Regulation on Operations Conducted in Accordance with Islamic Principles of Banking and Finance

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Date of creation: 2026-05-13

Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic of September 23, 2009 No. 38/8

REGULATION

on operations conducted 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 August 28, 2013 No. 32/8, February 10, 2016 No. 7/2, December 21, 2016 No. 49/8, May 31, 2017 No. 21/10, March 28, 2018 No. 2018-P-12/10-6, August 14, 2019 No. 2019-P-12/42-1, August 14, 2019 No. 2019-P-12/42-2, September 23, 2020 No. 2020-P-12/51-1, February 24, 2022 No. 2022-P-12/9-4, November 16, 2022 No. 2022-P-12/70-1, June 14, 2023 No. 2023-P-12/38-3, December 20, 2023 No. 2023-P-12/80-3, October 8, 2025 No. 2025-P-12/50-3-(NPA), October 23, 2025 No. 2025-P-12/55-4-(NPA), December 19, 2025 No. 2025-P-12/68-2-(NPA), April 27, 2026 No. 2026-P-12/26-3-(NPA))

SECTION I

GENERAL PROVISIONS

1.1. (Lost force in accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/10)

1.2. The purpose of this Regulation is to establish the procedure for commercial banks, including banks with an "Islamic window" (hereinafter referred to as "banks"), to conduct certain types of operations corresponding to Islamic principles of banking and finance.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/10)

1.3. A bank conducting operations in accordance with Islamic principles of financing must invest funds only in businesses permitted by Shariah.

1.4. A Shariah Council must be established in the bank. All policies and standard contracts of the bank must be approved by the Shariah Council.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/10)

1.5. When conducting operations in accordance with Islamic principles of banking and finance, the bank must comply with requirements for identification of persons and operations for the purpose of countering the financing of criminal activities and legalization (money laundering) of criminal proceeds, in the manner established by the legislation of the Kyrgyz Republic.

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of February 10, 2016 No. 7/2, May 31, 2017 No. 21/10, August 14, 2019 No. 2019-P-12/42-1, December 19, 2025 No. 2025-P-12/68-2-(NPA))

1.6. Contracts in accordance with Islamic principles of banking and finance, including in the form of an electronic document signed by means of an electronic signature that allows verifying its belonging to the party to the contract, with all attachments to them and other contracts/agreements by mutual agreement of the parties are drawn up in the state language and, if necessary, in the official language (if necessary, the text of the contract may be translated into another language). This consent is bound/stored in the client/partner's file.

(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)

1.7. The bank is recommended to pay special attention to issues of interaction and assistance to clients with disabilities, including regarding:

• etiquette rules when communicating with the client;
• rules for accompanying the client when a bank employee and the client perform necessary operations within the framework of service;
• the application of available measures for the most comfortable service;
• communication with the client themselves, and not with their companion, if the client has not chosen another way of communication;
• minimization of stressful factors and full (detailed, specific) explanation of banking procedures during the client's service.

(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)

1.8. When serving a client with visual or hearing impairment, the bank must, at the client's request, ensure audio playback/sign language interpretation of the text of the contract and other documents signed by the client.

The bank must provide a client who is unable to sign independently due to existing impairments with the opportunity to sign (including a facsimile signature) in contracts and other documents signed by the client, taking into account the requirements of the legislation of the Kyrgyz Republic.

(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)

1.9. Movable and immovable property that is the subject of a contract in accordance with Islamic principles of banking and finance must be insured in cases provided for by the legislation of the Kyrgyz Republic in the field of mandatory insurance.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of October 23, 2025 No. 2025-P-12/55-4-(NPA))

1.10. Movable and immovable property that is the subject of a pledge contract in accordance with Islamic principles of banking and finance must be insured by the pledgor in cases where the legislation of the Kyrgyz Republic in the field of mandatory insurance or the pledge contract imposes on the pledgor the obligation to insure the pledged property.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of October 23, 2025 No. 2025-P-12/55-4-(NPA))

1.11. When providing financing for which it is possible to draw up a schedule for repayment of debt or accrual of income, the contract must additionally indicate the markup/income or increase in the client's debt amount compared to the price (cost) of the goods, work, or service in nominal annual percentage terms, calculated in accordance with the Regulation "On minimum requirements for the pricing policy of banks, payment services and services provided by microfinance organizations, and for the implementation of marketing activities," approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 29, 2021 No. 2021-P-12/75-1-(BS).

