Instruction on Accounting for Payment Purposes in Banks

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Creation date: 2023-01-12

Approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic dated December 28, 2022 No. 2022-P-10/83-10-(NPA)

INSTRUCTION

on accounting for payment purposes in banks

1. Definitions and General Provisions

2. This Instruction on Accounting for Payment Purposes in Banks (hereinafter - the Instruction) establishes the requirements for the collection and accounting of information on payment purposes by the National Bank of the Kyrgyz Republic (hereinafter - the National Bank) for the purpose of compiling the Balance of Payments statistics of the Kyrgyz Republic.

The National Bank guarantees the confidentiality of data obtained in accordance with this Instruction. The obtained data will in no way be used to verify the activities or financial condition of individual bank clients and will be reflected in the Balance of Payments of the Kyrgyz Republic only in aggregated form.

2. This Instruction defines the forms and deadlines for the submission by commercial banks and financial-credit organizations licensed by the National Bank of information on payment purposes necessary for compiling the Balance of Payments of the Kyrgyz Republic.

3. Reports in accordance with this Instruction are submitted by all banks and financial-credit organizations licensed by the National Bank (hereinafter - banks) that carry out operations in foreign currency, have correspondent accounts in foreign banks or accounts of foreign correspondent banks in the bank, as well as those carrying out operations with non-residents in national and foreign currency.

In the event of a bank ceasing operations in foreign currency, the bank must notify the National Bank in writing. Upon resumption of operations in foreign currency, the bank must also notify the National Bank.

4. The Balance of Payments of the Kyrgyz Republic is statistical reporting that reflects aggregate data on the foreign economic operations of the Kyrgyz Republic with other countries of the world for a specific period of time.

5. Residents are:

• individuals permanently residing in the Kyrgyz Republic, including those temporarily abroad. Foreign individuals permanently residing in the Kyrgyz Republic become residents after submitting an immigration notification to the relevant authorities;

• legal entities created in accordance with the legislation of the Kyrgyz Republic, with their location in the Kyrgyz Republic;

• diplomatic and other official representations of the Kyrgyz Republic located abroad;

• branches and representative offices of foreign legal entities created in accordance with the legislation of the Kyrgyz Republic, with their location in the Kyrgyz Republic;

• branches and representative offices of legal entities of the Kyrgyz Republic located abroad.

6. Non-residents are persons who are not residents.

7. Forms and Deadlines for Reporting

8. Reports in forms PB-1 and PB-2 are submitted to the National Bank in electronic format, signed by the electronic signature of the responsible official, in accordance with the requirements of this Instruction.

9. The report in form PB-1 includes information on account balances at the beginning and end of the reporting period and cash flows during the period. This form is transmitted via email as a file in the format established in paragraph 3 of this Instruction. The report in form PB-1 reflects:

a) operations on each correspondent account (nostro account) in a foreign bank and on each correspondent account of a non-resident bank (loro account) in a Kyrgyz bank. If a loro account is opened in som, operations on this account must also be reflected in the report;

b) movement of foreign currency cash;

c) movement of funds in accounts in national and foreign currency of non-resident clients.

9. Information on account balances at the beginning and end of the reporting period in forms PB-1K, PB-1N, PB-1SI is submitted in electronic format, signed by the electronic signature of the responsible official, and must contain the following:

a) in form PB-1K - information on balances in correspondent accounts in foreign banks;

b) in form PB-1N - information on balances in foreign currency cash;

c) in form PB-1SI - information on balances in accounts in national and foreign currency of non-resident clients.

These data must correspond to the account balance data at the beginning and end of the period reflected in the electronic report form PB-1.

10. The report in form PB-2 must contain information on bank clients (residents of the Kyrgyz Republic - legal entities) who have bank accounts outside the Kyrgyz Republic. This reporting form is submitted in electronic format, signed by the electronic signature of the responsible official.

11. Reporting in form PB-1 is submitted to the National Bank monthly, no later than the 15th day of the month following the reporting period. Reporting in form PB-2 is submitted to the National Bank quarterly, no later than the 15th day of the month following the reporting period. In the event that employees of the National Bank identify errors in the submitted reporting, banks are obliged to correct the errors and send the corrected reporting to the National Bank within 3 working days after notification of the errors.

12. In the event of failure to submit or untimely and intentionally incorrect submission of reporting, enforcement measures are applied to banks in accordance with the legislation of the Kyrgyz Republic.

13. Procedure for Filling Out the Electronic Reporting Form

14. Each operation is classified by correspondent banks, account, currency of the operation, date of the operation, type of operation, partner country (counterparty) of the bank's client, affiliation with a specific economic sector, client country, with which the operation is conducted. The type of operation, country name, currency name, and economic sector are presented in coded form. When coding information, it is necessary to use the code classifiers indicated in Appendix 1.

