Regulation on Enforcement Measures Applied to Non-Bank Financial and Credit Organizations and Other Legal Entities Supervised by the National Bank of the Kyrgyz Republic

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Date of creation: 2026-05-01

Appendix
to the Resolution of the Board of the National Bank of the Kyrgyz Republic dated December 23, 2020 No. 2020-P-33/73-12-(NF KU)

REGULATION

on enforcement measures applied to non-bank financial and credit organizations and other legal entities supervised by the National Bank of the Kyrgyz Republic

(As amended by the Resolutions of the Board of the National Bank of KR dated December 21, 2022 No. 2022-P-12/81-7, December 8, 2023 No. 2023-P-12/76-1, June 27, 2025 No. 2025-P-12/31-1-(NPA), October 8, 2025 No. 2025-P-12/50-4-(NPA), April 23, 2026 No. 2026-P-12/25-2-(NPA))

Section I. General Provisions

1. This Regulation establishes the procedure for applying enforcement measures by the National Bank of the Kyrgyz Republic (hereinafter - the National Bank) to non-bank financial and credit organizations and other legal entities supervised by the National Bank (hereinafter - NFKOs), including those conducting operations in accordance with Islamic principles of banking and financing and/or having an "Islamic window".

2. The provisions of this Regulation apply to microfinance organizations, credit unions, guarantee funds, credit bureaus, housing savings credit companies (hereinafter - HSCCs), specialized financial institutions (hereinafter - SFIs) and specialized financial-credit organizations (hereinafter - SFCOs).

3. The purpose of applying enforcement measures by the National Bank to NFKOs is prompt early response, adjustment and elimination of problems to maintain stability and resilience of NFKOs and the banking system, counter financing of terrorist activities and legalization (money laundering) of criminal proceeds, prevent monopolistic activity in the banking services market, protect the interests of depositors, consumers of NFKO services and other creditors.

4. Enforcement measures are applied by the National Bank independently on grounds and in the manner provided for by the laws of the Kyrgyz Republic, banking legislation, legislation on counter financing of criminal activity and legalization (money laundering) of criminal proceeds, legislation on limiting usury activities, regulatory legal acts of the National Bank and this Regulation. Enforcement measures may be applied sequentially or selectively, depending on the nature, type of violation and financial condition of NFKOs. The National Bank independently determines the feasibility, type and procedure for applying enforcement measures to NFKOs.
   (As amended by Resolution of the Board of the National Bank of KR dated April 23, 2026 No. 2026-P-12/25-2-(NPA))

5. Violations of NFKO and other supervised legal entities' activities are considered actions (inaction) of NFKOs, their owners and officials that contradict the laws of the Kyrgyz Republic and regulatory legal acts of the National Bank.

Section II. Types of Enforcement Measures

6. Enforcement measures include:
   1) directive/order;
   2) fine/penalty;
   3) requirement/demand;
   4) increase of economic standards, requirements and restrictions;
   5) restrictions or prohibitions;
   6) suspension or dismissal of officials, change of management bodies;
   7) introduction of a special regime;
   8) suspension of license/registration certificate;
   9) revocation of license/registration certificate.
   (As amended by Resolution of the Board of the National Bank of KR dated December 8, 2023 No. 2023-P-12/76-1)

7. A decision to apply a specific enforcement measure to an NFKO is made taking into account:

• the nature of the violation and its impact on NFKO's activities and the NFKO system;
• frequency and duration of the violation;
• threats to the financial condition of NFKOs and the NFKO system;
• size of losses incurred by NFKOs due to violations and adopted decisions;
• awareness of NFKO officials regarding the violation;
• ability of NFKO officials to resolve arising problems;
• fact of intentional nature of the violation, as well as absence/presence of personal interest (moral, material) of affiliated and other related persons;
• compliance with internal procedures and policies approved by the authorized body of NFKO;
• cases of prior application of enforcement measures for the same violation;
• recognition by NFKO officials of the existence and significance of problems;
• fulfillment by officials or shareholders (participants) of NFKO recommendations and/or requirements of the National Bank;
• nature, frequency and/or volume of operation(s) subject to violation of banking legislation, legislation on counter financing of criminal activity and money laundering, and legislation on limiting usury activities.
  (As amended by Resolution of the Board of the National Bank of KR dated April 23, 2026 No. 2026-P-12/25-2-(NPA))