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of April 27, 2026 No. 2026-P-12/26-3-(NPA))

SECTION II

TYPES OF TRANSACTIONS CORRESPONDING TO ISLAMIC PRINCIPLES OF BANKING AND FINANCE

Chapter 2.1

Mudaraba Contract

(Name of the chapter in the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of November 16, 2022 No. 2022-P-12/70-1)

2.1.1. A Mudaraba contract is a contract under which one party-investor provides capital (funds), and the other party (mudarib) accepts this capital and manages it for the purpose of obtaining profit, which is distributed proportionally between the parties in accordance with the terms of the contract. The debt/obligation of the mudarib or another party to the investor cannot be used as capital in a Mudaraba contract.

In the event that losses are incurred during the performance of the contract, the investor bears losses in the amount of the provided capital sum, and the mudarib does not receive remuneration for their labor in such a case. This rule of loss distribution applies in the event that losses arose not due to the fault of the mudarib.

In the event that losses during the performance of the contract arose as a result of the culpable or unlawful actions of the mudarib, these losses must be covered at the expense of the mudarib. At the same time, the investor has the right to receive from the mudarib the amount previously transferred under the contract at the expense of the collateral, and in the event that it is insufficient, at the expense of other property of the mudarib.

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of December 21, 2016 No. 49/8, May 31, 2017 No. 21/10, November 16, 2022 No. 2022-P-12/70-1)

2.1.2. Mudaraba contracts are divided into the following types:

Contract of limited (special) Mudaraba - a Mudaraba contract under the terms of which the investor establishes the types of assets or projects for investment by the mudarib.

Contract of unlimited (general) Mudaraba - a Mudaraba contract under the terms of which the mudarib has the right to use funds at their discretion in any of the types of their activities.

Open Mudaraba contract - a Mudaraba contract under the terms of which the investor has the right to receive early (at first demand) the funds provided by them from the mudarib. In this case, the bank (if it acts as the mudarib) pays the investor profit for the last full period (month, year).

The parties may agree on the gradual withdrawal of capital by the investor.

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of November 16, 2022 No. 2022-P-12/70-1, June 14, 2023 No. 2023-P-12/38-3)

2.1.3. The Mudaraba contract is applied by the bank in two cases:

• as a tool for attracting funds;
• as a financing tool.

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of November 16, 2022 No. 2022-P-12/70-1, December 20, 2023 No. 2023-P-12/80-3)

2.1.4. A Mudaraba contract is concluded in written form or in the form of an electronic document signed by means of an electronic signature that allows verifying its belonging to the party to the contract, with all attachments to them.

(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)

2.1.5. The bank, acting in the role of investor, must assess the business plan, determine investment objects, assess the client's activity, and consult them subsequently during the performance of the contract.

2.1.6. When issuing funds under a limited (special) Mudaraba contract, the bank must include in the contract conditions prohibiting the mudarib from using funds for non-target purposes, including issuing loans to third parties and providing gifts and donations for charitable purposes at the expense of financing funds.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of June 14, 2023 No. 2023-P-12/38-3)

2.1.7. For the proper performance of obligations under the Mudaraba contract, the bank, acting in the role of investor, must obtain security from the client in the form of pledge, suretyship, guarantee, earnest money, and other types of security provided for by legislation or contract in an amount equal to the amount provided by the bank under the contract.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of November 16, 2022 No. 2022-P-12/70-1)

2.1.8. The Mudaraba contract must provide for at least:

1. indication of the type of contract;
2. depending on the type of contract - indication of the investment object, a provision on the impossibility of early withdrawal of the contributed amount, the possibility of mixing funds received from the investor with funds of third parties;
3. the amount of the provided sum;
4. the method of securing obligations;
5. rights and obligations of the parties;
6. liability of the parties for non-performance or improper performance of the obligation to compensate for losses arising during the performance of the contract as a result of culpable or unlawful actions;
7. the procedure for distributing profit and loss between the parties;
8. conditions for the parties to perform the contract independently or with the involvement of qualified persons;
9. accounting for the use of received funds, allowing, upon completion of the contract or a separate stage, to determine the profit received, which is subject to distribution between the parties;
10. the procedure for terminating the contract.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 21, 2016 No. 49/8)

2.1.9. The profit of the parties to the contract is determined in the manner provided for by the contract as a share of the received profit. The procedure and terms for distributing profit from operations under the Mudaraba contract are established in accordance with the terms of the contract.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of June 14, 2023 No. 2023-P-12/38-3)

2.1.10. A Mudaraba contract cannot be terminated unilaterally if:

• the mudarib has begun to perform the contract and is already using funds in entrepreneurial activity;
• the term of the contract has not expired.

