Regulation on Economic Norms and Requirements Mandatory for Commercial Banks of the Kyrgyz Republic

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Creation Date: 2025-11-25

Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 14, 2022 No. 2022-P-12/78-7-(NPA)

REGULATION

"On Economic Norms and Requirements Mandatory for Commercial Banks of the Kyrgyz Republic"

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of April 29, 2023 No. 2023-P-12/29-1, December 8, 2023 No. 2023-P-12/76-1, January 17, 2024 No. 2024-P-12/1-3, April 12, 2024 No. 2024-P-12/17-3, June 27, 2025 No. 2025-P-12/31-2-(NPA), October 23, 2025 No. 2025-P-12/55-4-(NPA))

Chapter 1. General Provisions

1. The Regulation "On Economic Norms and Requirements Mandatory for Commercial Banks of the Kyrgyz Republic" (hereinafter - the Regulation) applies to all commercial banks, including commercial banks conducting operations in accordance with Islamic principles of banking and financing, including banks having an "Islamic window," taking into account the special terminology applied by them in conducting banking operations (hereinafter - banks).

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of January 17, 2024 No. 2024-P-12/1-3)

2. The purpose of this Regulation is to establish economic norms and requirements mandatory for banks to comply with.

3. In order to comply with the economic norms and requirements specified in this Regulation and to reduce risks, banks are recommended to establish internal limits for economic norms and requirements, which must be lower than the maximum and higher than the minimum limits established by the National Bank of the Kyrgyz Republic (hereinafter - the National Bank).

A bank has the right to recognize rating assessments of rating agencies of States-Members of the Eurasian Economic Union (EAEU), subject to regulation in the country of origin and whose assessments are recognized within the framework of prudential regulation, as well as those meeting the following criteria:

1. objectivity:

• the methodology applied by the rating agency is reliable and subject to verification based on historical and/or expected default data, and contains a detailed description of all key quantitative and qualitative factors determining the ability of the rated entity to fulfill its financial obligations, and a description of their impact on credit ratings and credit rating forecasts;

2. independence:

• the rating agency is not controlled by state bodies or officials of state bodies, quasi-state organizations or political parties that do not interfere in the activities of the rating agency and do not have influence on the rating assignment processes;
• legal entities to which the rating agency assigns, confirms or revises a rating are not affiliated persons of the rating agency;
• rating analysts of the rating agency participating in rating actions regarding the rated entity are not and have not been in employment or business relations with the rated entity for the last 3 (three) years prior to the date of the rating action, and do not own directly or indirectly, including through close relatives, securities, other financial instruments or other property of the rated entity or persons exercising control over the rated entity or exerting significant influence on such entity;
• the rating agency has an internal audit or internal control service, including performing internal audit functions, accountable to the Board of Directors;
• at least one third, but no less than two members of the Board of Directors of the rating agency are independent members who do not perform rating actions, advertise rating agency services and other actions to attract clients;
• the share of direct or indirect ownership of shares of each shareholder of the rating agency does not exceed 50 (fifty) percent of the total number of voting shares of that rating agency;
• the internal procedures of the rating agency provide for measures to prevent improper use and disclosure of information and ensure protection and confidentiality of information;

3. international access/transparency:

• the rating agency ensures disclosure on the rating agency's internet resource of the following information:
• the methodology applied by the rating agency in determining the rating;
• a list of credit ratings assigned in the last year, as well as rated entities and other entities whose share of cash receipts amounted to five percent or more in the annual revenue of the rating agency as of the end of the last completed calendar year;

4. disclosure of information: the rating agency discloses the following information:

• its professional code of conduct;
• the general nature of its compensation agreements with assessed organizations;
• any conflict of interest, compensation mechanisms of the rating agency, its rating assessment methodologies, including the definition of default, time horizon and the significance of each rating;
• actual default performance indicators for each rating category and rating transitions, for example, the probability that an "AA" rating will become "A" over time.

The rating must be disclosed as soon as possible after its release. When disclosing the rating, information must be provided in simple language indicating the nature and limitations of credit ratings, as well as the risk of unjustified use of them in investment activities.

5. reliability of ratings and resources:

• the rating agency conducts rating activities on a regular basis for at least the last five years;
• the number of organizations to which the rating agency has assigned and revised credit ratings is not less than thirty, including not less than twenty in the last three years, of which not less than five were financial organizations;
• the rating agency continuously monitors assigned ratings and ensures timely response to changing factors related to changes in the financial position, corporate governance or other aspects of the rated entity's activities, changes in macroeconomic conditions or financial market conditions, which is confirmed by actual rating updates no later than the calendar year from the date of assignment or last revision of the rating or the date of the last revision of the applied methodology.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of April 12, 2024 No. 2024-P-12/17-3)

4. To achieve the goals and perform the tasks of the National Bank, the Board of the National Bank may, by a separate resolution, change the values of the economic norms and requirements established in this Regulation.

