Resolution of the Board of the National Bank of the Kyrgyz Republic of 13 December 2023 No. 2023-П-12/77-1-(НПА)

On Amendments

to the Resolution of the Board of the National Bank of the Kyrgyz Republic

“On Approval of the Regulation ‘On the Special Regulatory Regime’

of 12 August 2020 No. 2020-П-12/45-3-(НПА)

In accordance with Articles 5, 9 and 64 of the Constitutional Law of the Kyrgyz Republic “On the National Bank of the Kyrgyz Republic”, the Board of the National Bank of the Kyrgyz Republic resolves:

• 1. To introduce amendments to the Resolution of the Board of the National Bank of the Kyrgyz Republic “On Approval of the Regulation ‘On the Special Regulatory Regime’” of 12 August 2020 No. 2020-П-12/45-3-(НПА) (attached).

• 2. This Resolution shall enter into force upon the expiration of fifteen days from the day of its official publication.

• 3. To the Legal Department:

  • from the day of receipt of the relevant documents, within 3 (three) working days, to publish this Resolution on the official website of the National Bank of the Kyrgyz Republic;

  • after official publication, to send this Resolution to the Ministry of Justice of the Kyrgyz Republic for inclusion in the State Register of Normative Legal Acts of the Kyrgyz Republic.

• 4. To the Supervision Methodology Department, within 3 (three) working days, to bring this Resolution to the attention of commercial banks, the Legal Entity “Union of Banks of Kyrgyzstan”, the Legal Entity “Association of Microfinance Organizations”, the Legal Entity “National Association of Credit Unions and Cooperatives of Kyrgyzstan”, the Legal Entity “Association of Payment System Operators KG”, microfinance companies, microcredit companies, microcredit agencies, credit unions, guarantee funds, credit bureaus, Open Joint-Stock Company “Financial Company of Credit Unions”, payment system operators and payment organizations.

• 5. To the “Secretariat of the Board” Division, within 3 (three) working days, to bring this Resolution to the attention of the relevant structural subdivisions of the National Bank of the Kyrgyz Republic, regional departments and the Representative Office of the National Bank of the Kyrgyz Republic in Batken Oblast.

• 6. To entrust control over the execution of this Resolution to the member of the Board supervising the Supervision Methodology Department.

Chairman K. Bokontaev

Annex
to the Resolution of the Board of the National Bank of the Kyrgyz Republic of “13” December 2023 No. 2023-П-12/77-1-(НПА)

Amendments to the Resolution of the Board of the National Bank of the Kyrgyz Republic “On Approval of the Regulation ‘On the Special Regulatory Regime’

of 12 August 2020 No. 2020-П-12/45-3-(НПА)

• 1. To introduce the following amendment to the Resolution of the Board of the National Bank of the Kyrgyz Republic “On Approval of the Regulation ‘On the Special Regulatory Regime’” of 12 August 2020 No. 2020-П-12/45-3-(НПА):

in the Regulation “On the Special Regulatory Regime” approved by the above-mentioned Resolution:

• in paragraph 1:

  • in the third paragraph, to exclude the words “fundamentally”;

  • the fourth paragraph shall be deemed to have lost force;

• paragraph 2 shall be supplemented with a paragraph as follows:

  • “- development of competition.”;

• paragraph 6, after the tenth paragraph, shall be supplemented with a paragraph as follows:

  • “In the event of a decision to extend the special regulatory regime, the content of the technical specification may, if necessary, be changed on the basis of a corresponding application of the Applicant (Co-applicant) by decision of the Committee of the National Bank.”;

• paragraph 7 shall be set out as follows:

“7. An application for the creation of a special regulatory regime (hereinafter – the Application) shall be submitted by the Applicant and the Co-applicant (if any) to the National Bank.

