Regulation on Cashless Payments in the Kyrgyz Republic

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Creation date: 2023-05-18

Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 8, 2021 No. 2021-P-14/68-7-(PS)

REGULATION on cashless payments in the Kyrgyz Republic

(As amended by the Resolutions of the Board of the National Bank of the Kyrgyz Republic of December 7, 2022 No. 2022-P-14/76-6, of May 11, 2023 No. 2023-P-14/31-1-(PS))

Chapter 1. General Provisions

1. This Regulation determines the procedure for carrying out cashless payments on the territory of the Kyrgyz Republic, the relationships between its participants, as well as the forms and requirements for the documentation of payment documents used by commercial banks in carrying out cashless payments.

2. Cashless payments on the territory of the Kyrgyz Republic are carried out in accordance with the Constitutional Law of the Kyrgyz Republic "On the National Bank of the Kyrgyz Republic", the Civil Code of the Kyrgyz Republic, the laws of the Kyrgyz Republic "On Banks and Banking Activity" and "On the Payment System of the Kyrgyz Republic", regulatory legal acts of the National Bank of the Kyrgyz Republic (hereinafter - the National Bank) and this Regulation.

(As amended by the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 7, 2022 No. 2022-P-14/76-6)

3. The action of this Regulation extends to legal entities and individuals when conducting cashless payments on the territory of the Kyrgyz Republic in the national currency.

4. The procedure for conducting cashless payments in foreign currency is established in contracts between clients and banks in accordance with the banking legislation of the Kyrgyz Republic and the customs of business turnover applied in international banking practice.

Chapter 2. Concepts and Definitions

5. For the purposes of this Regulation, the following concepts are used:

Acceptance - the payer's consent to pay monetary and commodity documents. Acceptance is used in settlements for goods, services, and completed works, in which payment is made with the consent (acceptance) of the payer based on settlement documents issued by the supplier.

Cashless payment - the fulfillment of a monetary obligation by transferring funds from the payer's bank account without the participation of cash in the form established by the banking legislation of the Kyrgyz Republic.

Cashless settlement - a form of money circulation in which the movement of funds occurs without the participation of cash by debiting funds from the payer's bank account and crediting them to the payee's bank account, according to the presented payment documents, as well as settlements using electronic money in accordance with the banking legislation of the Kyrgyz Republic. The settlement is the completion of the payment.

Client - a physical or legal entity that has concluded a bank account agreement with a bank.

Correspondent account - an account opened by commercial banks in the National Bank for conducting interbank settlements.

Payer - a physical or legal entity that is the initiator of the payment, from whose funds the settlement is carried out.

Payee - a physical or legal entity in whose favor monetary funds are received as a result of the payment and settlement.

Settlement - the final procedure in the process of which funds are debited from the payer's bank account and credited to the payee's bank account, according to the provided payment documents.

Settlement (current) account - an account intended for storing monetary funds and carrying out current settlements, including the conduct of settlements using bank payment cards, carried out by legal entities, except for banks, and individual entrepreneurs (receipts, payments, mutual settlements with other physical or legal entities, transfers to other financial and credit organizations) under a bank account agreement, as well as by physical persons (residents) - agricultural producers in accordance with the requirements of the banking legislation of the Kyrgyz Republic.

Electronic payment document - a type of payment document drawn up in electronic form, containing the necessary information for carrying out settlements, and certified by an electronic signature.

Chapter 3. Basic Provisions on the Organization of Cashless Payments

6. Cashless payments on the territory of the Kyrgyz Republic are carried out by banks that have licenses for carrying out settlements and payments on behalf of clients, opening and maintaining accounts opened on the basis of agreements on the opening and maintenance of a bank account, unless otherwise provided by the banking legislation of the Kyrgyz Republic, and is determined by the form of payment instruments used.

7. Cashless payments without opening an account are carried out by depositing cash funds by the client-payer to the sending bank by transfer to the specified account of the recipient. These settlements must not be related to entrepreneurial activity. In the event that funds are received by the bank for a client who does not have an account in this bank, the funds are issued by the bank in cash upon full identification of the client. Banks keep records of detailed information about clients for operations without opening an account (statement, journal, etc.) for each payment.

8. Cashless payments for money transfers without opening a bank account are carried out in accordance with the Rules for carrying out money transfers through money transfer systems in the Kyrgyz Republic, approved by the Resolution of the Board of the National Bank of July 15, 2009 No. 30/6.

