Methodological Guidelines for Filling Out the Periodic Regulatory Report of Credit Unions Conducting Operations in Accordance with Islamic Principles of Banking and Finance

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Creation date: 2025-03-13

Appendix 3
to the Resolution of the Supervisory Committee of the National Bank of the Kyrgyz Republic of 26.12.2014 No. 46/1

METHODOLOGICAL GUIDELINES

on filling out the periodic regulatory report of credit unions conducting operations in accordance with Islamic principles of banking and finance

(Changes and additions approved by the Resolution of the Supervisory Committee of the NBKR No. 37/3 dated 05.10.2017, No. 06/2 dated 08.02.2018, No. 43/2 dated 30.12.2022, No. 13/1 dated 06.03.2025)

I. GENERAL PROVISIONS

These Methodological Guidelines explain the procedure for filling out the appendices to the Regulation "On the periodic regulatory report of credit unions conducting operations in accordance with Islamic principles of banking and finance" (hereinafter referred to as the PRR), submitted under the following sections:

1. title page;

2. Section 1 "Regulatory report on financial position":

3. Section 2 "Report on income and expenses";

4. Section 3 "Information on the financing portfolio";

5. Section 4 "Information on major clients of the credit union";

6. Section 5 "Information on major problematic clients of the credit union";

7. Section 6 "Report on funds attraction operations of the CU";

8. Section 7 "Other information";

9. Section 8 "Information on compliance with economic norms of the credit union";

10. Section 9 A. "Information on members of the supervisory board, the board, participants (shareholders) and members of the Shariah Council of the CU";

11. Section 9 B. "Information on certain officials of the CU";

12. Section 9 C. "Basic information on the CU (information on branches, active committees, subsidiaries and affiliated companies)".

All amounts must be indicated in thousands of som (amounts in foreign currency must be indicated in som equivalent at the official exchange rate of the National Bank on the reporting date).

(changes and additions approved by the Resolution of the Supervisory Committee of the NBKR No. 13/1 dated 06.03.2025)

ceased to be in force in accordance with the Resolution of the Supervisory Committee No. 37/3 dated 05.10.2017.

Sections not described in these methodological recommendations are filled out in accordance with the corresponding regulatory legal acts of the National Bank.

II. TITLE PAGE

The title page indicates:

date and outgoing registration number;

the date as of which the report was prepared. The date is the last day of the reporting period, and the report is compiled as of the end of the day;

date of preparation of the report;

frequency – "quarterly", "annual" or "correction". When submitting a quarterly report, underline the word "quarterly". When submitting a report for the 4th quarter, which is annual, underline the word "annual". Mark the word "correction" when submitting a corrected report. Correction of the report is allowed if technical errors arise. In this case, only those reporting forms in which changes were made are submitted, and the changes are marked with a marker;

type of audit or inspection conducted - one or two of the following lines are indicated:

a) internal inspection - if the inspection was conducted by the Audit Commission of the credit union (hereinafter - CU);

b) audit without conclusion - if an audit was conducted that does not give recommendations, a work plan for the future, but is limited to issuing a conclusion on the correctness of conducting banking operations and accounting;

c) audit with issuance of a conclusion - if an audit was conducted that, in addition to checking the correctness of conducting operations and accounting, gives the CU recommendations and a plan of measures to improve and/or perfect its activities;

name of the reporting CU, which is indicated in capital letters;

certifying signatures of the Chairman of the Board of the CU or a CU participant acting as Chairman in his absence, the Chief Accountant;

signature of a CU employee responsible for preparing and submitting the PRR with indication of position, surname, first name, patronymic and phone number.

SECTIONS

III. OF THE PERIODIC REGULATORY REPORT

1. Section 1 "Regulatory report on financial position"

(changes and additions approved by the Resolution of the Supervisory Committee of the NBKR No. 13/1 dated 06.03.2025)

In the regulatory report on financial position, the most significant items of the financial position of the CU are separately highlighted from the point of view of the regulatory report.

(changes and additions approved by the Resolution of the Supervisory Committee of the NBKR No. 13/1 dated 06.03.2025)

The regulatory report on financial position consists of two columns:

name of the report item;

total - value of the item in som.