In the special regulatory regime, for testing analogous operations and services or the technologies used in conducting operations and providing services, simultaneous participation of participants of the special regulatory regime is permitted, taking into account paragraph 14-1 of this Regulation.”;

• paragraph 8 shall be set out as follows:

“8. The Application shall include:

    - an application in the form of Appendix 1 to this Regulation, drawn up on the letterhead of the Applicant, with a request for the creation of a special regulatory regime in accordance with this Regulation, containing an inventory of the documents attached to the application, signed by the head and certified by the seal of the Applicant and the Co-applicant (if any), or electronic equivalents drawn up in accordance with the requirements of the legislation of the Kyrgyz Republic;

    - information about the Applicant and the Co-applicant (if any) in the form of Appendix 2 to this Regulation and the written consent of the Co-applicant;

    - information about the operation, service/technology in the form of Appendix 3 to this Regulation, the testing of which is proposed by the Applicant;

    - notarized copies or electronic forms of the constituent documents of the Applicant/Co-applicant (if any) with details for obtaining confirmation from the relevant state bodies, indicating the amount of the declared charter capital;

    - duly certified accounting/financial statements of the applicant for the last reporting financial year;

    - a document confirming payment for the license. The amount of the state fee for the license shall be determined in accordance with the legislation of the Kyrgyz Republic;

    - the original power of attorney for obtaining the license;

    - written consent of the Applicant and the Co-applicant to the conduct of scheduled/unscheduled on-site inspections within the framework of the special regulatory regime by the National Bank, if the Applicant and/or the Co-applicant are not legal entities supervised by the National Bank (Appendix 1-1);

    - forecast economic calculations of the results expected from the proposed operation and service.

The requirement to provide constituent documents and accounting/financial statements shall not apply to persons supervised by the National Bank acting as the Applicant and the Co-applicant (if any).”;

• the fifth paragraph of paragraph 14 shall be set out as follows:

  • “- the presence of analogous banking activity provided or used in accordance with the legislation of the Kyrgyz Republic;”;

• to supplement with paragraph 14-1 as follows:

“14-1. Applications for the creation of a special regulatory regime for testing a banking operation and service that are already provided by another entity(ies) within the framework of a special regulatory regime shall be submitted with the additional provision of the following information:

    - a) a comprehensive assessment of factors (SWOT analysis) of the operation and service proposed for testing in comparison with already existing special regulatory regimes testing analogous operations and services. Minimum disclosure of the components of the comprehensive assessment of factors (SWOT analysis) is required:

      - S – strengths, with a description of the advantages of parallel testing of operations and services that are provided by another entity(ies) within the framework of a special regulatory regime;

      - W – weaknesses, with a description of the difficulties of parallel testing of operations and services that are provided by another entity(ies) within the framework of a special regulatory regime;

      - O – opportunities of the external environment, with a description of the result of introducing innovative services/technologies in the banking and payment services market;

      - T – threats of the external environment, with a description of possible risks of parallel testing of operations and services that are provided by another entity(ies) within the framework of a special regulatory regime.

    - b) proposals for improving the regulatory legal acts of the National Bank that will facilitate the introduction of innovative services/technologies in the banking and payment services market.";

• paragraph 20 shall be stated in the following wording:

"20. Within the framework of the special regulatory regime, the Committee may establish the following obligations of the Participant of the special regulatory regime:

    - additional reporting related to the provision of the tested banking operation and service;

    - admission of representatives of the National Bank within the framework of periodic on-site inspections, targeted inspections, as well as access to the information systems of the Participant of the special regulatory regime for obtaining information related to the provision of the tested banking operation and service, including for a participant that is not a person supervised by the National Bank;

    - notification of consumers that the banking operation and service is provided in a test mode and of the possibility of termination of the test mode within 1 (one) business day from the moment of termination of the license by the National Bank and notification of the Participant;

    - unconditional compensation of all financial obligations under banking operations and services;

    - other obligations, taking into account the specifics of the provision of the innovative banking operation and service.";

• shall be supplemented with paragraph 22-1 in the following wording:

"22-1. Within the framework of the special regulatory regime, the National Bank has the right to conduct scheduled/unscheduled inspectoral inspections in the procedure and within the timeframes established by the regulatory legal acts of the National Bank on inspectoral inspections, including of persons that are not supervised by the National Bank, who have obtained a license to carry out banking operations within the framework of the special regulatory regime and have given consent in accordance with Appendix 1-1 to this Regulation.";

