Regulation on Requirements for Financial Reporting of Commercial Banks Conducting Operations in Accordance with Islamic Principles of Banking and Finance

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Date of creation: 2025-09-18

Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/13

REGULATION

on requirements for the formation of financial reporting of commercial banks conducting operations in accordance with Islamic principles of banking and finance

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of February 26, 2020 No. 2020-P-12/8-7-(NPA), November 16, 2022 No. 2022-P-12/70-1-(NPA), December 20, 2023 No. 2023-P-12/80-3-(NPA), September 12, 2025 No. 2025-P-12/46-1-(NPA))

Chapter 1. General Provisions

This Regulation defines the composition, content, and main rules for the preparation and submission of financial reporting by commercial banks conducting operations in accordance with Islamic principles of banking and finance (hereinafter referred to as the Islamic bank), banks having an "Islamic window", and the parent company (head company) of a banking group to the National Bank of the Kyrgyz Republic (hereinafter - the National Bank).

Financial reporting of a banking group is presented on a consolidated basis by the parent company of the banking group (hereinafter - consolidated financial reporting of a banking group).

The requirements of this Regulation apply to parent companies (head companies) - residents of the Kyrgyz Republic.

Financial reporting of an Islamic bank is a structured representation of the financial position and results of operations for the reporting period.

Financial reporting of an Islamic bank must objectively represent its financial position and comply with the standards of the Accounting and Auditing Organization for Islamic Financial Institutions (hereinafter - AAOIFI), and in the absence of certain standards, the bank may use IFRS standards provided that they do not contradict the Shariah standards approved by AAOIFI.

Financial reporting of a bank having an "Islamic window" is presented in accordance with Chapter 11 of this Regulation.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of February 26, 2020 No. 2020-P-12/8-7-(NPA))

The purpose of financial reporting of an Islamic bank is:

to provide reliable information through periodic reports on the financial position, financial results of operations, and cash flows of the Islamic bank, useful for users in making economic decisions;

to present information on assets, liabilities, funds in investment accounts, capital, income and expenses (including profits and losses), and cash flows;

to provide information on the Islamic bank's compliance with Shariah principles, as well as on measures undertaken by the Islamic bank to comply with these principles, including information regarding the use (disposal) of profits and losses obtained from operations that do not comply with Shariah standards, if any.

The accounting policy of the Islamic bank, approved by the Board of Directors and the Shariah Board, must include the Procedure for the formation of financial reporting of the Islamic bank.

If a participant of a banking group uses an accounting policy different from the accounting policy adopted for the preparation of consolidated financial reporting of the banking group regarding similar transactions and events under similar conditions, then in the process of preparing consolidated financial reporting, its financial reporting is appropriately transformed.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

An Islamic bank under temporary administration also presents financial reporting in accordance with this Regulation.

6.1. The bank's management must ensure the timely and accurate preparation and submission of the bank's financial reporting to the National Bank within the established deadlines. In case of violation by banks of the procedure and deadlines for submitting financial reporting, submission of unreliable information, as well as publication of reports without complying with the requirements established by legislation, measures of impact provided for by the legislation of the Kyrgyz Republic are applied to the bank and its management.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

Chapter 2. General Requirements for the Structure and Content of Financial Reporting

(Title of the chapter in the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

Financial reports must reflect all necessary information for users, which must be adequate and reliable.

8. Financial reporting of an Islamic bank includes the following components:

1. statement of financial position as at the end of the period;

2. statement of comprehensive income for the period;

3. statement of changes in equity for the period;

4. statement of cash flows for the period;

5. statement of sources of formation and use of Qard funds;

6. Shariah Board report;

7. accounting policy and notes to the financial reporting;

8. statement of financial position as at the beginning of the earliest comparative period.

The explanatory note (disclosures) to the financial report must be concise and understandable, and also have cross-references to the corresponding items of the financial report, if necessary. The explanatory note (disclosures) attached to the financial reporting is an integral part of it.

