Policy and Basic Principles of Antimonopoly Regulation, Competition Development, and Consumer Protection in the Banking Services Market of the Kyrgyz Republic

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Date of creation: 2023-02-08

Approved

by the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 2, 2005 No. 4/1

POLICY AND BASIC PRINCIPLES

of antimonopoly regulation, development of competition, and protection of consumer rights in the market of banking services of the Kyrgyz Republic, provided by commercial banks, non-bank financial credit organizations, payment system operators and payment organizations, and other legal entities licensed and regulated by the National Bank of the Kyrgyz Republic

(In the edition of the Resolutions of the Board of the NB KR of November 16, 2012 No. 43/1, March 27, 2013 No. 9/12, February 19, 2014 No. 4/5, December 28, 2016 No. 51/3, June 15, 2017 No. 2017-P-12/25-12, December 28, 2022 No. 2022-P-12/83-8)

1. General Provisions

1.1. (Lost force in accordance with the Resolution of the Board of the NB KR of June 15, 2017 No. 2017-P-12/25-12)

1.2. The National Bank of the Kyrgyz Republic (hereinafter - the National Bank) exercises control over the activities of commercial banks, non-bank financial credit organizations, payment system operators and payment organizations, and other legal entities providing banking services based on a license (certificate) issued by the National Bank, and the State Development Bank of the Kyrgyz Republic regarding their compliance with antimonopoly legislation and regulatory legal acts of the National Bank on the development of competition, pricing, and protection of consumer rights (hereinafter - antimonopoly legislation) in the market of banking services of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2022 No. 2022-P-12/83-8)

1.3. This Policy determines the actions that will be applied by the National Bank in the field of antimonopoly regulation, development of competition, and protection of consumer rights in the market of banking services of the Kyrgyz Republic, provided by commercial banks, non-bank financial credit organizations, payment system operators and payment organizations, and other legal entities licensed and regulated by the National Bank, as well as the State Development Bank of the Kyrgyz Republic.

(In the edition of the Resolutions of the Board of the NB KR of December 28, 2016 No. 51/3, December 28, 2022 No. 2022-P-12/83-8)

1.4. This Policy regulates relations between commercial banks, non-bank financial credit organizations, other legal entities (hereinafter - FCO), payment system operators and payment organizations, licensed and regulated by the National Bank, affecting competition in the market of banking services of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2022 No. 2022-P-12/83-8)

2. Basic Terms and Definitions

2.1. (Lost force in accordance with the Resolution of the Board of the NB KR of December 28, 2022 No. 2022-P-12/83-8)

2.2. The following terms and definitions are used in this Policy:

anti-competitive agreements (coordinated actions) - an agreement in written form contained in a document or several documents, as well as an oral agreement, the proof of which may be an analysis of changes in the situation in the banking services market;

banking services - operations and services of FCO, payment system operators and payment organizations provided to legal and physical persons in accordance with the legislation of the Kyrgyz Republic;

dominant position in the market of banking services - an exclusive position of an FCO, payment system operator or payment organization, giving the opportunity to exert decisive influence on the general conditions for providing banking services and/or making it difficult for other FCO, payment system operators and payment organizations of the Kyrgyz Republic to access the banking services market;

competition in the market of banking services - free competition between FCO, payment system operators and payment organizations, in which their independent actions limit the ability of each of them to unilaterally influence the general conditions for carrying out activities in the market of banking services, including in terms of service segments;

monopolistic activity in the market of banking services - abuse by FCO, payment system operators and payment organizations, a group of persons, of their dominant position, agreements or coordinated actions contradicting antimonopoly legislation, actions (inaction) of FCO, payment system operators and payment organizations (group of persons) aimed at preventing, limiting or eliminating competition;

unfair competition in the market of banking services - actions of FCO, payment system operators and payment organizations that contradict antimonopoly legislation and business customs, establish an unjustified advantage in providing banking services and caused or may cause losses to other FCO, payment system operators and payment organizations - competitors in the market of banking services or damage their business reputation;

improper advertising activity in the market of banking services - activity of FCO, payment system operators and payment organizations violating general and/or special requirements of the legislation of the Kyrgyz Republic in the field of advertising, the Law of the Kyrgyz Republic "On Banks and Banking Activity" and regulatory legal acts of the National Bank;

market of banking services - the sphere of activity of FCO, payment system operators and payment organizations on the territory of the Kyrgyz Republic or its part, determined based on the place of provision of banking services to consumers.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2022 No. 2022-P-12/83-8)

