LogoRegulatory Alerts
2020-12-28 | 125985

Regulation on the Classification of Assets and Formation of Reserves to Cover Potential Losses and Shortfalls by Non-Bank Financial-Credit Organizations

The National Bank of the Kyrgyz Republic issued this Regulation to establish uniform requirements for non-bank financial-credit organizations (NFCOs) to classify assets and form reserves covering potential losses and shortfalls. It mandates monthly asset assessments, defines specific classification categories (normal, substandard, doubtful, losses, and assets under supervision), and sets reserve contribution rates based on asset performance, collateral quality, and borrower income structures. The framework additionally incorporates specialized rules for Islamic financing principles, foreign currency exposures, and off-balance sheet obligations to ensure systemic stability and accurate financial reporting.

National Bank of the Kyrgyz Republic logo

Kyrgyzstan

National Bank of the Kyrgyz Republic

Click to view thumbnail

Back Print Version Date of creation: 2025-06-25

Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic dated December 28, 2020 No. 2020-P-33/75-4-(NFKU)

REGULATION on the Classification of Assets and Formation of Reserves to Cover Potential Losses and Shortfalls by Non-Bank Financial-Credit Organizations

(As amended by the Resolutions of the Board of the National Bank of the Kyrgyz Republic dated December 21, 2022 No. 2022-P-12/81-8, December 20, 2023 No. 2023-P-12/80-4, March 19, 2025 No. 2025-P-12/11-7-(NFKU), June 18, 2025 No. 2025-P-12/28-1-(NPA))

Section I. General Provisions

  1. This Regulation establishes requirements for the classification of assets and off-balance sheet obligations (hereinafter - assets), as well as for the creation of corresponding reserves to cover potential losses and shortfalls (hereinafter - RPPU) of microfinance organizations, credit unions, specialized financial-credit organizations, and housing-savings credit companies. This Regulation also applies to microfinance organizations, credit unions, and specialized financial-credit organizations conducting operations in accordance with Islamic principles of banking and financing.

  2. For the purposes of this Regulation, a non-bank financial-credit organization (hereinafter - NFCO) refers to a microfinance organization, credit union, housing-savings credit company (hereinafter - HSCC), and specialized financial-credit organization (hereinafter - SFCO).

  3. Credit risk is the risk of losses resulting from a decrease in the value of an NFCO's asset due to clients' failure to fulfill their obligations according to the terms and conditions of the contract. Credit risk may be related to the financial condition of the NFCO's client (hereinafter - client), collateral quality, client type by ownership form, industry affiliation, presence and types of guarantees on assets, reliability of guarants, assessment of fulfillment of previously given obligations regarding NFCO assets, prospects for the client's further business development, and other potential factors. Note: For the purposes of this Regulation, "client" of an NFCO refers to a legal or natural person assuming obligations to repay the NFCO's assets listed in paragraph 8 of this Regulation.

  4. Investments in securities and/or equity - NFCO investments in debt securities, as well as the acquisition of shares or financial investment in capital for

Share