Amounts in the items of the financial position report (except for financing) are shown net of corresponding amounts of reserves for potential losses and losses (hereinafter - RPPU), depreciation charges and discount/premium (net asset value).

In the report, assets and liabilities are grouped by content. Assets are arranged in descending order of liquidity, and liabilities by maturity dates.

In column 3 of the section, balances of balance sheet accounts of the corresponding groups of accounts are indicated.

§ 1. Subsection "Assets"

In item 1 "Cash", cash on hand in the CU's cash register is indicated.

In item 2 "Settlement accounts", funds located in settlement accounts in commercial banks are indicated.

In item 3 "Deposits in FKO, including banks", funds of the CU placed in commercial banks that generate income for the CU and have a fixed payment term are indicated.

In item 4 "Debt securities held to maturity", debt securities that the CU is firmly determined and able to hold until maturity are indicated.

In item 5 "Marketable debt and equity securities" - debt and equity securities that are not acquired for sale in the short term, but may be sold before maturity are reflected. Marketable securities are Government Bonds of the Kyrgyz Republic Cabinet of Ministers acquired by the CU, excluding equity securities of other FKOs licensed by the National Bank. Securities acquired by the CU must comply with Shariah standards.

In item 6 "Total liquid assets", the sum of the values of items 1 to 5 is indicated.

In item 7 "Financing", financing provided by the CU to its participants is indicated.

In item 8 "(Minus) Special RPPU for financing", the amount of special RPPU for classified assets, created in accordance with the requirements of the Regulation "On the classification of assets and formation of reserves for potential losses and losses by non-bank financial-credit organizations", approved by the Resolution of the Board of the National Bank dated 28.12.2020 No. 2020-P-33/75-4-(NFKU), is indicated.

In item 9 "Total: net financing", the difference between the values of items 7 and 8 is indicated.

In item 10 "Assets/inventory for subsequent transfer to clients", the cost of buildings, other structures, furniture, equipment and other assets/inventory acquired by the CU for subsequent transfer to clients, including under murabaha and ijara/ijara muntahiya bit tamlik contracts, is indicated. These data are reflected in a breakdown into real estate and movable property.

In item 11 "Fixed assets, total", investments in buildings, furniture, office equipment, computers, automobiles, and construction in progress are indicated. Item 11 includes, among other things, fixed assets received as a grant on a gratuitous basis. The cost of fixed assets is reduced by the amount of accumulated depreciation (minus).

In item 12 "Other property, total:", data are indicated in a breakdown into:

a) client's real estate accepted in repayment of received financing - real estate accepted onto the CU's balance sheet as a result of the transfer of ownership rights to collateral property to it;

b) other client property accepted in repayment of provided financing - other client property (except real estate) accepted onto the CU's balance sheet as a result of the transfer of ownership rights to collateral property to it.

In item 13 "Investments and financial participation", investments in the capital of FKOs licensed and regulated by the National Bank and others are indicated.

In item 14 "Accrued income receivable, total:", data of sub-items a) - g) are indicated, reflected separately in the corresponding rows:

a) on deposits in banks and other FKOs - income accrued for receipt on deposits in banks and other FKOs is reflected;

b) on financing - income accrued for receipt on financing issued to participants is reflected;

c) on securities held to maturity - income accrued for receipt on acquired securities held to maturity is reflected;

d) on marketable securities - income accrued for receipt on acquired marketable securities is reflected.

In item 15 "Other assets, total:", other assets not accounted for in previous items are indicated: commissions, prepayments, expenses of future periods, accounts receivable, low-value and fast-wearing items transferred for use, inventory, intangible assets, capital investments in the improvement of rented property and others.

In item 16 "Total assets", the sum of the values of items 6, 9-15 is indicated.

Off-system accounts indicate data located in off-system accounting: written-off financing, markup/income on classified assets, other property at net realizable value, and fees for non-performance of obligations on classified assets (penalties).

(changes and additions approved by the Resolution of the Supervisory Committee of the NBKR No. 13/1 dated 06.03.2025)

§ 2. Subsection B. "Liabilities and Capital"

In item 1 "Demand deposits under card agreement", funds of CU participants in demand deposits are indicated.