The National Bank has the right to establish other sizes and types of economic norms and requirements for systemically important banks.

Chapter 2. Maximum Risk Size for One Borrower or Group of Related Borrowers (K1)

5. The maximum risk size for one borrower or group of related borrowers not affiliated with the bank shall not exceed the following values:

• for borrowers or groups of related borrowers, except banks (K1.1) - 20%;
• for banks (K1.3) - 30%.

6. The maximum risk size for one borrower or group of related borrowers affiliated with the bank shall not exceed the following values:

• for borrowers or groups of related borrowers, except banks (K1.2) - 20%;
• for banks (K1.4) - 20%.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of June 27, 2025 No. 2025-P-12/31-2-(NPA))

7. The procedure for calculating the maximum risk size for one borrower or group of related borrowers not affiliated with the bank is determined in accordance with the Instruction "On Lending Restrictions".

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 8, 2023 No. 2023-P-12/76-1)

8. The procedure for calculating the maximum risk size for one borrower or group of related borrowers affiliated with the bank is determined in accordance with Chapter 6 of the Instruction on Lending Restrictions and the Instruction "On Requirements for Bank Operations with Affiliated and Related Persons", approved by the Resolution of the Board of the National Bank of May 31, 2017 No. 21/5.

Chapter 3. Capital Adequacy Standards (K2)

9. Minimum capital size established by the Board of the National Bank:

1. minimum size of authorized capital of banks;
2. minimum size of own (regulatory) capital (Tier 1 capital).

10. Capital adequacy ratios based on risk-weighted assets and off-balance sheet obligations:

• total capital adequacy ratio (K2.1) - not less than 12%;
• Tier 1 capital adequacy ratio (K2.2) - not less than 7.5%;
• Common Equity Tier 1 capital adequacy ratio (K2.3) - not less than 6%.

11. For systemically important banks, capital adequacy ratios must be:

• total capital adequacy ratio (K2.1) - not less than 14%;
• Tier 1 capital adequacy ratio (K2.2) - not less than 9.5%;
• Common Equity Tier 1 capital adequacy ratio (K2.3) - not less than 8%.

12. Leverage ratio (K2.4) - not less than 6%.

13. Capital adequacy standards and the procedure for their calculation are determined in accordance with the Instruction on Determining Capital Adequacy Standards for Commercial Banks of the Kyrgyz Republic, approved by the Resolution of the Board of the National Bank of October 12, 2022 No. 2022-P-12/63-1-(NPA).

Chapter 4. Liquidity Ratio (K3)

14. The liquidity ratio (K3.1) must be maintained at a level not lower than 45%.

15. The liquidity ratio is determined by the formula: K3.1 = (LA / OB) * 100%, where:

1. LA - liquid assets, which include:

• cash in bank vaults and ATMs in national and foreign currency;
• funds in correspondent and other accounts, including in precious metals, at the National Bank;
• funds in correspondent accounts, including in precious metals, at banks;
• interbank deposits with a maturity of 7 (seven) days;
• state treasury bills and other highly liquid securities issued by the Cabinet of Ministers of the Kyrgyz Republic (hereinafter - Cabinet of Ministers) and the National Bank (hereinafter - highly liquid securities). These securities are taken into account in the calculation of the liquidity ratio net of premium (discount) and unrealized profit (loss);
• gold standard bars issued by the National Bank;
• deposits in banks having a long-term credit rating not lower than "BB" or "Ba2", assigned by one of the rating agencies Standard and Poor's, Fitch Ratings, Moody's Investors Service, Japan Credit Rating Agency (JCR), Dominion Bond Rating Service (DBRS) and other rating agencies meeting the criteria established in paragraph 3 of this Regulation, except affiliated banks, if the contract terms provide for the possibility of withdrawing the deposit within 7 (seven) days;
• highly liquid securities purchased under a repo agreement;
• state securities having a long-term sovereign credit rating not lower than "A", assigned by the rating agency Standard & Poor's, or an equivalent rating assigned by one of the rating agencies Japan Credit Rating Agency (JCR), Fitch Ratings, Dominion Bond Rating Service (DBRS), Moody's Investors Service and other rating agencies meeting the criteria established in paragraph 3 of this Regulation;

2. OB - bank obligations, which for the calculation of the liquidity ratio include:

• demand deposits of legal and natural persons in national and foreign currency, except for the minimum balance established by the contract (which cannot be disposed of until the contract is terminated), as well as funds in settlement;
• the amount of a term deposit (deposit), if the contract terms provide for the possibility of partial replenishment and partial withdrawal of funds by the client before the expiration of the term or before the occurrence of other obligations, without the need to terminate the contract and pay a penalty interest rate, except for the minimum balance established by the contract;
• any other obligations, including bills of exchange and other securities issued by the bank, obligations on securities sold under a reverse repo agreement, the settlement of which occurs within 30 (thirty) days after the reporting date, as well as off-balance sheet obligations, the performance of which under the contract occurs within 30 (thirty) days after the reporting date.