Chapter 2.2

Sharikat/Musharaka Contract

(Name of the chapter in the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of November 16, 2022 No. 2022-P-12/70-1)

2.2.1. A Sharikat/Musharaka contract is a partnership contract between two or more parties, whereby each partner contributes a certain amount of money or, with the consent of all partners - material assets, which gives each partner the right to conduct business using the company's assets on the terms of profit distribution according to the Sharikat/Musharaka contract, and each partner bears losses in accordance with their contribution to the total capital of the company.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of November 16, 2022 No. 2022-P-12/70-1)

2.2.2. A Sharikat/Musharaka contract is classified into two main categories:

1. association of participants without forming a legal entity;
2. association of participants with the formation of a legal entity, including, partnership societies and/or legal entities created in accordance with the legislation of the Kyrgyz Republic.

Unless otherwise follows from the subject of the contract, the Sharikat/Musharaka contract is applied both to associations of participants without forming a legal entity and to associations with the formation of a legal entity.

Diminishing Musharaka is a form of partnership based on a Sharikat/Musharaka contract, in which one of the partners promises to gradually buy out the share of another partner until the ownership right to the share passes completely to him.

The buying partner is allowed only to give an obligation to buy shares. This obligation must be independent of the partnership contract. In addition, the sales contract must be independent of the partnership contract. It is not allowed for one contract to be concluded on the condition of concluding another contract.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of November 16, 2022 No. 2022-P-12/70-1)

2.2.3. In a diminishing Musharaka contract, the general rules of the Sharikat/Musharaka contract are applied, and it is not allowed to include in the diminishing Musharaka contract any provision that gives any party the right to withdraw their share from the company's capital.

A Sharikat/Musharaka contract is concluded in written form or in the form of an electronic document signed by means of an electronic signature that allows verifying its belonging to the party to the contract, with all attachments to them.

In the event that a legal entity is created on the basis of the contract, it is subject to registration in the manner established by the legislation of the Kyrgyz Republic. In the document on the establishment of the partnership or the charter of the legal entity, the purpose of the partnership must be clearly formulated.

(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)

2.2.4. The bank is allowed to conclude partnership contracts if the financial funds or property presented by the parties for the purpose of carrying out partnership activities originate from permissible sources. When creating a legal entity based on partnership, all necessary confirmations must be obtained regarding compliance with the rules and principles of Shariah in the performance of operations during partnership activities, including management in compliance with Shariah rules.

2.2.5. When making amendments to the partnership contract, if the profit distribution shares are revised, then each partner must bear losses in accordance with their contributed share in the capital.

2.2.6. If material assets (goods) are contributed to the capital of a legal entity established on the basis of a Sharikat/Musharaka partnership contract, the monetary value of such assets must be determined based on an independent assessment.

If partners made contributions to the capital in different currencies, they must be converted into the currency of the Sharikat/Musharaka contract at current exchange rates.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/10)

2.2.7. As a contribution to the capital of a legal entity established on the basis of a Sharikat/Musharaka contract, it is not allowed to contribute debt obligations (accounts receivable). Debt obligations may be contributed to the capital of a partnership established on the basis of a Sharikat/Musharaka partnership contract only if they are inseparable from other assets presented as a contribution to the capital. At the same time, the value of net assets must be confirmed by independent auditors.

2.2.8. The contract on the creation of a legal entity based on partnership must provide for the obligation of each partner to act within the framework of the contract and in the interests of the company, as well as unconditional compliance with the rules and principles of Shariah.

2.2.9. The contract may provide for a condition on the implementation of management of the legal entity by certain partners or one partner. In this case, other partners are obliged to adhere to this decision and not take actions on behalf of the company.

2.2.10. The Sharikat/Musharaka contract may provide for the appointment of a manager not from among the partners, for a fixed remuneration, included in the company's costs, or payments in the form of a part of the investment profit and a fixed remuneration to encourage the manager may be provided. If management is carried out from the very beginning based on the size of the share of the received profit, then this action classifies the manager as a mudarib, and in this case, he has the right only to a share in the profit, if any, and no further remuneration is paid to him for manager services.

2.2.11. The parties may provide for a fixed remuneration to a partner who contributes their contribution in the form of providing services for managing the funds of the company established on the basis of a Sharikat/Musharaka contract, or who provides their services in any other form, for example, provides accounting services. At the same time, the parties to the Sharikat/Musharaka contract may determine such a partner a larger share of the profit than if he had earned it in accordance with his share in the partnership capital.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of November 16, 2022 No. 2022-P-12/70-1)

2.2.12. The Sharikat/Musharaka contract must provide for the liability of partners in the form of providing security to cover losses in the event of unlawful actions, negligence, carelessness, or violation of the contract by partners/partner.