(changes and additions approved by the Resolution of the Supervisory Committee of the NBKR No. 13/1 dated 06.03.2025)

In item 2 "Time deposits under mudaraba agreement", funds of CU participants in time deposits are indicated, in a breakdown into:

(changes and additions approved by the Resolution of the Supervisory Committee of the NBKR No. 13/1 dated 06.03.2025)

a) time deposits under limited mudaraba agreement;

b) time deposits under unrestricted mudaraba agreement.

(changes and additions approved by the Resolution of the Supervisory Committee of the NBKR No. 13/1 dated 06.03.2025)

In item 3 "Total", the sum of the values of items 1 and 2 is indicated.

In item 4 "Financing received from banks and other financial organizations", the amount of financing received by the CU from banks and other financial-credit organizations is indicated, in a breakdown into:

a) from JSC "Financial Company of Credit Unions" (hereinafter - FKCU);

b) including technical financing from FKCU;

c) from banks;

d) from other financial organizations;

e) from international financial organizations and donors;

f) from international FKOs.

In item 5 "Financing provided by the Cabinet of Ministers of the Kyrgyz Republic", financing provided by the Ministry of Finance of the Kyrgyz Republic, regional, district, city akimats, accounts of ministries and other budget funds is indicated.

(changes and additions approved by the Resolution of the Supervisory Committee of the NBKR No. 43/2 dated 30.12.2022)

In item 6 "Other liabilities and financing", liabilities for capital lease and other similar liabilities of the CU are indicated.

In item 7. "Accrued expenses payable", expenses accrued but not paid by the CU as of the date of preparation of the report are indicated, in a breakdown into:

a) on participant deposits;

(changes and additions approved by the Resolution of the Supervisory Committee of the NBKR No. 13/1 dated 06.03.2025)

b) on financing from FKCU;

c) on technical financing of FKCU;

d) on financing from banks;

e) on financing from other financial organizations;

f) on financing from international organizations and donors;

g) on financing from international FKOs;

h) others.

In item 8 "Other liabilities", data are indicated in a breakdown into:

a) creditor accounts - various liabilities for payment for goods supplied, services rendered, accrued wages are indicated;

b) deferred income (markup) on murabaha and salam operations;

c) dividends payable - the amount of dividends accrued to CU participants after distribution is indicated;

d) accrued liabilities - accrued wages, accrued tax payments are indicated;

e) income of future periods - advance payments received from buyers for fixed assets, materials, services, reimbursable commission expenses are indicated.

In item 9 "Total liabilities", the sum of the values of items 3- 8 is indicated.

In item 10 "Savings shares", the total amount of savings shares of CU participants as of the date of preparation of the report is indicated.

In item 11 "Reserves for future needs (capital reserves)", reserves formed by the CU from part or all of the profit (not available for dividend payment) according to the decision of the General Meeting of Participants are indicated. Formed once a year based on the results of the general meeting of CU participants.

In item 12 "General RPPU", the amount of RPPU for non-classified assets is indicated.

In item 13 "Profit Smoothing Reserve (PSR)", the amount allocated by the CU from gross profit before distribution of the mudarib's share, in order to maintain a certain level of yield on investments of investment account holders, is indicated.

In item 14 "Reserve for investment risk coverage" (if any), the amount allocated from the profit of investment account holders, after distribution of the mudarib's profit share, in order to mitigate the risks of future investment losses of investment account holders, is indicated.

In item 15 "Undistributed profit/losses", data are indicated in a breakdown into:

a) profit/losses of previous years - the amount of profit of previous years remaining undistributed is indicated;

b) profit/losses of the last reporting (current) period.

In item 16 "Total capital"

is indicated

the sum of items 10, 11, 12, 13, 14 and 15-a), in case of losses, lines 15-a) and 15-b) are subtracted.

In item 17 "Total liabilities and capital", the sum of items 9-15 is indicated.

§ 3. Subsection C. "Off-balance sheet liabilities"

In item 1 "Obligations to provide financing", obligations to provide financing in the future are reflected.