9. Cashless payments are carried out on the basis of payment documents presented in electronic or paper form.

10. A payment document, оформленный in the form of a document on a paper carrier or in the form of an electronic payment document, represents:

1. an order of the payer to debit funds from his account and transfer them to the account of the recipient of funds;

2. an order of the recipient of funds (collector) to debit funds from the payer's account and transfer them to the account specified by the recipient of funds (collector), only with the consent of the account holder (payer) or on the basis of a contract between the bank and its client;

3. an order (declaration) for the deposit of cash funds or an application for the issuance of funds.

11. The following forms of cashless payments and payment instruments are applied in the course of cashless payments:

• payment order;

• payment demand (in cases established by the banking legislation of the Kyrgyz Republic);

• letter of credit;

• payment order for direct debit (pre-authorized);

• collection order;

• settlement and settlement-cash check;

• bank payment card;

• settlements using electronic money.

12. Presentation of an order to carry out a cashless settlement is carried out:

• by presenting the original of the payment document, executed on a paper carrier;

• by transmitting the order electronically using appropriate electronic communication channels;

• by sending a payment link (a text string for transmitting payment data) to the payer.

13. Cashless payments may be carried out using two-dimensional barcode symbols and payment links (QR-code) in accordance with the requirements of the Rules for conducting payments using two-dimensional barcode symbols (QR-code), approved by the Resolution of the Board of the National Bank of December 11, 2019 No. 2019-P-14/62-5-(PS).

14. Transmission of client orders to the bank to carry out operations on his account may be carried out via internet banking, home banking, mobile banking in real-time mode on the basis of a contract between the bank and the client in accordance with the requirements of regulatory legal acts of the National Bank.

15. Cashless payments are carried out through bank accounts by:

• debiting funds from the bank accounts of payers and crediting funds to the bank accounts of recipients;

• debiting funds from the bank accounts of payers and increasing the balance of electronic money of the recipients of funds;

• debiting funds from the account of the holder of electronic money and crediting funds to the bank accounts of recipients.

16. Debiting funds from an account is carried out by the bank on the basis of payment documents drawn up by the account holder in accordance with the requirements of this Regulation, within the limits of the funds available in the account, unless otherwise provided in contracts concluded between banks and their clients, or by the banking legislation of the Kyrgyz Republic.

17. A cashless settlement becomes irrevocable for the client-payer at the moment of receiving confirmation of the acceptance of the payment document for execution by the payer's bank and final - at the moment of debiting funds from the payer's account.

18. A cashless settlement becomes final for the recipient at the moment of crediting funds by the receiving bank to the recipient's account or issuing funds from another (internal) account of the bank to the client-recipient who does not have an account in this bank.

19. Cashless payments are carried out by banks within the time limits established by the Resolution of the Government of the Kyrgyz Republic and the National Bank of the Kyrgyz Republic "On establishing the time limits for the passage of payments in the payment system of the Kyrgyz Republic and on liability for violation of the time limits for their passage" of March 11, 2004 No. 144/1/6.

20. In the event of insufficient funds in the account to satisfy all claims presented to it, the debiting of funds is carried out as they are received in the order established by the civil legislation of the Kyrgyz Republic.

21. The bank has the right to refuse the client in the execution of the order to carry out a cashless payment and settlement in cases and in the manner provided for by the Law of the Kyrgyz Republic "On the Payment System of the Kyrgyz Republic".

22. All interbank payments in national currency are carried out only through correspondent accounts of participants in the payment system opened in the National Bank. Opening direct correspondent accounts between participants in the payment system for each other for conducting cashless payments in national currency is not permitted.

23. The final settlement becomes a settlement conducted through bank accounts opened in the National Bank. Final settlement is unconditional and irrevocable.

24. The system of correspondent relations represents a method of carrying out international (cross-border) payments and providing other services to users on the basis of contracts (agency agreements) on the maintenance of correspondent accounts between financial and credit organizations. International (cross-border) money transfers may be carried out by banks through specialized money transfer systems used in banking practice.

The National Bank has the right to establish requirements for the procedure for carrying out international (cross-border) money transfers, including requirements for the used bank account numbers and formats of electronic messages in accordance with international standards.

25. Banks must approve internal documents containing:

• the procedure for drawing up orders;

• the procedure for accepting for execution, cancellation, and suspension of execution of orders;

• the procedure for executing orders;

• other provisions on the organization of cashless payments.

26. Internal documents must comply with the requirements of the banking legislation of the Kyrgyz Republic and this Regulation.

27. The internal infrastructure of banks must guarantee direct straight-through processing (STP) of their clients' payments in the large-value payments system and interbank retail payments systems.