8. An enforcement measure may be applied by the National Bank no later than 12 (twelve) months from the date of discovery of the violation. When applied following National Bank inspections, the date of registration of the inspection report in the National Bank is considered the discovery date.

9. Enforcement measures of the National Bank may be formalized by resolutions of the Board or the Supervision Committee, directives by the Deputy Chairman/Board Member overseeing supervision, or heads of structural subdivisions.

10. The National Bank may provide for the possibility of NFKOs voluntarily undertaking obligations to rectify identified deficiencies in their activities.

11. The National Bank may issue a written warning to an NFKO. A written warning is not an enforcement measure and serves to inform the NFKO of significant risks and/or potential violations of certain norms, rules, laws and regulatory acts (including counter financing of terrorism and money laundering), or activities threatening stability and reliability, with the aim of preventing future enforcement measures.
    A written warning is signed by a structural subdivision head or Deputy Chairman/Board Member overseeing supervision.

Section III. Recognition of NFKO Activities, Actions (Inaction) as Unsound and Unsafe Banking Practice

12. NFKO activities, actions (inaction) of their officials/shareholders/participants creating real threat and/or high probability of losses for depositors, other creditors, shareholders/participants or the banking system are considered unsound and unsafe banking practice.

13. The National Bank determines unsound and unsafe banking practice in each case based on assessment of:

• factors and circumstances, including force majeure;
• potential threat to depositors' funds, creditors, NFKO stability and/or the banking system as a whole.

14. Indicators of NFKO activities, actions (inactions) that may relate to unsound and unsafe banking practice are provided in Appendix 1 to this Regulation.

15. NFKOs, their shareholders/participants/founders and officials must not be involved in unsound and unsafe banking practice.
    (As amended by Resolution of the Board of the National Bank of KR dated December 21, 2022 No. 2022-P-12/81-7)

16. The National Bank may apply enforcement measures, up to license/registration certificate revocation in accordance with Kyrgyz legislation, to any NFKO whose activities/actions (inaction) are recognized as unsound and unsafe banking practice.
    (As amended by Resolution of the Board of the National Bank of KR dated December 21, 2022 No. 2022-P-12/81-7)

17. NFKO activities, actions/inactions of officials/shareholders/participants are recognized as unsound and unsafe banking practice by the Supervision Committee based on information from structural subdivisions.

18. The Supervision Committee/Board of the National Bank, within its competence, decides on applying the corresponding enforcement measure to NFKOs and their officials/shareholders/participants whose actions (inaction) are responsible for unsound and unsafe banking practice.

Section IV. Voluntary Undertakings

19. A distinctive feature of voluntary undertakings is the demonstration by NFKO management's willingness to cooperate with the National Bank to ensure effective rectification of identified deficiencies, risks of violating norms/rules/laws/regulatory acts (including counter financing of terrorism and money laundering), and/or threats to stability and reliability.

20. A voluntary undertaking may be used in the form of a letter of commitment regarding an NFKO.

21. A letter of commitment is prepared and submitted by an NFKO with deficiencies/threats/potential violations not causing significant supervisory concern. It must contain specific measures to rectify deficiencies, with deadlines and target indicators set by the NFKO management body, approved by the supervisory board (or executive body if none) and coordinated with the National Bank.