2.2.13. If the guarantee of compensation for losses incurred by some or all partners is provided by a third party, such guarantee must meet the following requirements:

1. the legal capacity and financial obligation of such a third party acting as a guarantor must be independent of the Sharikat/Musharaka contract;
2. the guarantee cannot be provided for a certain compensation and cannot be linked to the Sharikat/Musharaka contract;
3. the third party acting as a guarantor should not own more than half of the capital amount in the company for which it provides the guarantee;
4. the company receiving the guarantee should not own more than half of the capital amount of the company providing such guarantee;
5. the partner in whose favor the third-party guarantee is issued has no right to refuse to perform their obligations under the contract if the guarantor does not fulfill the conditions of the guarantee.

2.2.14. The Sharikat/Musharaka contract must provide for a procedure for distributing profit between the parties in the form of a share of the received profit proportionally to the contribution of each partner to the company's capital. Profit cannot be established as a fixed monetary amount.

2.2.15. The Sharikat/Musharaka contract may provide for a change in the partners' shares in profit sharing on the date of its distribution or the right of a partner to assign part of the profit due to him in favor of another partner on the day of profit distribution. The parties may agree to distribute profit disproportionately to the partners' contributions to the capital. At the same time, the coefficient of the share of the passive partner (if any according to the terms of the contract) in the profit cannot be higher than the coefficient of his contribution to the capital.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/10)

2.2.16. The bank has no right to voluntarily accept losses of other partners. But in the Sharikat/Musharaka contract, the bank may provide for the right of other partners to voluntarily accept without any prior condition responsibility for losses at the moment they arise.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of November 16, 2022 No. 2022-P-12/70-1)

2.2.17. Partners are allowed to agree on the use of any method of profit distribution, regardless of whether it is constant or not, for example, agree that the size of the profit share in the first stage of contract performance is one, and in the second stage - another, depending on the mismatch of two periods or the amount of received profit. This is allowed on condition that the use of such a method does not lead to a situation where one of the partners is excluded from participation in the profit.

(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)

2.2.18. Profit must be distributed based on actual results, without taking into account expected future profit from the company's activities.

2.2.19. It is not allowed to include in the conditions or method of profit distribution under the Sharikat/Musharaka contract any provision or condition that may lead to a violation of the principle of profit distribution. Any condition or method of profit distribution that may lead to such a result will make the contract invalid.

2.2.20. Partners are not allowed to provide in the contract a provision according to which one or several partners may receive a fixed amount from the profit or an amount calculated in percentage terms from the capital of the company created on the basis of the Sharikat/Musharaka contract.

2.2.21. It is allowed to agree that if the amount of received profit is higher than a certain maximum threshold, which the parties can establish in advance, the excess profit may be transferred to a specific partner. The parties may also agree that if the profit does not exceed the maximum amount or is below such amount, the profit is distributed in accordance with their contract.

2.2.22. Upon completion of the partnership term or its liquidation, profit may be finally distributed based on receipts from the sale of all existing assets of the company created on the basis of the Sharikat/Musharaka contract, at market value.

2.2.23. It is allowed to distribute some funds to any party in advance, i.e., before actual or constructive assessment, on condition that final actual settlements will take place at a later stage. In this case, the parties are obliged to compensate the company for any amount they received in excess of their entitled share of profit after actual or constructive assessment.

2.2.24. If the subject of the Sharikat/Musharaka contract is assets acquired for lease (leasing), which will bring income, or the subject of the contract is services that will bring receipts, then the amount is distributed annually to partners in advance and is subject to settlement and compensation at the end of the term of the Sharikat/Musharaka contract.

2.2.25. It is allowed on the basis of the charter or decision of the parties not to distribute the company's profit or periodically leave a certain amount of profit as a solvency reserve or a reserve to cover capital loss (investment risk reserve).

2.2.26. It is allowed to agree and leave some part of the profit for charitable donations.

2.2.27. The parties may conclude a Sharikat/Musharaka contract for a specific term or without specifying a term, or establish conditions that are the basis for terminating or canceling the contract.

Each partner has the right to terminate the Sharikat/Musharaka contract (i.e., exit the company) after providing their partner(s) with proper notice of this. In this case, he has the right to his share contributed to the capital/assets of the company, and his exit does not lead to the termination of the partnership of the remaining partners.

In the case of a term contract, the parties are allowed to agree on the early termination of the partnership. In all such cases, obligations and actions that partners perform before the termination of the contract remain unchanged and continue to exist.

2.2.28. A partner is allowed to give an obligation to buy, either during the period of the company's existence, or at the moment of its liquidation, all assets of the company created on the basis of the Sharikat/Musharaka contract at their market value or by agreement on the date of purchase. It is not allowed to give an promise to acquire assets of the company created on the basis of the Sharikat/Musharaka...