Chapter 4. Procedure for Documentation of Payment Documents

28. Payment documents on a paper carrier are drawn up on forms indicating mandatory details according to the form established by the Instruction "On the procedure for filling out payment documents", approved by the Resolution of the Board of the National Bank of July 25, 2007 No. 36/5.

29. Presentation of a payment document electronically is carried out on the basis of a contract (agreement) on the use of formats of electronic payment documents, electronic systems for exchanging payment documents and the use of a software-cryptographic protection system and electronic signature or other equivalent means of protection between the client and his bank, or between banks and payment system operators, unless otherwise provided by regulatory legal acts of the National Bank.

30. An electronic payment document is accepted for processing only on condition of its composition using information security tools (electronic signature, other equivalent means of protection), confirming the fact of lawful documentation of the electronic payment document by the sender and guaranteeing the integrity of the electronic payment document during its transmission and processing.

31. An electronic payment document, on the basis of which a payment is made (primary electronic payment document), carried out in accordance with the established requirements for format and procedures for verifying authenticity, certified by an electronic signature or other equivalent means of protection, as well as an electronic payment document (card-check, SMS notification, electronic message), formed upon the fact of carrying out payment for goods/services, fines, and other payments in cashless form (confirming electronic payment document), including those carried out using bank payment cards, electronic wallets, and other innovative tools, have a legal status equal to the legal status of paper payment documents and confirmations, certified in accordance with the presented requirements, and must be accepted as evidence in the consideration of judicial and other disputes.

The use of an electronic signature is carried out in accordance with the Law of the Kyrgyz Republic "On Electronic Signature".

32. The date on an electronic payment document (card-check, in an SMS notification, electronic message), formed upon the fact of carrying out payment for goods/services, fines, taxes, state services, and other payments in cashless form, is the date of the payment and serves as confirmation of the fact of carrying out a cashless payment in favor of the recipient, including for third parties.

33. A payment document is drawn up in the state and/or official languages. Additional composition of payment documents in other languages is allowed in cases established by a contract between the bank and its client.

34. Upon acceptance of payment documents by the bank, they are checked for compliance with the requirements established by the regulatory legal acts of the National Bank and this Regulation.

35. Payment documents drawn up in violation of the established requirements are not accepted by the bank for execution and are returned to the sender no later than one operational day.

When returning accepted but unexecuted payment documents on a paper carrier for one reason or another, a note is made on the reverse side of the first copy about the reason for return, the date of return, the bank's stamp, as well as the signatures of the responsible executor and the controlling bank employee with the indication of surnames. This requirement does not apply to electronic payment documents (card-check, SMS notification, electronic message) formed upon the fact of carrying out payment for goods/services, fines, and other payments in cashless form.

Chapter 5. Settlements Using a Payment Order

36. When carrying out cashless payments using payment orders, the payer provides the servicing bank with an order to transfer (transfer) a certain amount of funds from his account to the account of the recipient opened in this or another bank. A payment order is used by physical and legal entities when carrying out all types of payments in national currency on the territory of the Kyrgyz Republic.

37. A payment order is executed by the bank in accordance with the date indicated in the document, or within the time limit provided for by the bank account agreement.

38. A payment order on a paper carrier is drawn up on forms according to the form established by the Instruction "On the procedure for filling out payment documents".

39. When carrying out cashless payments through communication enterprises by legal and physical persons for received goods, rendered services, as well as when returning revenues of financial bodies to the budget, accepted payment orders may be used in accordance with the rules and procedure for the use of accepted payment orders, determined by the banking legislation of the Kyrgyz Republic.

Chapter 6. Settlements Using a Tax Payment Demand

40. A tax payment demand is issued in accordance with the tax legislation of the Kyrgyz Republic by the tax bodies of the Kyrgyz Republic to the bank account of the taxpayer or to the account of a third party having a debt to the taxpayer, for the purpose of repaying the tax debt.

41. A tax payment demand is executed by the bank by debiting funds from the accounts of the taxpayer, including foreign currency, in repayment of his tax debt, no later than one operational day following the day of receipt of the tax payment demand by the bank.

42. In the event of insufficient or absence of funds in the accounts of the taxpayer on the day of receipt of the tax payment demand by the bank, such a demand is executed as funds are received into these accounts no later than one operational day following the day of each such receipt.

Chapter 7. Settlements Using a Payment Order for Direct Debit (Pre-authorized)

43. Cashless payments by pre-authorized direct debit are used by bank clients to make regular payments (payments for utility enterprises) and/or payments with a fixed amount (insurance premiums, mortgage, etc.).