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA), September 12, 2025 No. 2025-P-12/46-1-(NPA))

8.1. The bank must clearly identify each component of financial reporting. In the financial reporting, for proper understanding of the presented information, the following information must be reflected:

• full name of the Islamic bank and other identification details;
• whether this financial reporting is the reporting of a separate Islamic bank or consolidated reporting of a banking group;
• the date of completion of the reporting period or the period covered by this set of financial reporting;
• the currency and unit of measurement when presenting amounts in the financial reporting.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

8.2. When preparing financial reporting, the bank's management must assess the ability of the bank/banking group to continue its operations. The bank is obliged to prepare financial reporting on the going concern basis, except in cases where the liquidation of the bank or cessation of its operations is assumed. In the event that management is aware of material uncertainties related to events or conditions that may cast significant doubt on the bank's ability to continue its operations in the future, these uncertainties must be disclosed (in components) in the financial reporting.

If financial reporting is prepared on a basis other than the going concern assumption, this fact must be disclosed, as well as the basis on which the reporting was prepared and the reason why the bank is not considered a going concern.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

For financial reporting purposes, the reporting period for an Islamic bank is the period from January 1 to December 31 of the calendar year inclusive.

For a newly created Islamic bank, the first reporting year is considered the period from the day of its state registration to December 31 inclusive.

For an Islamic bank created after October 1, the first reporting year is considered the period from the day of its state registration to December 31 of the following year inclusive.

In exceptional cases, when the reporting period of an Islamic bank is changed and financial reporting is submitted for a period longer or shorter than one year, the Islamic bank must disclose in addition to the financial reporting:

the reason for using a longer or shorter period different from the reporting period;

the fact that the amounts presented in the financial reporting are not fully comparable.

If the reporting dates of the parent and subsidiary companies do not match, the subsidiary company prepares additional financial reporting for the purpose of consolidation as of the end of the reporting period of the parent company.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

Each material item must be presented separately in the financial reporting. Immaterial amounts must be grouped with amounts of a similar nature or purpose. The materiality of items for the purpose of forming financial reporting is determined independently by the Islamic bank in the Accounting Policy and disclosed in the notes to the financial reporting.

The content and forms of financial reporting are applied consistently from one reporting period to another (principle of consistency).

Classification and disclosure of items in financial reports must be maintained from period to period, except in cases where:

due to a significant change in the nature of operations of the Islamic bank, or when analysis of their presentation in financial reporting proves that changes will lead to a more reliable representation of events or operations;

changes in presentation are required by AAOIFI standards.

For each indicator of accounting reporting, comparative indicators of the previous reporting year must be provided, unless otherwise permitted or required by AAOIFI standards. Comparative information must be included in the narrative and descriptive part when appropriate for understanding the financial reporting for the current period.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

If the classification of items in the financial reporting is changed, comparative amounts must be reclassified to ensure comparability with the current period. In addition, the nature, amount, and reason for any reclassification must be disclosed. If reclassification of comparative amounts is impracticable, the Islamic bank must disclose the reason and nature of the changes that could have occurred in the event of reclassification of amounts.

Financial reporting must be signed by the Chairman of the Board and the Chief Accountant of the Islamic bank, and also certified with the seal of the Islamic bank.

The correctness and reliability of the reflection of data on the financial condition of the banking group in the consolidated financial reporting is certified by the Chairman of the Board of Directors (supervisory body), the Board, and the Chief Accountant of the parent company of the banking group.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

(Expired in accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

Financial reporting of an Islamic bank must be prepared in the national currency of the Kyrgyz Republic, unless otherwise agreed by international treaties ratified in the established order.

(Expired in accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

The management of the Islamic bank is responsible for the preparation and presentation of financial reports.

Consolidated financial reporting of a banking group must include the financial reporting of all its subsidiaries, dependent, and affiliated companies. At the same time, participants of the banking group are responsible for the accuracy and completeness of the data presented to the parent company.

