateral, loan-to-value ratio, assessment of market value and its location);
• control over correct documentation of loans.

8.3. Requirements for loan management, including:

• procedure for managing the credit portfolio;
• maintenance of an adequate borrower credit file;
• control over the execution of loan agreements;
• periodicity of collateral monitoring;
• conditions for restructuring overdue loans;
• classification and formation of a reserve for covering potential losses and losses (RPPU);
• process of independent assessment of the credit portfolio;
• requirements for information systems (reporting);
• control over loan management;
• conducting stress testing to assess potential losses associated with credit risk (Appendix 3);
• periodicity of loan/borrower financial condition monitoring.

(In the edition of the Resolution of the Board of the NB KR of April 5, 2023 No. 2023-P-12/22-3)

8.4. Separation of powers for issuing loans with indication of the maximum amount and type of loan. The right to issue loans and accept off-balance sheet obligations of the bank must be divided among several levels of officials who are responsible in accordance with the legislation of the Kyrgyz Republic for violations committed during lending.

8.5. Obligations for the transfer of rights and provision of information between structural units participating in the lending process.

8.6. Procedure for assessing risks for new banking products. Risks for all new products must be identified, assessed, and under control before the bank enters the market for such products.

8.7. Procedure for identifying, analyzing, and resolving situations related to "problem" loans.

8.8. Principles of responsible lending, containing requirements for the development and implementation of an assessment and reporting system aimed at preventing over-indebtedness (when a borrower has parallel obligations, including in more than one financial-credit organization, as a result of which the borrower's debt burden may exceed their ability to service obligations), including the application of the debt burden indicator for consumer loans in accordance with the requirements of this Regulation.

(In the edition of the Resolutions of the Board of the NB KR of May 17, 2017 No. 19/11, April 23, 2026 No. 2026-P-12/25-2-(NPA))

9. Within the regulatory requirements established by the legislation of the Kyrgyz Republic and regulatory legal acts of the National Bank, the bank independently determines the circle of future borrowers, types of loans, forms the credit portfolio, and sets interest rates, including taxes established by the tax legislation of the Kyrgyz Republic.

The bank is obliged to ensure compliance with the requirements of the legislation of the Kyrgyz Republic on the maximum permissible size of the interest rate (markup) on loans, including the requirements of the Law of the Kyrgyz Republic "On Restriction of Usurious Activities in the Kyrgyz Republic" and the Law of the Kyrgyz Republic "On Consumer Credit", as well as other requirements of the legislation of the Kyrgyz Republic regulating the procedure for providing consumer loans.

In this regard, the internal documents of the bank must contain procedures for assessing the activities of a borrower - a legal entity regarding the conduct of actual activity, namely the production and provision on the market of certain goods/services.

(In the edition of the Resolutions of the Board of the NB KR of April 24, 2019 No. 2019-P-12/22-4, September 15, 2021 No. 2021-P-12/51-1, April 5, 2023 No. 2023-P-12/22-3, July 5, 2024 No. 2024-P-12/28-2, April 23, 2026 No. 2026-P-12/25-2-(NPA))

10. The presence of a clear and detailed credit policy of the bank contributes to the correct work with loans and ensures the profitability of the bank's operations.

11. The Board of the Bank is responsible for the execution of the credit policy and credit strategy of the bank, for which it is obliged to ensure the development and execution in the bank's activities of a policy and procedure for identifying, measuring, monitoring, and controlling credit risk, including credit risk arising from currency risk.

(In the edition of the Resolution of the Board of the NB KR of April 5, 2023 No. 2023-P-12/22-3)

12. The Board of Directors of the bank is obliged to review the credit policy for its adequacy, limit systems, instruments and procedures for credit risk management, the internal audit system for credit risk management. The Board of Directors of the bank is also obliged, if necessary, to review the credit policy, as changes occur in the bank's risk profile, regulatory legal acts of the National Bank, organizational structure and personnel of the bank, as well as the development and improvement of the bank's operations that have affected the lending process, and changes occurring in the economy of the republic and countries where the bank and its clients have partners, affecting the lending process, but no less than once a year.

(Paragraph lost force in accordance with the Resolution of the Board of the NB KR of April 5, 2023 No. 2023-P-12/22-3)

The bank must ensure a comprehensive system of constant identification, assessment, monitoring, and control of credit risk, as well as ensure a reporting system for carrying out control, analysis, and monitoring of credit risk, including risk arising from currency risk.

(Paragraph lost force in accordance with the Resolution of the Board of the NB KR of April 5, 2023 No. 2023-P-12/22-3)

The right to issue loans must be divided among several levels of officials, and these persons are responsible in accordance with the legislation of the Kyrgyz Republic for violations committed by them during lending.

Issuance of loans carrying significant risk and loans to persons associated with the bank/affiliated persons of the bank must be approved by the Board of Directors of the bank. The Board of Directors of the bank is responsible for approving decisions on the issuance of loans carrying significant risk, loans to persons associated with the bank/affiliated persons of the bank, cross-border loans, including loans secured by collateral located outside the Kyrgyz Republic, which were issued in violation of the requirements of the regulatory legal acts of the National Bank and/or for which the bank incurred losses.

Approval of the Board of Directors of the bank is required in cases where collateral located outside the Kyrgyz Republic serves as collateral for a loan for more than 20% of the loan amount. In this case, the cost of collateral is understood as its liquidation value.

In addition, the credit policy must specify the powers of the Credit Committee and/or the Board regarding the write-off and restructuring of loans with indication of restrictions.

The bank's credit policy must also contain methodologies for assessing the solvency of borrowers. For these purposes, the bank may develop an internal credit rating system. The internal risk rating system must correspond to the nature, size, and complexity of the types of activities carried out by the bank.

The internal credit rating system must contain a comprehensive assessment of the borrower's financial condition, as the main indicator of their future solvency, and must reflect the disclosure of data on borrowers specified in sections 4.1 and 4.2 of this Regulation.

When providing consumer loans, the borrower solvency assessment system must include the calculation of the debt burden indicator in accordance with the requirements of this Regulation.

Credit rating is the main indicator of loan quality. A credit rating must be assigned at the initial stage of loan approval, and may also be assigned during subsequent loan monitoring, its extension, or change of loan agreement terms or loan restructuring. Developed credit ratings determining the solvency of borrowers are established in the form of alphabetical, numerical, or alphanumeric symbols that indicate risks in the issuance of loans by the bank. The bank assigns a credit rating taking into account certain characteristics related to the borrower and the loan itself.

Approaches to analyzing borrower solvency when determining the credit rating may be based on various methods:

• quantitative - using appropriate indicators that allow determining the credit rating (coefficient method, rating models, scoring models);
• forecast, which relies on statistics of past years and is aimed at modeling life activity