Minimum Requirements for Forming a Credit Portfolio Accepted as Collateral

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Date of creation: 2025-09-08

RESOLUTION OF THE BOARD OF DIRECTORS OF THE NATIONAL BANK OF THE KYRGYZ REPUBLIC

Bishkek, December 27, 2017 No. 2017-P-15/54-4-(NPA)

On Approval of the Minimum Requirements for Forming a Credit Portfolio Accepted as Collateral

(As amended by Resolutions of the Board of Directors of the National Bank of the Kyrgyz Republic dated December 12, 2018 No. 2018-P-15/53-12, November 17, 2021 No. 2021-P-15/63-1, December 15, 2021 No. 2021-P-12/70-2, February 22, 2023 No. 2023-P-15/11-6, July 30, 2025 No. 2025-P-15/38-1-(NPA))

In accordance with Articles 20 and 68 of the Law of the Kyrgyz Republic "On the National Bank of the Kyrgyz Republic, Banks and Banking Activity," the Board of Directors of the National Bank of the Kyrgyz Republic resolves:

1. Approve the Minimum Requirements for Forming a Credit Portfolio Accepted as Collateral (attached).

2. This resolution shall enter into force upon the expiration of 15 days from the date of its official publication.

3. The Legal Department:

• publish this resolution on the official website of the National Bank of the Kyrgyz Republic;
• after official publication, send this resolution to the Ministry of Justice of the Kyrgyz Republic for inclusion in the State Register of Regulatory Legal Acts of the Kyrgyz Republic.

4. The Accounting and Reporting Department shall bring this resolution to the attention of commercial banks, structural divisions, regional departments, and the representative office of the National Bank of the Kyrgyz Republic in the Batken Region.

5. Control over the implementation of this resolution shall be entrusted to the Deputy Chairman of the National Bank of the Kyrgyz Republic, A.S. Tezekbaeva.

Chairman of the Board of Directors of the National Bank of the Kyrgyz Republic

T. Abdygulov

Appendix to the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated December 27, 2017 No. 2017-P-15/54-4-(NPA)

MINIMUM REQUIREMENTS

for forming a credit portfolio accepted as collateral

(As amended by Resolutions of the Board of Directors of the National Bank of the Kyrgyz Republic dated December 12, 2018 No. 2018-P-15/53-12, November 17, 2021 No. 2021-P-15/63-1, December 15, 2021 No. 2021-P-12/70-2, February 22, 2023 No. 2023-P-15/11-6, July 30, 2025 No. 2025-P-15/38-1-(NPA))

1. General Provisions

2. The purpose of these minimum requirements is to define the characteristics and requirements for loans/leases of commercial banks (hereinafter - banks), non-bank financial credit organizations attracting deposits (hereinafter - NBFCs), included in the credit portfolio, the rights to which may be accepted as collateral when providing loans to the National Bank of the Kyrgyz Republic (hereinafter - National Bank) and their verification for compliance with established requirements.

(As amended by Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated February 22, 2023 No. 2023-P-15/11-6)

2. The following terms are used in these minimum requirements:

Credit Portfolio - a collection of loans/leases issued by a bank/NBFC that meet certain characteristics established by these minimum requirements, the rights to which may be accepted as collateral when providing loans to the National Bank.

The term "Resident" is defined in accordance with the legislation of the Kyrgyz Republic.

Individual - within the framework of these minimum requirements, an individual refers to a person not registered as an individual entrepreneur engaged in agricultural activities.

(As amended by Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated December 12, 2018 No. 2018-P-15/53-12)

3. Other terms used in these minimum requirements correspond to terms provided for in the regulatory legal acts of the National Bank, the Glossary of Banking and Financial Terms of the National Bank.

4. Characteristics of Loans/Leases Included in the Credit Portfolio

5. The credit portfolio must be formed from loans/leases provided to legal entities, individual entrepreneurs engaged in the following economic sectors:

• industry;
• agriculture, harvesting and processing;
• transport, communications and services;
• trade and commercial operations;
• construction;
• tourism;
• financing of "green" projects;
• financing of women's entrepreneurship.

In addition, loans provided to individuals engaged in agriculture may be included in the credit portfolio.

Rights to claims on loans (tranches) within a credit line may serve as collateral, provided there is an identifiable allocation of collateral separately for each loan (tranche) in accordance with these minimum requirements.