Off-balance sheet obligations (bank guarantees, letters of credit, credit lines with an unconditional obligation to perform) with an undefined performance term are included in the liquidity coefficient calculation at 10% of the total amount of such off-balance sheet obligations.

Note: off-balance sheet obligations for credit lines, each tranche of which is considered a separate loan, are not included in the calculation of the liquidity ratio.

In this case, the bank's obligations for swap and forward transactions are taken into account based on the net value of obligations minus the bank's claims against the counterparty;

• bank obligations for metal accounts on demand or with a performance term in the next 30 (thirty) days.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of April 12, 2024 No. 2024-P-12/17-3)

16. Classified interbank placements are not included in the composition of liquid assets when calculating the liquidity ratio.

Note: Regulation "On Classification of Assets and Corresponding Provisions for Reserve to Cover Potential Losses and Damages", approved by the Resolution of the Board of the National Bank of July 21, 2004 No. 18/3.

17. Any liquid assets serving as collateral for bank obligations, as well as highly liquid securities sold under a repo agreement, are excluded from the composition of liquid assets.

18. Deposits accepted by the bank and serving as collateral for assets provided to clients are not included in the composition of bank obligations if the bank has necessary procedures and a control system guaranteeing that the collateral will not be withdrawn before the loan repayment date.

Interbank loans obtained by the bank and secured by cash collateral and/or a deposit in a counterparty bank are not included in the composition of bank obligations if the bank has necessary procedures and a control system guaranteeing that the loan can be fully repaid from the collateral.

19. In order to reduce liquidity risk, bank management must carry out daily asset and liability management. The bank must comply with the liquidity ratio during the reporting period (one month) based on weekly average data. During the reporting period, the bank must calculate the values of weekly average liquid assets and short-term bank obligations (only working days are included in the calculation of weekly averages) on reporting dates. Average indicators are calculated using the arithmetic mean method.

20. The bank must develop a liquidity risk management policy in accordance with the requirements of the Regulation "On Minimum Requirements for Liquidity Risk Management of Commercial Banks of the Kyrgyz Republic", approved by the Resolution of the Board of the National Bank of March 29, 2019 No. 2019-P-12/17-3-(NPA) (hereinafter - the Regulation "On Minimum Requirements for Liquidity Risk Management of Commercial Banks of the Kyrgyz Republic").

21. The short-term liquidity ratio (K3.2) must be maintained at a level not lower than 35%.

22. The short-term liquidity ratio (K3.2) is determined by the formula: K3.2 = (VLA / KOB) * 100, where:

1. VLA - highly liquid assets, which include: a) cash in bank vaults and ATMs in national and foreign currency; b) funds in correspondent and other accounts, including in precious metals, at the National Bank; c) funds in correspondent accounts, including in precious metals, at banks having a long-term credit rating not lower than "BB" or "Ba2", assigned by one of the rating agencies Standard and Poor's, Fitch Ratings, Moody's Investors Service, Japan Credit Rating Agency (JCR), Dominion Bond Rating Service (DBRS) and other rating agencies meeting the criteria established in paragraph 3 of this Regulation, except affiliated banks; d) deposits in banks having a long-term credit rating not lower than "BB" or "Ba2", assigned by one of the rating agencies Standard and Poor's, Fitch Ratings, Moody's Investors Service, Japan Credit Rating Agency (JCR), Dominion Bond Rating Service (DBRS) and other rating agencies meeting the criteria established in paragraph 3 of this Regulation, except affiliated banks, if the contract terms provide for the possibility of withdrawing the deposit within 7 (seven) days; e) National Bank notes; f) state securities issued by the Cabinet of Ministers, the maturity of which occurs within 12 (twelve) months; g) the share of state securities issued by the Cabinet of Ministers (excluding state securities specified in paragraph "f" of sub-paragraph 1 of this paragraph), in an amount not exceeding 50% of the total amount of obligations to the Social Fund of the Kyrgyz Republic (hereinafter - Social Fund); h) highly liquid securities purchased under a repo agreement; i) 20% of funds in correspondent accounts in other banks, except affiliated banks, banks specified in paragraph "c" of sub-paragraph 1 of this paragraph, as well as banks under direct banking supervision or undergoing liquidation procedures; j) for a branch of a foreign bank - funds in correspondent accounts in other branches of the same foreign bank and opened in the currency of the specified state; k) state securities issued by states having a long-term sovereign credit rating not lower than "A", assigned by the rating agency Standard & Poor's, or an equivalent rating assigned by one of the rating agencies Japan Credit Rating Agency (JCR), Fitch Ratings, Dominion Bond Rating Service (DBRS), Moody's Investors Service and other rating agencies meeting the criteria established in paragraph 3 of this Regulation;