3. Dominant Position of FCO, Payment System Operator, Payment Organization

(Name of the section in the edition of the Resolution of the Board of the NB KR of March 27, 2013 No. 9/12)

3.1. Dominant position is determined for any type of banking services provided by FCO, payment system operators and payment organizations on the territory of the Kyrgyz Republic.

(In the edition of the Resolutions of the Board of the NB KR of March 27, 2013 No. 9/12, December 28, 2016 No. 51/3)

3.2. In the event that the dominant position of an FCO, payment system operator or payment organization affects the quality of the service provided to the consumer, or may lead to the emergence of financial risk and/or monopolistic position in the market of banking services, or increases the cost of services, or establishes a restriction on free pricing, the National Bank has the right to establish appropriate restrictions in accordance with the regulatory legal acts of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2016 No. 51/3)

3.3. The dominant position of an FCO, payment system operator or payment organization in the market of banking services is a violation of antimonopoly legislation if it was achieved by:

a) unjustified refusal to conclude a contract with consumers of banking services;

b) forcing the consumer to conclude a contract only upon inclusion in it of unfavorable, unacceptable to the consumer, or unrelated to the subject of the contract conditions;

c) establishing monopolistically high (low) prices for the services provided, which are determined in accordance with the legislation of the Kyrgyz Republic;

d) creating obstacles to access to the market of banking services for other FCO, payment system operators and payment organizations;

e) exerting negative influence on the general conditions for providing banking services in the market of banking services, as well as infringing on the rights of consumers.

(In the edition of the Resolutions of the Board of the NB KR of March 27, 2013 No. 9/12, December 28, 2016 No. 51/3, December 28, 2022 No. 2022-P-12/83-8)

4. Unfair Competition

4.1. FCO, payment system operators and payment organizations in the course of their activities must not engage in unfair competition, which may cause losses to other FCO, payment system operators or payment organizations - competitors in the market of banking services, or damage their business reputation, or lead to a violation of consumer rights. Among such actions, in particular, are:

a) dissemination of false, inaccurate or distorted information about another FCO, payment system operators and payment organizations;

b) violation of forms and methods of advertising activity in accordance with the legislation in the field of advertising, the Law of the Kyrgyz Republic "On Banks and Banking Activity", regulatory legal acts of the National Bank of the Kyrgyz Republic;

c) obtaining, using and disclosing information constituting official or commercial secret without the consent of its owner, except for cases provided for by the legislation of the Kyrgyz Republic;

d) attracting clients by misleading them by providing knowingly false, inaccurate, undisclosed or distorted information about the provided banking services, including entailing additional expenses for consumers;

e) other forms of actions contradicting the legislation of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2022 No. 2022-P-12/83-8)

5. Anti-competitive Agreements (Coordinated Actions) of FCO, Payment System Operators or Payment Organizations Limiting Competition in the Market of Banking Services

(Name of the section in the edition of the Resolution of the Board of the NB KR of March 27, 2013 No. 9/12)

5.1. Agreements and coordinated actions of FCO, payment system operators and payment organizations must not contain conditions aimed at limiting competition in the market of banking services, namely:

a) collusion between FCO, payment system operators and payment organizations with the aim of fixing certain prices in the market of banking services;

b) division of the market of banking services on a territorial basis, by types of provided banking services, by consumers of banking services;

c) limiting access to the market of banking services for new FCO, payment system operators and payment organizations or eliminating existing ones from it;

d) establishing unjustified barriers for the entry of other FCO, payment system operators and payment organizations into certain payment systems.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2016 No. 51/3)

5.2. Agreements concluded with economic entities must not contain conditions that lead to an unjustified change in prices for basic types of banking services (opening an account, cash and settlement services, etc.), to price differentiation for economic entities due to geographical location or the absence on the market of other financial credit organizations or payment system operators and payment organizations.