In item 2 "Guarantees, sureties and similar obligations", general guarantees and similar obligations of the CU are reflected.

In item 3 "Obligations to purchase assets", obligations of the CU to purchase assets in the future are reflected.

In item 4 "Other off-balance sheet liabilities", all other off-balance sheet liabilities not indicated above are reflected.

In item 5 "Total off-balance sheet liabilities", the sum of items 1 to 4 is shown.

Section 2. "Report on income and expenses"

(changes and additions approved by the Resolution of the Supervisory Committee of the NBKR No. 13/1 dated 06.03.2025)

This reporting form must reflect income and expenses received and incurred by the CU during the reporting period (column 3 "for the quarter") and year-to-date (column 4 "cumulative"). Income and expenses arising from the activities of the CU are grouped by their nature and the amounts of the main types of income and expenses are disclosed.

In item 1 "Income received from operations (sum of items a)-c))", income received by the CU during the reporting period is indicated, and the amounts of the following sub-items are included:

• on debt obligations;

• on funds in accounts in other banks and FKOs;

• on financing provided to CU participants.

In item 2 "Income on attracted investments", income of the CU on attracted investments received during the reporting period is indicated.

In item 3 "Expenses incurred on operations", expenses incurred by the CU during the reporting period are indicated, and the amounts of items 4, 5 and 6 are included.

In item 4 "Expenses on participant accounts", expenses on participant accounts of the CU placed in the CU are indicated.

In item 5 "Expenses on financing received from banks and financial organizations", all expenses related to received financing from external sources: FKCU, commercial banks, from other financial organizations of the KR are indicated.

In item 6 "Other operating expenses", other operating expenses not indicated above are indicated.

In item 7 "Net income", the sum of items 1 and 2 minus item 3 is indicated.

In item 8 "Expenses for RPPU", expenses for RPPU are indicated.

In item 9 "Net income after deductions to RPPU", the difference between items 7 and 8 is indicated.

In item 10 "Income from other operations", income from collection of funds for other types of CU activities is indicated and includes the sum of the following sub-items:

a) fees and commissions on financing - income in the form of commission fees and other similar payments received for services, including notary fees, etc. is indicated;

b) premises rental fees - income received by the CU from its own buildings occupied by third-party tenants is indicated;

c) income (loss) from the sale of fixed assets - income (losses) received by the CU from the sale of fixed assets used in the CU are indicated;

d) income (loss) from the sale of other property - income (losses) received by the CU from the sale of collateral property on unrecovered financing are indicated;

e) other income - other income not listed above is indicated.

In item 11 "Expenses from other operations", operating expenses of the CU during the reporting period are indicated and include the sum of items 12-20.

In item 12 "Personnel expenses", expenses of the CU related to payment of salaries to employees and management, incentives, social payments, payment of staff training and other payments are indicated.

In item 12-a) "Deductions to the Social Fund", the amount of deductions to the Social Fund of the KR is indicated.

In item 13 "Expenses on buildings and structures", expenses on operational lease of CU buildings, amortization of improvement of rented production premises, amortization of buildings and structures, expenses for maintenance of buildings, expenses under contracts for maintenance and repair of buildings, utilities, current repair of buildings, building security are indicated.

In item 14 "Expenses on furniture, equipment, computers and software", expenses on amortization of furniture and equipment, computers, rental of furniture and equipment, current repair of furniture and equipment, expenses under contracts for maintenance and repair of equipment, computers and software are indicated.

In item 15 "Administrative expenses", expenses of the CU related to ensuring the activities of the CU are indicated: office supplies and office supplies, communication services, travel expenses, representation expenses, for amortization of cars, expenses on cars, payment for specialist services, expenses on advertising and marketing, expenses on publications and subscriptions, other administrative expenses.

In item 16 "Expenses on financing and debts", expenses related to the provision of financing, repayment of debts and administration of property in the form of collateral accepted into ownership are indicated, and include:

a) expenses for debt repayment - expenses for debt repayment (for example, payment for legal services, intermediary services) are indicated;

b) expenses on collateral property accepted into ownership - expenses on collateral property accepted into ownership by the CU (for example, payment for property security, repair to prevent further damage to the property or to preserve its value until the moment of sale, as well as expenses for legal services related to the realization of collateral rights) are indicated.