The electronic form of the report in form PB-1 is provided in 14 fields, with the following structure:

1

2

3

4

5

6

7

8

9

10

11

12

13

14

Field Number

Field Name

Field Content

1

Partner Name

Here the name of the foreign correspondent bank is specified. When accounting for operations with cash currency, the following should be specified in this field: "foreign currency cash". When accounting for non-resident operations in the Kyrgyz Republic, the following should be specified here: "accounts of non-resident clients".

2

Partner Location Country Code

Here the country code where the correspondent bank is located is specified. Here country codes from the classifier of countries of the National Statistical Committee (NSC) are used. When accounting for operations with foreign currency cash or non-resident operations in national and foreign currency in the Kyrgyz Republic, the country code of the Kyrgyz Republic should be specified here.

3

Account

Here the account code is specified in accordance with its classification ("1 - nostro", "2 - loro", "3 - foreign currency cash", "4 - non-resident client accounts").

4

Currency Name

Here the currency code in which the operation is conducted is specified. Letter currency codes from the interstate currency classifier are used.

5

Operation Date

Here the date of reflecting the operation in the bank's accounting reporting is specified.

6

Operation Code

Here the operation code is specified in accordance with the list of operation codes provided in the appendix.

7

Payer/Recipient Country Code

When accounting for non-cash operations: for outgoing payments, the country code of the beneficiary (recipient) is specified here, and for incoming payments, the country code of the sender. Similarly, operations with foreign currency cash are accounted for. For example, when depositing cash for transfer via various systems (Western Union, Contact, Money Gram, Anelik, etc.), the country code of the recipient is specified here, and when receiving cash via various systems (Western Union, Contact, Money Gram, Anelik, etc.), the country code of the sender is specified. Here country codes from the NSC country classifier are used.

8

Sector Code

Here the code of the economic sector to which the bank's client in the Kyrgyz Republic belongs, for whose account the operation is conducted in the bank, is specified. Here economic sector codes are used in accordance with the classifier based on the IMF Balance of Payments Manual.

9

Client Country Code

Here the country code of the country of which the bank's client in the Kyrgyz Republic is a resident, for whose account the operation is conducted in the bank, is specified. Here country codes from the NSC country classifier are used.

10

Credit

Movement of funds on accounts is reflected in credit and debit rows. Data should be reflected as follows: for operations on nostro accounts and operations with foreign currency cash - receipt of funds - on credit, on debit - their write-off; for operations on loro accounts and operations on accounts in national and foreign currency of non-resident clients, conversely: on credit - write-off from the account, on debit - receipt of funds to the account. The amount is specified in nominal terms, in currency units with two decimal places.

11

Debit

12

Amount in Soms

Here the equivalent amount in soms is specified at the National Bank rate as of the date of reflecting the operation in the bank's accounting reporting. The amount is specified with two decimal places.

13

Amount in US Dollars

Here the equivalent amount in US dollars is specified at the National Bank rate as of the date of reflecting the operation in the bank's accounting reporting. The amount is specified with two decimal places.

14

Operation

Here full information on the purpose of each money transfer is specified. Information in this column should not repeat the operation name according to the standard balance of payments classification provided in the appendix, but should reflect the content of the specific operation.

14. Information on each account in the report begins with the specification of the account balance at the beginning of the period, which is reflected under operation code "000001" (balance at the beginning of the period). Then, the movement of funds in accounts during the reporting period is reflected. Information on each account ends with the specification of the account balance at the end of the reporting period under operation code "999999" (balance at the end of the period). The balance at the beginning and end of the reporting period is specified depending on the nature of the account: for nostro accounts and foreign currency cash, the balance at the beginning and end of the period is reflected on the credit side, and for loro accounts and accounts in national and foreign currency of non-resident clients, conversely - on the debit side.

15. Movement of funds on correspondent accounts is reflected as follows: for nostro accounts - receipt of funds to the account is reflected on credit, write-off on debit; for loro accounts, conversely - write-off of funds from the account on credit, receipt on debit. The balance at the beginning and end of the reporting period for nostro accounts is reflected on the credit side, and for loro accounts - on the debit side.

16. The report on operations with foreign currency cash has the same form as the report on non-cash operations on correspondent accounts. In field 1 (partner name), the following is recorded: "foreign currency cash". Operations involving the receipt of foreign currency cash are reflected on credit, and the expenditure of foreign currency cash on debit. The balance at the beginning and end of the reporting period is reflected on the credit side.