Section V. Enforcement Measures Applied by the National Bank

Chapter 1. Directive/Order

22. Directives are applied by authorized heads of structural subdivisions, Deputy Chairman/Board Member overseeing supervision, and the Supervision Committee.
    A directive may be applied as a primary or supplementary enforcement measure.
    In a directive, references to specific norms and requirements of Kyrgyz laws/regulatory acts violated by the NFKO, its shareholders/participants and officials are indicated, along with a compliance deadline. Depending on the violation and risks to stability/reliability, it may include but is not limited to:

• eliminating the violation (aligning mandatory economic standards, open FX position limits, fulfilling obligations to creditors/depositors);
• aligning activities with regulatory acts;
• performing certain actions to reduce/optimize risk in specific operations/transactions;
• amending internal regulatory documents.
  (As amended by Resolution of the Board of the National Bank of KR dated December 21, 2022 No. 2022-P-12/81-7)

23. A directive must contain the following:

• date and place of issuance;
• registration number;
• full name of the issuing body/official's name;
• surname, first name, patronymic of the NFKO official addressed/full name of NFKO;
• effective date;
• validity period (if time-bound);
• appeal deadline and body.
  A directive also describes the issue, i.e., the fact of violation, related circumstances, and corresponding references to Kyrgyz laws/regulatory acts violated. It may specify responsible persons/bodies per National Bank requirements, internal documents, and NFKO practices. When issued, it cites laws/regulatory acts used, states the decision, corresponding measures to be taken by NFKO/shareholders/participants/officials, and sets deadlines. A directive is sealed with the National Bank's official seal per internal procedure.

24. After issuance, the initiating structural subdivision ensures NFKO compliance within deadlines and takes immediate subsequent measures in case of non-compliance.

25. For non-compliance or improper compliance with a directive, the National Bank may apply other enforcement measures per this Regulation.

Chapter 2. Fine/Penalty

26. In case of NFKO violation of norms, requirements and restrictions established by Kyrgyz laws "On Banks and Banking Activity", "On Counter Financing of Terrorist Activities and Legalization (Money Laundering) of Criminal Proceeds", "On Protection of Bank Deposits",
    "On Consumer Credit", "On Limiting Usury Activities in the Kyrgyz Republic", and other regulatory acts, the Supervision Committee may impose a fine:
    1) up to 10 (ten) percent of balance sheet asset value - for NFKOs;
    2) up to the average annual remuneration (salary, bonuses, etc.) - for NFKO officials.
    A fine may be applied as a primary or supplementary measure.
    (As amended by Resolutions of the Board of the National Bank of KR dated December 21, 2022 No. 2022-P-12/81-7, April 23, 2026 No. 2026-P-12/25-2-(NPA))

27. The fine must be paid by the NFKO/official within 3 (three) months from receipt of the fine imposition resolution.

28. If unpaid within the deadline, the fine is collected compulsorily through executive proceedings.

29. Fines for FX position limit violations are imposed per instructions "On the Procedure for Observing Open FX Position Limits by Microfinance Companies" and "On the Procedure for Observing Open FX Position Limits by Credit Unions", approved by Board Resolutions.

30. Fines for non-compliance with mandatory reserve requirements are collected per National Bank regulatory acts.

31. The procedure for handling violation cases under relevant articles of the Kyrgyz Code of Administrative Offenses within the National Bank's competence is regulated by the Instruction on Handling Violation Cases, approved by Board Resolution.
    (As amended by Resolution of the Board of the National Bank of KR dated December 21, 2022 No. 2022-P-12/81-7)

32. Imposing a fine on an NFKO and its officials does not exempt them from rectifying the violation.

Chapter 3. Requirement/Demand

33. The National Bank may impose the following requirements on NFKOs:

• conducting financial rehabilitation measures;
• conducting a repeat/special external audit;
• reducing administrative expenses;
• changing organizational structure;
• amending policies, regulations, procedures and other internal regulatory documents.

34. A decision to apply a requirement as an enforcement measure is made by the Supervision Committee.

§ 1. Requirement for Financial Rehabilitation Measures

35. The National Bank may impose a financial rehabilitation requirement on systemically significant NFKOs, MFIs attracting deposits, SFCOs, and credit unions with deposit attraction licenses or third-party debts.
    A financial rehabilitation plan is prepared per Appendix 2 requirements, providing adequate measures, deadlines, methods and resources.
    NFKOs must assess the plan's adequacy.