(In the edition of the Resolutions of the Board of the NB KR of December 28, 2016 No. 51/3, December 28, 2022 No. 2022-P-12/83-8)

5.3. When agreeing with the National Bank, the ban does not apply to agreements or coordinated actions of FCO, payment system operators and payment organizations, the conditions of which have as their goal:

a) unification of activity standards of FCO, payment system operators and payment organizations - participants of agreements;

b) joint purchase of technical means for carrying out the main activity;

c) use of unified software and technical means for processing information and databases.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2016 No. 51/3)

5.4. The legislation of the Kyrgyz Republic may establish other conditions of agreements or coordinated actions of FCO, payment system operators and payment organizations that are not subject to prohibition.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2016 No. 51/3)

5.5. FCO, payment system operators and payment organizations must send a notification to the National Bank about all concluded agreements or adopted decisions on carrying out coordinated actions, as a result of which they may occupy a dominant position in the market of banking services.

In case of non-compliance by FCO, payment system operators and payment organizations with the restrictions on the conditions of the agreement specified in paragraph 5.1 of this Policy, the National Bank may take measures to recognize it invalid in accordance with the legislation of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2016 No. 51/3)

6. Tasks and Functions of the National Bank on Antimonopoly Regulation, Development of Competition and Protection of Consumer Rights in the Market of Banking Services

6.1. The main tasks of the National Bank are:

6.1.1. Facilitating the development of competition in the market of banking services, including facilitating the introduction of new banking services and the development of banking and innovative technologies.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2016 No. 51/3)

6.1.2. Monitoring compliance with antimonopoly legislation in the market of banking services, including when concluding agreements and carrying out coordinated actions by FCO, payment system operators and payment organizations, when creating, reorganizing (merger, accession, transformation) of FCO, payment system operators and payment organizations and acquiring shares of FCO, payment system operators and payment organizations.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2016 No. 51/3)

6.1.3. Carrying out measures to protect consumer rights in accordance with the legislation.

6.2. The National Bank performs the following main functions:

6.2.1. Issues regulatory legal acts and instructions mandatory for compliance with antimonopoly legislation regarding FCO, payment system operators and payment organizations in accordance with the legislation of the Kyrgyz Republic.

(In the edition of the Resolutions of the Board of the NB KR of March 27, 2013 No. 9/12, December 28, 2016 No. 51/3)

6.2.2. Provides recommendations to executive bodies, local self-government bodies on the conduct of measures aimed at the development of competition in the market of banking services.

6.2.3. Establishes facts of violation of antimonopoly legislation and other regulatory legal acts on the development of competition in the market of banking services and takes appropriate measures on them.

6.2.4. Upon appeal by consumers of banking services, considers facts of violation of their rights within the powers established by the legislation of the Kyrgyz Republic.

7. Powers of the National Bank

7.1. In order to exclude monopoly in the market of banking services, the National Bank has the right:

7.1.1. To establish pricing principles for FCO, payment system operators and payment organizations in case of their monopolistic position in accordance with the legislation of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2016 No. 51/3)

7.1.2. To provide explanations on issues of application of antimonopoly legislation in the market of banking services.

7.1.3. Within the framework of state programs, to determine for FCO, payment system operators and payment organizations the category of consumers subject to mandatory service, in order to protect the rights of users of banking services, in accordance with the legislation of the Kyrgyz Republic. Participation in state programs is determined by FCO, payment system operators and payment organizations independently.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2016 No. 51/3)

7.1.4. To request from subsidiary FCO a letter-guarantee from the parent FCO approving its opening.

7.1.5. (Lost force in accordance with the Resolution of the Board of the NB KR of December 28, 2022 No. 2022-P-12/83-8)