In item 17 "Other operating expenses", expenses of the CU for charity, expenses related to shortages and surpluses in the cash register and other expenses arising in the activities of the CU are indicated.

In item 18 "Takaful", expenses related to insurance (takaful) are indicated.

In item 19 "Taxes, except profit taxes", taxes on value added (value added tax not subject to deduction for acquired material resources and only VAT payers) and other taxes are indicated.

In item 20 "Unforeseen income and expenses", income or expenses from operations or events not related to the ordinary activities of the CU, and occurring rarely (extraordinary income and expense) are indicated.

In item 21 "Expenses on tax on unforeseen profit", tax on profit from unforeseen events is indicated.

In item 22 "Net operating income (loss)", the sum of items 9 and 10 minus item 11 is indicated.

In item 23 "RPPU (not from financing operations)", expenses for RPPU not from financing operations are indicated.

In item 24 "Expenses on zakat and charity", expenses directed by the CU to zakat and charity are indicated.

In item 25 "Net income (loss)", the difference between items 22 and 23 and 24 is indicated.

(changes and additions approved by the Resolution of the Supervisory Committee of the NBKR No. 13/1 dated 06.03.2025)

Section 3. "Information on the financing portfolio"

§ 1. Subsection A. "Overdue assets"

Data on overdue assets are shown in a breakdown by items depending on the number of days overdue.

In columns 3, 4, 5, payments on the principal amount (according to the schedule), markup/income (according to the schedule) and the balance of financing at the end of the reporting period are indicated, respectively.

In column 6 "Yield coefficient, in %", the yield coefficient in percentage terms is indicated.

The definition of the yield coefficient is comparable to the definition of the annual effective interest rate. The yield coefficient is income in a reliable, annual, effective, comparable calculation, in which the client's payments related to obtaining financing or rewarding the client for placing funds in a deposit account are taken into account.

The yield coefficient is calculated in accordance with the Regulation "On the calculation of the effective interest rate when disseminating information on the amount of remuneration for banking services", approved by the Resolution of the Board of the National Bank dated August 27, 2008 No. 33/4.

(changes and additions approved by the Resolution of the Supervisory Committee of the NBKR No. 06/2 dated 08.02.2018)

In item 6 "Total overdue assets", the sum of items 1-5 is indicated.

ceased to be in force in accordance with the Resolution of the Supervisory Committee No. 37/3 dated 05.10.2017.

In item 7 "Restructured assets", restructured assets are indicated, depending on whether they were restructured one or two or more times.

In item 10 "Total amount of assets written off from the balance sheet for the reporting period", the total amount of assets written off from the balance sheet and transferred to off-system accounting of the CU in the current month is indicated.

In item 11 "Total amount of assets written off from the balance sheet cumulatively", the total amount of assets written off from the balance sheet and transferred to off-system accounting of the CU cumulatively is indicated.

(changes and additions approved by the Resolution of the Supervisory Committee of the NBKR No. 13/1 dated 06.03.2025)

§ 2. Subsection B. "Asset Classification"

In column 2 "Name of the item", the direction in which financing was provided is shown.

The value of column 3 "Total assets" must be equal to the sum of the values of columns 6, 7.1, 7.2, 9.1, 9.2, 10, 11.

In column 4 "Discount", the amount of unamortized discount on all financing operations is indicated.

In column 5 "Total reserves", the size of RPPU (general and special) for each type of assets and off-balance sheet liabilities is indicated. The value of column 5 must be equal to the sum of the values of columns 8 and 12.

In columns 8 and 12, the amount of RPPU is indicated in a breakdown by types into general and special reserves.

In columns 6, 7, 7.1, 7.2, 9, 9.1, 9.2, 10 and 11, categories of assets and off-balance sheet liabilities are indicated, depending on the classification, from "standard" to "losses".

In columns 13 and 14, the weighted average markup/income and yield coefficient at the end of the reporting period in percent are indicated. Markup/income is calculated in the manner provided for in paragraph 16 of

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