2. KOB - short-term obligations: a) demand deposits of legal and natural persons in national and foreign currency, except for the minimum balance established by the contract (which cannot be disposed of until the contract is terminated), as well as funds in settlement; b) the amount of a term deposit (deposit), if the contract terms provide for the possibility of partial replenishment and partial withdrawal of funds by the client before the expiration of the term or before the occurrence of other obligations, without the need to terminate the contract and pay a penalty interest rate, except for the minimum balance established by the contract; c) other obligations, the settlement of which occurs within 7 (seven) days, as well as off-balance sheet obligations, the performance of which under the contract occurs within 7 (seven) days after the reporting date. In this case, the bank's obligations for swap and forward transactions are taken into account based on the net value of obligations minus the bank's claims against the counterparty.

Off-balance sheet obligations (bank guarantees, letters of credit, credit lines with an unconditional obligation to perform) with an undefined performance term are included in the liquidity coefficient calculation at 10% of the total amount of such off-balance sheet obligations.

Note: off-balance sheet obligations for credit lines, each tranche of which is considered a separate loan, are not included in the calculation of the short-term liquidity ratio; d) 50% of the total amount of obligations to the Social Fund, not included in paragraphs "a" - "c" of this sub-paragraph; e) obligations for unallocated metal accounts of natural and legal persons on demand and with a performance term in the next 7 (seven) days.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of April 12, 2024 No. 2024-P-12/17-3)

23. Any liquid assets serving as collateral for bank obligations, as well as highly liquid securities sold under a repo agreement, are excluded from the composition of liquid assets.

24. In order to reduce short-term liquidity risk, bank management must carry out daily asset and liability management. The bank must comply with the short-term liquidity ratio during the reporting week (7 (seven) calendar days) based on weekly average data, including working, weekend and holiday days. When calculating weekly averages, daily data as of the end of the business day are taken into account. Average indicators are calculated using the arithmetic mean method.

25. The instant liquidity ratio (K3.3) must be maintained by banks whose deposit base (accounts of legal entities, natural persons and the Social Fund) constitutes 8% or more of the deposit base of the banking system as a whole.

26. The instant liquidity ratio (K3.3) is determined by the formula: K3.3 = (VLA / KOB) * 100%, where:

1. VLA - highly liquid assets:

• cash in bank vaults and ATMs in national and foreign currency;
• funds in correspondent and other accounts at the National Bank;
• funds in correspondent accounts at banks having a long-term credit rating not lower than "BB" or "Ba2", assigned by one of the rating agencies Standard and Poor's, Fitch Ratings, Moody's Investors Service, Japan Credit Rating Agency (JCR), Dominion Bond Rating Service (DBRS) and other rating agencies meeting the criteria established in paragraph 3 of this Regulation, except affiliated banks;
• 20% of funds in correspondent accounts in other banks, except affiliated banks, banks specified in the fourth paragraph of sub-paragraph 1 of this paragraph, as well as banks under direct banking supervision or undergoing liquidation procedures;
• for a branch of a foreign bank - funds in correspondent accounts in other branches of the same foreign bank located on the territory of OECD member states and opened in the currency of the specified states;
• National Bank notes, except notes serving as collateral for bank obligations, as well as sold under a repo agreement;
• state securities issued by the Cabinet of Ministers, the maturity of which occurs within 7 (seven) days, except state securities serving as collateral for bank obligations, as well as sold under a repo agreement;
• "overnight" deposits in banks having a long-term credit rating not lower than "BB" or "Ba2", assigned by one of the rating agencies Standard and Poor's, Fitch Ratings, Moody's Investors Service, Japan Credit Rating Agency (JCR), Dominion Bond Rating Service (DBRS) and other rating agencies meeting the criteria established in paragraph 3 of this Regulation, except affiliated banks, the maturity of which occurs on the next (one) business day;

2. KOB - short-term obligations:

• demand deposits of legal and natural persons in national and foreign currency, funds in settlement;
• other obligations, including off-balance sheet, r