When preparing consolidated financial reporting of a banking group, the parent company consolidates the financial reporting of the parent and subsidiary organizations line by line by adding similar items of assets, liabilities, capital, income, and expenses.

The following information must be disclosed in the consolidated reporting:

1. the nature of the relationship between the parent and subsidiary companies, when the parent company does not own, directly or indirectly through subsidiary companies, more than 50% of the voting shares;

2. the reasons why ownership of a share, direct or indirect, through subsidiary companies, exceeding 50% of the voting shares of the investment object does not lead to obtaining control over it;

3. if the reporting date or period of the financial reporting of the subsidiary company used in the preparation of consolidated financial reporting differs from the reporting date or period of the financial reporting of the parent company:

• the reporting date of the financial reporting of the subsidiary company;

• the reason why another reporting date or period was used;

• the content and scale of significant restrictions on the ability of subsidiary companies to transfer funds to the parent company in the form of cash dividends or to repay loans or advances;

• a table representing the impact of changes in the parent company's share in the subsidiary company, which do not lead to loss of control over it, on the amount of capital attributable to the owners of the parent company;

• in the event of loss of control over a subsidiary company, the parent company must disclose information on income and expenses (if any) recognized in accordance with AAOIFI standards, and in the absence of certain standards, the bank may use IFRS standards provided that they do not contradict the Shariah standards approved by AAOIFI, including:

• the portion of income or expense attributable to recognition at fair value on the date of loss of control over the investment retained in the former subsidiary company;

• the item(s) in the consolidated statement of comprehensive income, in which the income or expense is recognized (if it is not presented separately in the consolidated statement of comprehensive income).

In order for the consolidated financial reporting of the parent company to present financial information about the banking group as a single economic entity, it is necessary:

• to exclude the book value of the parent company's investment in each subsidiary company and the parent company's share in the capital of each subsidiary company;

• to determine the non-controlling interest (or minority interest) in the profit or loss of consolidated subsidiary companies for the reporting period;

• to determine the non-controlling interest (or minority interest) in the net assets of consolidated subsidiary companies separately from the parent company's share in them. The non-controlling interest (or minority interest) in net assets consists of the following:

• the amount of non-controlling interest (or minority interest) on the date of initial business combination;

• the non-controlling interest (or minority interest) in changes in capital since the business combination.

When preparing consolidated financial reporting, intra-group assets, liabilities, capital, income, expenses, and cash flows within the banking group must be fully excluded.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

The financial reporting of a subsidiary company cannot be excluded from the consolidated financial reporting on the grounds that:

• the activities of the subsidiary company differ from the activities of other participants of the banking group;

• the investors are an organization with venture capital, a mutual fund, a trust, or a similar structure.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

(Expired in accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

The nature of the relationship between the parent company and subsidiary companies must necessarily be disclosed in the financial reporting, regardless of whether transactions were carried out between these related parties.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

The bank is exempt from submitting consolidated financial reporting if the parent company of this bank, located on the territory of the Kyrgyz Republic, this head company prepares and submits consolidated financial reporting in accordance with the requirements of the National Bank and AAOIFI standards, and in the absence of certain standards, in accordance with IFRS provided that they do not contradict the Shariah standards approved by AAOIFI.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

Investments in associated and joint (dependent and affiliated) companies of the bank are reflected using the equity method, except for those cases where they are classified as held for sale, or are exempted from the need to apply this method in accordance with AAOIFI standards, and in the absence of certain standards, in accordance with IFRS provided that they do not contradict the Shariah standards approved by AAOIFI.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

Chapter 2.1. General Requirements for the Daily Trial Balance

(Title of the chapter in the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

32-1. In the daily trial balance, the bank must reflect:

• balance sheet accounts;

• totals by groups of balance sheet accounts;

• totals by classes of balance sheet accounts;

• in the "Undistributed Profit" section, total income, total interest expense, and total operating expense;

• totals by elements of financial reporting: capital, liabilities, and capital, as well as the bank's assets;

• a control line "difference", showing the absence of discrepancies between assets and the sum of liabilities and capital;

• balances of income and expenses.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

32-2. The daily trial balance is submitted in the form provided in Appendix 3 to this Regulation. The name of the daily trial balance form should be indicated as follows: "Daily Trial Balance as of '_' _________ 20 year (inclusive)". In this case, the date at the end of the reporting day should be indicated.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

Chapter 3. Statement of Financial Position

In the statement of financial position, assets and liabilities are presented taking into account their nature in a manner reflecting their relative liquidity (in descending order of liquidity or maturity dates).

