Regulatory Alerts2002-02-13 | 82025Rules on Credit (Overdraft) by Bank Payment Cards
The National Bank of the Kyrgyz Republic issued these rules to establish the procedures and mechanisms for commercial banks and licensed financial institutions to provide short-term overdraft credit to individuals via bank payment cards. The regulations define key terms, mandate internal bank procedures, and specify that overdrafts are granted within salary project frameworks based on individual credit limits and official income. Banks are required to manage risks through reserve creation, classify loans, and terminate credit lines upon notification of employment termination or salary cessation.
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Print version
Date of creation: 2017-08-03
Approved
by the Resolution of the Board of the NBKR
No. 8/6 of February 13, 2002
Rules on Credit
(Overdraft) by Bank Payment Cards
(Changes approved by the Resolution of the Board of the NBKR
No. 41/10 of October 31, 2012, No. 53/11 of September 16, 2015, and June 15, 2017 No. 2017-P-12/25-12-(NPA))
General Provisions
1.1. (Lost force in accordance with the Resolution of the Board of the National Bank of the KR of June 15, 2017 No. 2017-P-12/25-12-(NPA)).
1.2. These Rules establish the procedure and mechanism for providing short-term credit (overdraft) to individuals by bank payment cards by commercial banks and financial-credit organizations licensed by the National Bank (hereinafter - banks).
1.3. The bank must develop internal procedures for providing overdrafts on payment cards. When developing internal procedures on overdraft lending, the bank must be guided by the legislation of the Kyrgyz Republic and the regulatory legal acts of the National Bank.
1.4. Overdraft is provided to replenish a temporary shortage of funds in the client's account on the conditions of costliness, term, and repayability. Overdraft is provided on the basis of a contract concluded between the bank and the client.
1.5. The maximum amount, term of provision, interest rate, procedure for obtaining and repaying the credit in the form of an overdraft are determined by the bank independently and are stipulated in the contract between the bank and the client.
Terms Used
2.1. Client
– an individual, an employee of an organization, who has concluded a contract with the bank for the provision of a credit line by bank payment cards within the framework of a salary project.
2.2. Organization
– a legal entity that has concluded a contract with the bank for the transfer of funds of its employees to their personal card accounts and an Organization Contract with the bank for the provision of credit lines by payment cards of employees within the framework of a salary project (hereinafter, Organization Contract for the provision of a Credit Line).
2.3. Personal Card Account
– an account opened for the movement of funds and transactions on a payment card.
2.4. Personal Card Credit Account (PKCA)
– an off-balance sheet account of the client in the bank, opened in accordance with the bank and client contract on the provision of a credit line.
2.5. Bank Payment Card
– a card intended for payment for goods, works, and services, for carrying out other payments, as well as for receiving cash from a personal card account through terminals or other devices.
2.6. Overdraft –
a form of short-term credit,
the provision of which gives the client the opportunity to make payments in excess of the amount available in the current account within the limit and on the terms stipulated in the contract between the bank and the client.
2.7. Limit of Actual Debt
– the maximum amount of credit (overdraft) that can be provided to the client's card account in accordance with the contract.
2.8. Credit Line
– the bank's obligation to provide overdraft on payment cards within the framework of a salary project on the terms and deadlines determined by the contract between the bank and the client.
Procedure for Providing Overdraft
3.1. The organization within the framework of the salary project concludes a contract with the bank for the transfer of funds to a special account of the organization in the bank for subsequent distribution to the personal card accounts of employees.
3.2. The organization concludes an additional Organization Contract with the bank for the provision of credit lines to employees by payment cards within the framework of the salary project.
3.3. An employee, who is a client, in order to obtain the right to use overdraft, concludes a Client Contract with the bank for the provision of a Credit Line by payment cards.
3.4. Upon concluding the Client Contract with the bank for the provision of a credit line, civil-law relations arise in which the bank acts as a creditor, and the employee – as a borrower.
3.5. In order to minimize the risk when providing overdraft credit, the bank must provide in its regulatory documents the regulation of personnel actions, the procedure for document flow, both accounting and legal, and develop standard forms of documents in accordance with the requirements of the National Bank.
3.6. The credit contract concluded between the bank and the client means the right, but not the obligation of the borrower to receive loans. The borrower may not use the overdraft.
3.7. Upon concluding the Client Contract with the bank on the provision of a credit line, the bank acquires a conditional obligation to provide overdraft in the amount of the limit of actual debt. The bank must create a Reserve for conditional obligations in accordance with the regulatory documents of the National Bank.
3.8. Overdraft credit is provided in case of shortage of funds in the client's card account and within the limit of actual debt.
3.9. In case of insufficient funds of the client to make the next payment, the bank initially writes off the remaining funds from the personal card account, and then reduces the amount of off-balance sheet obligations by the amount of missing funds, which leads to the appearance on the bank's balance sheet of a credit account in the amount of the provided overdraft.
3.10. Upon receipt of funds in the client's personal card account, the bank, in accordance with the conditions of the Contract with the client, repays the debt on overdraft and interest for the use of overdraft in an undisputed manner.
3.11. The bank must classify loans of this category, create a Reserve to cover potential losses and damages on provided overdraft credits in accordance with the regulatory documents of the National Bank. Accounting for overdraft credit is carried out in accordance with the Policy on accounting for loans in banks and financial-credit organizations of the Kyrgyz Republic.
3.12. In the event of early termination of the contract, dismissal, or reduction of staff, the organization, in accordance with the contract, is obliged to notify the bank of the cessation of salary payments to the employee.
3.13. Upon receipt of information from the organization about the cessation of salary payments to the client, in accordance with the conditions of the Organization Contract on the provision of a Credit Line, the bank ceases to provide overdraft to the client, which entails the automatic termination of the Contract on the provision of a Credit Line.
Conditions for Providing Overdraft
4.1. According to the Client Contract for the provision of a Credit Line, the client is provided with an overdraft credit with a set term of validity and a limit of actual debt for making transactions using a bank payment card.
4.2. The term of validity of the credit line and the procedure for termination are stipulated by the contract on the provision of a Credit Line.
4.3. The limit of actual debt is set individually for each client. When assessing the client's solvency, it is necessary to focus exclusively on his official current income received into the personal card account.
4.4. The interest rate is determined by the contract of the bank and the client and applies only to the amount of overdraft.
4.5. The main source for repaying the debt on overdraft and interest on it is the amount of salary payments to the client transferred to the bank. An additional source of repayment may be a guarantee of the organization, in which the organization undertakes to fulfill the client's obligations in case of insufficient funds and his refusal to repay the debt and interest on overdraft.
4.6. When calculating interest on the loan, the number of days in a month is taken equal to the actual calendar number of days in the month, the number of days in a year – 365.
Contacts
Public Reception
+996 (312) 61-04-86 +996 (312) 66-90-15 +1257, +1256
Department for the Protection of Consumer Rights
+996 (312) 66-90-15 +1671, +1666
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Numismatic Museum
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For work with the media
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