36. The National Bank may at any time require NFKOs listed in Clause 35 to implement measures specified in the financial rehabilitation plan, as well as any other measures under banking legislation.
    Upon imposition of a requirement, the NFKO's plan (including updates per National Bank demands) and implementation activities are coordinated with the Supervision Committee.

37. From the date of imposition, NFKOs cannot make decisions on profit distribution, dividend payments (including prior resolutions), fulfilling financial obligations/payments to shareholders/participants, or paying remuneration to officials/employees, except salaries.

38. During financial rehabilitation, the National Bank may impose prohibitions or restrictions on creditor claims for monetary obligations and transactions with affiliated/related persons if they worsen financial condition or lead to bankruptcy.

39. The authorized NFKO body must approve the financial rehabilitation plan.

§ 2. Requirement for Repeat/Special External Audit

40. In case of identified violations and/or discrepancies with external audit data, the Supervision Committee is authorized to require a repeat/special external audit.

41. The Supervision Committee imposes the requirement via a resolution, which may also contain additional requirements.
    It may include restrictions on specific NFKO activities during the audit period.
    Note of "Toktom" Center: The number of paragraphs in Clause 41 does not match the number of paragraphs in the state language text.

42. All costs related to the repeat/special external audit are paid from NFKO funds.

§ 3. Requirement for Reducing Administrative Expenses

43. The National Bank may impose a requirement to reduce administrative expenses on systemically significant NFKOs, MFIs attracting deposits, SFCOs, and credit unions.
    The requirement is adopted by the Supervision Committee when NFKOs act riskily and/or existing administrative expenses are high, unjustified, or to avoid significant future financial losses.

44. Grounds for imposing a requirement to reduce administrative expenses may include:
    1) financial problems (loss-making, expenses exceeding income);
    2) identified violations of laws/regulatory acts;
    3) inadequate risk management system;
    4) non-compliance with capital requirements;
    5) other circumstances indicating high/unjustified expenses or potential for reduction.

45. The National Bank may specify particular administrative expense items to be reduced or excluded for a certain period.

§ 4. Requirement for Changing Organizational Structure

46. The Supervision Committee may require changing the NFKO's organizational structure when it does not clearly define competence, division of powers and responsibilities of management bodies, subdivisions and officials, or fails to exclude conflicts of interest.

47. The Supervision Committee may require excluding inefficient structural/specialized subdivisions that create a complex, cumbersome structure mismatched with NFKO activities.

§ 5. Requirement for Amending Policies, Regulations, Procedures and Other Internal Regulatory Documents

48. When policies, regulations, procedures and other internal documents do not meet legislative/regulatory requirements, the National Bank imposes a requirement to amend and/or supplement them.

49. The Supervision Committee/Deputy Chairman/Board Member/heads of structural subdivisions may, based on subdivision information identifying non-compliance and aiming to reduce risks/strengthen control, impose a requirement to amend internal regulatory documents.

Chapter 4. Increase of Economic Standards and Requirements

50. For violations of economic standards/requirements established by regulatory acts, and when NFKOs show a trend toward deteriorating financial condition (while meeting minimum standards), the National Bank may set new and/or stricter economic standards, requirements and restrictions.
    (As amended by Resolution of the Board of the National Bank of KR dated December 8, 2023 No. 2023-P-12/76-1)

51. The Supervision Committee may:
    1) increase capital adequacy ratios (standards, coefficients);
    2) reduce maximum risk per borrower/participant;
    3) increase liquidity ratios (indicators);
    4) strengthen reserve formation requirements, including increasing mandatory reserve standards;
    5) reduce open FX position limits when reducing foreign currency operation risks is necessary;
    6) change other economic standards, requirements and restrictions set by the National Bank.

52. Increase of mandatory reserve standards...