17. The report on non-resident operations in the Kyrgyz Republic includes the movement of funds in accounts in national and foreign currency of non-residents from one Kyrgyz bank to another Kyrgyz bank or within one Kyrgyz bank. Operations here are reflected in the same way as on correspondent accounts, in accordance with the classification of operations. In field 8 (client country code), it should be specified which country the non-resident client of the bank is a resident of, for whose account the operation is conducted. In field 7 (sector code), it should be specified which sector the counterparty with whom the non-resident client of the bank conducts the operation belongs to. In field 1 (partner name), the following is recorded: "accounts of non-resident clients". Write-off of funds from non-resident accounts is displayed on credit, receipt of funds to non-resident accounts on debit. The balance at the beginning and end of the reporting period is recorded on the debit side.

18. Operations whose content involves the transfer of funds in foreign currency between non-resident banks, as well as between resident banks, with a change in the structure of assets in foreign currency of resident banks, are considered as neutral operations for the balance of payments and must be entered into the report in the form with codes intended for displaying neutral operations. The following operations are reflected as neutral:

a) exchange of one non-cash foreign currency for another non-cash foreign currency (currency conversion);

b) transfer of currency from non-cash form to the same currency in cash form (currency cashing out);

c) transfer of currency from cash form to the same currency in non-cash form (currency cashing in);

d) transfer of funds from one correspondent account to another correspondent account (refilling the correspondent account);

e) receipt and subsequent write-off from the reporting bank's correspondent accounts of funds of other banks and legal and natural persons (intermediary operations).

19. Amounts of "overnights" provided and returned (received and returned) during the reporting period are not reflected in the report. Only interest received (or paid) for the provision (or receipt) of funds is reflected in the report.

20. In cases where it is impossible to classify money transfers from abroad by purpose during the reporting period, codes are used: "unclassified information". Receipts of funds for which the purpose could not be ascertained during the current month are indicated under code - 100200.

During the next period, it is recommended to determine the purpose of funds received in the previous period, or to make an assumption based on available information about the client to whose account the funds were received.

Money transfers for which the purpose was ascertained (or an assumption was made) during the current month are indicated under code - 100100, but in field 13 (operation), the purpose of this payment should be described in detail, placing the code in accordance with balance of payments standards (if the field is filled based on bank employees' assumptions, it is necessary to note in parentheses - "assumption").

21. Erroneously credited and reflected funds upon their return are reflected with a "minus" sign in the same credit or debit column, under the same codes as when received.

22. The bank codes operations in the report in form PB-1 based on documents and information obtained from clients, using the list of codes.

23. For outgoing payments, banks are obliged to obtain information about their purpose from payment orders/applications for transfer.

24. For outgoing payments in foreign currency (US dollars, euros, Russian rubles, Kazakh tenge, etc.), banks are obliged:

1. to require clients, when filling out the payment document, to specify in detail the purpose of the payment/transfer, namely - for what the payment/transfer is made (for example, "payment for a car", "prepayment for fuel", "for marketing services", "for advertising", "material assistance to a relative", "obtaining a loan", "sale of securities", etc.). Thus, payment purposes such as "according to contract", "according to agreement", "transfer", "private transfer" are not allowed;

2. to require clients, when filling out the payment document, to specify the name of the beneficiary (name of the physical or legal entity to whom the funds are received, country, city);

3. the bank must refuse to accept the payment document in cases where the "payment purpose" field of the payment document lacks a detailed description of the payment purpose, as well as when the "beneficiary" field lacks information about the beneficiary's name and country.

25. For incoming payments in foreign currency (US dollars, euros, Russian rubles, Kazakh tenge, etc.), banks are recommended to conclude an agreement on the provision of payment documents with a mandatory filled "payment purpose" line with all correspondent banks;

26. For the purpose of control and verification of the correctness of reflecting information in this reporting, employees of the National Bank responsible for the collection and processing of reporting may participate in checks of commercial banks.

27. Money transfers not exceeding 500 US dollars, as well as equivalent amounts in other currencies, may be combined and reflected in reporting with one entry, but only if the information in fields 1 (partner name), 2 (partner location country code), 3 (currency name), 5 (operation code), 6 (payer/recipient country code), 7 (sector code), 8 (client country code), 9, 10 (credit/debit) matches. In field 13 (operation), the number of payments combined into one entry is specified in parentheses. When combining several payments into one entry, in field 4 (operation date), the date of the last payment included in this entry is specified.

28. Reporting forms provided in electronic format, signed by the electronic signature of the responsible official, must include the following:

29. Form PB-1K - on the state of correspondent accounts:

Form PB-1K

in currency units

Account Type ("loro", "nostro")

Currency in which the account is opened

Name of the correspondent bank

Country where the correspondent bank is located

Balances at the beginning of the reporting period

Balances at the end of the reporting period

1

2

3

4

5

6

Notes on filling:

• in column 1, the account type is specified - "loro" or "nostro";

• in column 2, the currency code in which the non-resident bank's correspondent account in the Kyrgyz Republic or the Kyrgyz bank's account abroad is opened is specified. The currency code is specified in accordance with the letter currency classifier KV (ISO4217);

• in column 3, the name of the foreign bank with which correspondent relations are established is specified;

• in column 4, the country where the bank with which correspondent relations are established is located is specified;

• in column 5, the balances of funds at the beginning of the reporting period are specified;

• in column 6, the balances of funds at the end of the reporting period are specified.