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

The statement of financial position must include the assets of the Islamic bank, its liabilities, funds in investment accounts, and capital.

An asset item is not subject to offset against a liability item in the Statement of Financial Position, and vice versa, except when required or permitted by AAOIFI standards, with disclosure of these facts in the notes. In the absence of certain AAOIFI standards, the bank has the right to use IFRS standards provided that they do not contradict the Shariah standards approved by AAOIFI.

In the statement of financial position, operations with the National Bank, other banks, other money market partners, and creditors, and clients/partners must be reflected separately, in order to give a correct representation of their interdependence.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

The bank must disclose the following information in the statement of financial position or in the statement of changes in equity:

1. for each class of share capital:

• the number of shares authorized for issue;

• the number of issued and fully paid shares, as well as issued but not fully paid;

• the nominal value of shares, or a statement that shares have no nominal value;

• the number of shares in circulation at the beginning and at the end of the period;

• rights, privileges, and restrictions associated with the corresponding class, including restrictions on dividend distribution;

• shares of the bank held by the bank itself or its subsidiary or associated companies;

• the cost of assets taking into account the Provision for Possible Losses (PPLU), created in accordance with the requirements of the National Bank.

2. a description of the nature and purpose of each reserve within equity.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

The bank must disclose in the statement of financial position further sub-classes of each of the presented line items, classified in accordance with the operations of this bank.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

In the statement of financial position, all assets, except for assets carrying credit risk and assets under the Ijarah Muntahia Bittamlik contract for banks and clients/partners, are shown net of the allowance for losses. Assets carrying credit risk and assets under the Ijarah Muntahia Bittamlik contract are shown at nominal value with the indication of the Provision for Possible Losses (PPLU) created for this group of assets.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

The name of the form "Statement of Financial Position" must be stated as "Statement of Financial Position '_' _____________ 20 year (inclusive)". In this case, the date at the end of the month, quarter, or year is indicated.

Intermediate totals for assets, liabilities, investment accounts, and capital must be presented in the statement of financial position.

Results for investment accounts and their equivalents must be presented in the statement of financial position as a separate item between the liabilities and capital of the Islamic bank.

Chapter 4. Statement of Comprehensive Income

In the Statement of Comprehensive Income, income and expenses arising from the activities of the Islamic bank must be grouped by their nature and must reflect the main types of income and expenses.

43.1. Banks are obliged to present all items of income and expenses either:

a) in one statement of comprehensive income (combined statement); or

b) in two separate statements:

• in the income statement (which includes components of profit and loss);

• in the statement of comprehensive income, which starts with the profit and loss indicator and contains components of other comprehensive income.

In the case of presenting the report using the second approach (presentation in separate statements), the income statement must be presented directly before the statement of comprehensive income.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

43.2. The bank must necessarily disclose in the statement of comprehensive income items relating to the distribution of profit or loss for the period:

a) profit or loss for the period attributable to:

• non-controlling interest;

• owners of the parent company;

b) total comprehensive income for the period attributable to:

• non-controlling interest;

• owners of the parent company.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

43.3. If items of income and expenses are material, the bank must disclose their nature and amount separately in the Statement of Comprehensive Income or in the Notes to the Financial Reporting.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3-(NPA))

43.4. The bank must not present extraordinary items in items of income and expenses, neither in the statement of comprehensive income, nor in a separate income statement (if such is presented), nor in the Notes