For credit resources provided under the provisions of "On the Procedure for Conducting Credit Auctions by the National Bank of the Kyrgyz Republic for Refinancing and Liquidity Support," "On the Lender of Last Resort," "On the Loan for Liquidity Support," and "On the Lender of Last Resort for Non-Bank Financial Credit Organizations Attracting Deposits," the collateral consists of loans issued in the national currency.

(As amended by Resolutions of the Board of Directors of the National Bank of the Kyrgyz Republic dated December 12, 2018 No. 2018-P-15/53-12, February 22, 2023 No. 2023-P-15/11-6, July 30, 2025 No. 2025-P-15/38-1-(NPA))

5. Loans/leases included in the credit portfolio must meet the following characteristics:

1. the purpose of the loan has been verified by the bank/NBFC and documented by the borrower (receipts, checks, contracts, etc.);

2. the borrower/lessee is a resident of the Kyrgyz Republic and is not an affiliated or related party to the bank/NBFC;

3. the payment schedule does not provide for repayment of the entire amount or a significant part (70% or more) of the principal debt at the end of the loan/lease term;

4. the bank/NBFC has assessed the solvency of the borrower/lessee in accordance with the requirements of the regulatory legal acts of the National Bank, credit policy, and internal procedures of the bank/NBFC, and the positive credit history of the borrower/lessee is confirmed by information provided by the credit bureau;

5. the loan/lease meets the characteristics of normal and satisfactory loans (assets), according to the provisions of "On the Classification of Assets and Corresponding Provisions for Potential Losses and Losses" for banks and "On the Classification of Assets and Formation of Reserves for Potential Losses and Losses by Non-Bank Financial Credit Organizations" for NBFCs attracting deposits;

6. the credit file of the borrower/lessee is prepared by the bank/NBFC in accordance with the requirements of the Regulation "On Minimum Requirements for Managing Credit Risk in Commercial Banks and Other Financial Credit Organizations Licensed by the National Bank of the Kyrgyz Republic." The loan contract/financial lease (lease) agreement concluded between the borrower/lessee and the bank/NBFC must contain, among other things, the following:

• a condition that the loan/lease provided to the borrower/lessee may be included in the credit portfolio, the rights to which may be accepted as collateral by a third party when providing loans;

• an obligation of the bank/NBFC to notify the borrower/lessee in writing about the transfer of rights to third parties in the volume and on the terms that existed for the borrower/lessee at the time of the transfer of rights;

7. the loan is secured by collateral specified in paragraph 15 and meeting the conditions of paragraphs 16 and 17 of these minimum requirements.

(As amended by Resolutions of the Board of Directors of the National Bank of the Kyrgyz Republic dated February 22, 2023 No. 2023-P-15/11-6, July 30, 2025 No. 2025-P-15/38-1-(NPA))

6. The credit portfolio submitted to the National Bank must be free from any restrictions (encumbrances) on rights to it and must not be pledged to secure another obligation of the bank/NBFC. The bank/NBFC is responsible for complying with this requirement.

7. The credit portfolio submitted to the National Bank must contain loans/leases provided by the bank/NBFC for a term at least one month longer than the term of the loan provided to the bank/NBFC by the National Bank.

8. Requirements for the maximum volume of collateral in the form of rights to claims on loans are established by the Board of Directors of the National Bank upon the recommendation of the Monetary and Credit Regulation Committee or the Supervision Committee in accordance with the regulatory legal acts of the National Bank and are established as a percentage of the total volume of collateral.

(As amended by Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated July 30, 2025 No. 2025-P-15/38-1-(NPA))

9. The total share of the lease portfolio in the structure of the provided collateral of the credit portfolio must not exceed 20%.

(As amended by Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated November 17, 2021 No. 2021-P-15/63-1)

10. Authorized employees of the National Bank have the right to conduct an inspection (selective or comprehensive) of loans/leases included in the credit portfolio for compliance with the characteristics provided by these minimum requirements, notifying the bank/NBFC 2 (two) working days in advance.

11. To ensure a proper internal control system, the bank/NBFC is obliged to monitor loans/leases included in the credit portfolio to assess:

1. compliance with established characteristics - no less than once a month;

2. the financial condition and solvency of the borrower/lessee - no less than once every six months;

3. timeliness of loan/lease repayment according to the established payment schedule - on a continuous basis;

4. the condition of the collateral/lease item - no less than once every six months.

12. In the event that rights to claims on the credit portfolio are accepted as collateral by the National Bank, the bank/NBFC shall submit a report on the credit portfolio to the National Bank monthly, in accordance with the terms of the pledge agreement, in electronic format, signed by the electronic signature of the responsible official no later than the 5th day of the month following the reporting period.