44. Payment by pre-authorized direct debit is carried out on the basis of a contract between the client and his bank, according to which the client gives preliminary consent to debit funds from his account based on presented orders of the recipient to the client's bank account for payment for supplied goods, completed works, or rendered services, with the attachment of corresponding documents to the aforementioned contract. Payment by pre-authorized direct debit may also be carried out at the initiative of the sender.

45. The rights and obligations of the client and the bank in carrying out settlements by pre-authorized direct debit arise from the moment of conclusion of the corresponding contract between the payer and the bank.

46. The payer must present the recipient with a written order (consent) to initiate the recipient through the recipient's bank an order for direct debit of the payer's settlement account in the payer's bank.

47. The recipient of the payment must send the payer an invoice-receipt for payment for rendered services within the established period of time before carrying out the settlement by pre-authorized direct debit of the account.

48. The recipient provides his bank with an order for direct debit of the payer's account. The receiving bank sends the order for direct debit of the account to the payer's bank for carrying out the settlement on the established date.

49. The payer's bank must execute the order of the receiving bank, presented to the settlement account of its client, within the amount of funds in the client's account and/or the time period provided for in the contract with the client.

50. The payer must maintain a sufficient balance of funds in his account in the bank to ensure payment of payments upon presentation of orders for pre-authorized direct debit and other operations.

51. If the amount of the payment indicated by the recipient in the order for direct debit of the settlement account differs from the amount expected by the payer to be paid, then the payer has the right to cancel the pre-authorization in accordance with the banking legislation of the Kyrgyz Republic.

52. The payer's bank notifies the receiving bank of the non-execution of the payment by returning the order for direct debit in the event of the absence of sufficient funds in the payer's account to ensure payment of the presented amount, cancellation of pre-authorization by the client, or for other reasons provided for in the contract with the client.

Chapter 8. Settlements Using a Letter of Credit

53. A letter of credit represents a conditional monetary obligation of a bank, issued by it on the order of the client in favor of his counterparty to the contract, according to which the bank that opened the letter of credit (issuing bank) makes payment to the supplier or provides authority to another bank to make such payments upon presentation of documents provided for in the letter of credit and upon fulfillment of other conditions of the letter of credit.

54. Settlements with letters of credit are governed by the Civil Code of the Kyrgyz Republic, the Law of the Kyrgyz Republic "On Letters of Credit", as well as the Uniform Rules and Customs for Documentary Credits, prepared by the International Chamber of Commerce in the 1993 edition or a later edition.

55. Internal bank documents must contain norms establishing clear rules for carrying out settlements with letters of credit.

56. A letter of credit may be revocable or irrevocable. In the absence of an indication of the type of letter of credit, it is considered irrevocable.

57. A revocable letter of credit is one that may be changed or canceled by the issuing bank without prior notice to the recipient of funds. Cancellation of a letter of credit does not create any obligations of the issuing bank to the recipient of funds.

58. An irrevocable letter of credit is one that cannot be changed or canceled without the consent of the recipient of funds.

59. In settlements under a letter of credit, the bank acting on the order of the payer to open a letter of credit and in accordance with its instructions (issuing bank) undertakes to transfer funds to the recipient of funds upon condition of the latter presenting documents provided for in the letter of credit and for fulfilling the agreed conditions in the letter of credit.

60. The issuing bank may authorize another bank to execute (executing bank) or confirm (confirming bank) the letter of credit. If the executing bank is not a confirming bank, then it is not vested with the authority to make payments under the letter of credit, except in cases specifically agreed with the executing bank, which must be reported to the beneficiary/recipient of funds. The confirming bank adds its obligation to make payment under the letter of credit.

61. A letter of credit is separate and independent from the main contract. Opening a letter of credit is carried out by the issuing bank on the basis of an application by the payer to open a letter of credit, drawn up in the manner established by the bank. The consent of the executing bank to execute the letter of credit does not prevent its execution by the issuing bank.

62. The details and form of the letter of credit are established by the bank. The following information must be indicated in the letter of credit:

• number and date of the letter of credit;

• amount of the letter of credit;

• details of the payer;

• details of the issuing bank;

• details of the recipient of funds;

• details of the executing bank;

• type of letter of credit;

• validity period of the letter of credit;

• method of execution of the letter of credit;

• list of documents to be presented by the recipient of funds and requirements for them;

• purpose of payment;

• deadline for presentation of documents;

• necessity of confirmation (if any);

• procedure for payment of bank commission fees.

Other information may also be indicated in the letter of credit.

63. Upon receipt from the issuing bank of a letter of credit with authority to execute the letter of credit, the executing bank, in case of disagreement to accept the authority to execute the letter of credit, is obliged to immediately notify the issuing bank of this, indicating the reasons for refusal.

64. The executing bank communi

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