• paragraph two of paragraph 24 shall be stated in the following wording:

"In the event of extension of the testing period, an additional decision of the Committee shall be issued indicating the new end date of testing. An additional decision of the Committee on extension of the testing period may be adopted no more than 1 (one) time and for a duration of no more than 6 (six) months. The conditions for extending the testing periods specified in the decision of the Committee must comply with the requirements of this Regulation.";

• paragraph 34 shall be stated in the following wording:

"34. If, based on the results of testing, the Participant of the special regulatory regime, including Participants of simultaneous testing, have achieved the quantitative and qualitative criteria specified in the conditions of the special regulatory regime, on the basis of the conclusion of the authorized structural subdivision, the Committee shall recognize the testing as successful.";

• paragraph 35 shall be stated in the following wording:

"35. If the testing is recognized as unsuccessful, the Participant of the special regulatory regime, including Participants of simultaneous testing, shall be prohibited from further provision of the innovative banking operations and services that were tested within the framework of the special regulatory regime. The license for participation in the special regulatory regime shall be terminated.";

• shall be supplemented with paragraphs 35-1 and 35-2 in the following wording:

"35-1. In the event of termination of the license, the Participant, including Participants of simultaneous testing, shall be obliged:

    - 1) within 1 (one) business day to notify the participants/users, suppliers of goods/services of the termination of the provision of operations/services within the framework of the special regulatory regime;

    - 2) within the timeframes established by the Committee, to complete payments/fulfillment of obligations to participants/consumers and suppliers of goods/services (third parties) and immediately cease the licensed type of activity;

    - 3) within 3 (three) business days from the day of receipt of the notification of termination of the license, to surrender the license to the National Bank.

The National Bank shall publish information on the termination of the license on the official website of the National Bank.

35-2. Before surrendering the corresponding license to the National Bank, the Participant must fulfill the terms of the contract(s), complete payments and fulfill financial obligations to participants/consumers and suppliers of goods/services (third parties) and cease the licensed type of activity, in accordance with the legislation of the Kyrgyz Republic.

When surrendering the license to the National Bank, the Participant must submit in paper form copies of reconciliation acts on completion of settlements with third parties, copies of documents confirming completion of mutual settlements with other participants for the provision of the corresponding services.";

• in the third sentence of paragraph 36, the word "conditions" shall be replaced by the words "conditions/restrictions";

• paragraph 38 shall be stated in the following wording:

«38. The register of special regulatory regimes shall include the following information about participants of special regulatory regimes:

    - name of the Participant(s) of the special regulatory regime;

    - list of banking operations for which a license has been issued within the framework of the special regulatory regime;

    - registration number of the Participant of the special regulatory regime and license details;

    - website of the Participant(s) of the special regulatory regime (if available) and their contact details (including email address);

    - date of approval of the special regulatory regime;

    - start date of testing specified in the special regulatory regime;

    - end date of testing specified in the special regulatory regime

(as well as, in the case of extension of testing, an indication of the extension of the testing period).»;

• supplement with Appendix 1-1 as follows:

«Appendix 1-1 to the Regulation “On the Special Regulatory Regime” National Bank of the Kyrgyz Republic dated ___________________ No.____________________

WRITTEN CONSENT

for the conduct of scheduled/unscheduled on-site inspections within the framework of the special regulatory regime by

the National Bank of the Kyrgyz Republic

___________________(name of legal entity) represented by ______________(full name, passport No., issued by), being the head (chairman of the board) of ________, authorized by the charter _____ or by a decision of the management (board/board of directors), within the framework of the application for the creation of a special regulatory regime at the National Bank of the Kyrgyz Republic, gives consent to the conduct of scheduled/unscheduled on-site inspections within the framework of the special regulatory regime by the National Bank of the Kyrgyz Republic and to the provision, upon request of the National Bank, of documents and information within the established deadlines.

Full name
Signature of the head and seal of the organization

“_” ____________ 20.