30. Form PB-1N - report on foreign currency cash:

Form PB-1N

in currency units

Currency Type

Balances at the beginning of the reporting period

Balances at the end of the reporting period

1

2

3

Notes on filling:

• in column 1, the type of foreign currency cash with which the bank conducted operations during the reporting period is specified;

• in column 2, the balances of cash funds at the beginning of the reporting period are specified;

• in column 3, the balances of cash funds at the end of the reporting period are specified.

31. Form PB-1SI - report on accounts in national and foreign currency of non-resident clients:

Form PB-1SI

in currency units

Currency Type

Balances at the beginning of the reporting period

Balances at the end of the reporting period

1

2

3

Notes on filling:

• in column 1, the balances of cash funds at the beginning of the reporting period are specified;

• in column 2, the balances of cash funds at the end of the reporting period are specified.

32. In accordance with this Instruction, accounts and deposits of resident legal entities opened outside the Kyrgyz Republic are subject to mandatory registration in the National Bank. The list of bank clients having accounts abroad in form PB-2 is submitted in all cases when a transfer abroad or from abroad is made from the account to the account of the same legal entity. The report in form PB-2 is submitted in electronic format, signed by the electronic signature of the responsible official.

Form PB-2

Name of the legal entity

Form of ownership of the legal entity

Address and phone number

Foreign bank in which the account is opened

Country where the account is opened

1

2

3

4

5

Notes on filling:

• in column 1, the name of the legal entity that has an account opened abroad and which transfers funds abroad or from abroad from its account in a foreign bank to its account in a bank in the Kyrgyz Republic is specified:

• in column 2, the form of ownership is specified in the case where a legal entity's account is opened in a foreign bank;

• in column 3, the address and phone number of the legal entity that has an account in a foreign bank are specified;

• in column 4, the name of the foreign bank in which the legal entity has an account is specified;

• in column 5, the country in which the legal entity has an account is specified.

Appendix to the Instruction on Accounting for Payment Purposes in Banks, approved by the Resolution of the Board of the National Bank dated December 28, 2022 No. 2022-P-10/83-10-(NPA)

Reference of codes for filling out form PB-1

I. Reference of operation codes

Codes in the "operation code" position of the form indicate payment purposes. Payment purposes are classified in accordance with the main items of the balance of payments.

Balance at the beginning of the period

000001

Balance at the end of the period

999999

Goods

Credit

Debit

Export

Import

Prepayment for goods, payment upon fact for goods (including payment by letter of credit), payment for previously supplied goods, repayment of debt for the following goods:

• Gold, non-monetary

010011

010012

• Cotton

010021

010022

• Oil, oil products and similar materials

010031

010032

• Natural gas

010041

010042

• Sugar, sugar products

010051

010052

• Inorganic chemical substances

010061

010062

• Metal, scrap and waste of ferrous metallurgy

010071

010072

• Incandescent lamps

010081

010082

• Unmanufactured tobacco; tobacco products

010091

010092

• Vegetables and fruits

010111

010112

• Building materials from asbestos cement

010121

010122

• Cast and rolled glass

010131

010132

• Medicines (including veterinary)

010141

010142

• Other goods

010151

010152

INTERNATIONAL SERVICES

Operation

Operation Code

Description

Credit

Debit

Transport

Air transport

Air cargo transport

020011

020012

Transportation of goods by air

Air passenger transport

020021

020022

Passenger air transport services, including payment for excess baggage, passenger expenses for meals, drinks and other items purchased on board the carrier. Here, rental, charter and long-term lease of aircraft with crew for passenger transport are also accounted for

Other air services

020031

020032

Services that are auxiliary to air transport services: loading and unloading, storage and warehousing of cargo in air ports, packaging and repackaging, towing of vessels, etc. Here also includes navigation support for carriers, air traffic control and airport services (passenger services in airports, including cleaning and maintenance of transport equipment and operation of runways). Ship maintenance services should be attributed to repair and maintenance services (see operation 020801/020802)

Road transport

Road cargo transport

020041

020042

Transportation of goods by road

Road passenger transport

020051

020052

Passenger road transport services and related expenses, including payment for excess baggage. Here, rental, charter and long-term lease of road transport with crew for passenger transport are also accounted for

Other road services

020061

020062

Services that are auxiliary to road trans