(As amended by Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated December 15, 2021 No. 2021-P-12/70-2)

13. In the event that the bank/NBFC and/or the National Bank establishes a non-compliance of loans/leases with the characteristics specified in these minimum requirements, the bank/NBFC is obliged to replace them with loans/leases that meet these minimum requirements, or exclude them from the Credit Portfolio provided as collateral for credit resources of the National Bank.

(As amended by Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated December 12, 2018 No. 2018-P-15/53-12)

14. Regardless of compliance with the characteristics specified in paragraph 5 of these minimum requirements, loans fully secured by collateral in the form of state securities, National Bank securities, or deposits may be included in the credit portfolio.

15. Requirements for the Subject of Collateral/Lease

16. A loan included in the credit portfolio must be secured by the following types of collateral:

1. a deposit placed in the bank/NBFC providing the loan;

2. state securities - state treasury bills and state treasury bonds of the Kyrgyz Republic issued by the Ministry of Finance of the Kyrgyz Republic;

3. National Bank securities;

3-1) securities of international financial organizations issued and placed on the territory of the Kyrgyz Republic, provided the issuer has a long-term sovereign credit rating not lower than the highest (AAA) and the next highest (AA+), assigned by rating agencies Moody's Investors Service (USA), Standard & Poors (USA), Fitch IBCA (UK);

4. real estate (apartment, house, industrial facility, office in operation, as well as land plots);

5. motor vehicles if they serve as additional collateral to the main collateral in the form of real estate in an amount not exceeding 10% of the principal loan amount;

6. the subject of the lease;

7. guarantee of JSC "Guarantee Fund";

8. gold in the form of refined standard bars issued by the National Bank (in the form of a pledge).

(As amended by Resolutions of the Board of Directors of the National Bank of the Kyrgyz Republic dated December 12, 2018 No. 2018-P-15/53-12, November 17, 2021 No. 2021-P-15/63-1, July 30, 2025 No. 2025-P-15/38-1-(NPA))

15-1. Collateral for loans included in the credit portfolio cannot serve as collateral for other loans.

(As amended by Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic dated December 12, 2018 No. 2018-P-15/53-12)

16. The value of the collateral must cover at least 120% of the loan amount (principal debt). In cases where the loan and collateral in the form of a deposit are in the same currency, the coverage must be at least 100%.

17. The following requirements must be met regarding the subject of collateral:

1. the collateral provided in the form of real estate or motor vehicles belongs to the borrower/collateral provider by right of ownership, confirmed by documents prepared in accordance with the requirements of the legislation of the Kyrgyz Republic;

2. there is a written consent of the spouse of the borrower/collateral provider, certified by a state/private notary, for the transfer of real estate and/or motor vehicles belonging to the borrower/collateral provider by right of ownership into collateral;

3. the subject of collateral is located and registered on the territory of the Kyrgyz Republic by authorized state bodies, which must be confirmed by documents prepared in accordance with the requirements of the legislation of the Kyrgyz Republic;

4. the subject of collateral in the form of motor vehicles must be insured throughout the entire period of the loan agreement, and the amount of insurance coverage must correspond to the size of the debt covered by this collateral.

18. The following requirements must be met regarding the subject of the lease:

1. the subject of the lease is located and registered on the territory of the Kyrgyz Republic by authorized state bodies, which must be confirmed by documents prepared in accordance with the requirements of the legislation of the Kyrgyz Republic;

2. the subject of the lease must be insured throughout the entire period of the financial lease (lease) agreement, and the amount of insurance coverage must correspond to or exceed the size of the lease debt (principal and interest). Exceptions apply to cases of providing additional collateral in the form of real estate or making a own contribution, the coverage share of which is 50% or more of the amount of funds provided.

18-1. When securing a loan with a guarantee of JSC "Guarantee Fund," the requirements of the Regulation "On the Classification of Assets and Corresponding Provisions for Potential Losses and Losses" must be met.

(As amended by Resolutions of the Board of Directors of the National Bank of the Kyrgyz Republic dated December 12, 2018 No. 2018-P-15/53-12, February 22, 2023 No. 2023-P-15/11-6)

19. When preparing documentation for a loan/lease, the bank/NBFC must comply with all requirements of the legislation of the Kyrgyz Republic and the corresponding regulatory legal acts of the National Bank.

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