7.1.6. To make decisions:

a) on imposing a penalty in the form of a fine on FCO, payment system operators and payment organizations and their officials in accordance with the Code of the Kyrgyz Republic on Offenses;

b) on addressing to court with a statement on violations of antimonopoly legislation and other regulatory legal acts on the development of competition and protection of consumer rights in the market of banking services, including on recognizing agreements invalid in whole or in part that contradict antimonopoly legislation and other regulatory legal acts on the development of competition and protection of consumer rights in the market of banking services;

c) on addressing to court for the transfer of profits obtained as a result of violation of antimonopoly legislation and other regulatory legal acts on the development of competition and protection of consumer rights in the market of banking services to the state budget;

d) on sending to the relevant law enforcement agencies a statement on violations of antimonopoly legislation and other regulatory legal acts on the development of competition and protection of consumer rights in the market of banking services, as well as materials for deciding on the initiation of a criminal case on signs of crimes related to violation of antimonopoly legislation and other regulatory legal acts on the development of competition and protection of consumer rights in the market of banking services.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2022 No. 2022-P-12/83-8)

7.1.7. To carry out other actions within the powers provided for by the legislation of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2016 No. 51/3)

7.2. The National Bank applies measures of influence regarding FCO, payment system operators and payment organizations and their officials for violation of antimonopoly legislation in accordance with the regulatory legal acts of the National Bank and the legislation of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2022 No. 2022-P-12/83-8)

8. Mechanism of Antimonopoly Regulation by the National Bank

8.1. In the process of supervisory activity on antimonopoly regulation, development of competition and protection of consumer rights in the market of banking services, the National Bank uses methods combining the licensing regime, conducting external supervision and on-site inspections.

(In the edition of the Resolution of the Board of the NB KR of March 27, 2013 No. 9/12)

8.2. The dominant position of FCO, payment system operators and payment organizations in the market of banking services is determined in accordance with the Regulation "On Determining the Dominant Position in the Market of Banking Services", approved by the Resolution of the Board of the National Bank of March 28, 2007 No. 16/5.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2022 No. 2022-P-12/83-8)

8.3. During on-site inspections by the National Bank, an analysis of the pricing of banking services, the procedure for development and approval of tariffs for compliance with the internal pricing policy of FCO, payment system operators and payment organizations is carried out, and the corresponding information is reflected in the general report on the results of the inspection of FCO, payment system operators and payment organizations.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2016 No. 51/3)

8.4. The National Bank considers cases of non-compliance by FCO, payment system operators and payment organizations with antimonopoly legislation based on information contained in both inspection reports and discovered in the process of carrying out external supervision and licensing in terms of:

• actions in making transactions contradicting antimonopoly legislation;

• violation of the pricing procedure, including establishing, maintaining monopolistically high (low) prices;

• establishing collusion for the purpose of limiting competition, the proof of which may be an analysis of changes in the situation in the market of banking services;

• improper advertising activity in the market of banking services;

• written statements from consumers of banking services with attached documents confirming the existence of facts of violation.

(In the edition of the Resolution of the Board of the NB KR of December 28, 2022 No. 2022-P-12/83-8)

8.5. Upon detection of violations by FCO, payment system operator or payment organization of antimonopoly legislation, as well as upon consideration of received statements, the National Bank may make a decision to conduct an unscheduled (complex or targeted) inspection in accordance with the established procedure and/or to apply a measure of influence in accordance with the legislation of the Kyrgyz Republic.

(In the edition of the Resolutions of the Board of the NB KR of March 27, 2013 No. 9/12, December 28, 2016 No. 51/3)

9. Final Provisions

9.1. On issues of antimonopoly regulation in the field of banking services, the National Bank may exchange information within the limits defined by the legislation on banking secrecy with the authorized antimonopoly body of the Kyrgyz Republic.

9.2. For the effective conduct of payments and settlements, the National Bank exercises supervision over the payment system, and also ensures FCO fair and equal access to clearing and settlement services.

Contacts

Public Reception

+996 (312) 61-04-86 +996 (312) 66-90-15 +1257, +1256

Department for the Protection of Consumer Rights

+996 (312) 66-90-15 +1671, +1666

Report Corruption

+996 (312) 66-90-15 +2120 +996 (312) 61-04-00

Auto-informer of Official Exchange Rates

+996 (312) 61-07-11

Numismatic Museum

+996 (312) 66-90-15 +1232 +996 (312) 61-24-14

E-mail

mail@nbkr.kg

For work with the media

press@nbkr.kg

720010, Kyrgyz Republic, Bishkek, Kievskaya St., 189