Regulation on Licensing of Credit Unions

EXPIRED

(In accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic dated May 4, 2005 No. 14/3)

Registered in the Ministry of Justice of the Kyrgyz Republic February 28, 2002. Registration number 38-02

Approved

Resolution of the Board of the National Bank of the Kyrgyz Republic dated February 13, 2002 No. 8/1

REGULATION

on licensing of credit unions

(In the edition of Resolution of the Board of the National Bank of the Kyrgyz Republic dated July 9, 2003 No. 21/3, dated March 27, 2004 No. 6/6)

1. General Provisions

1.1. This Regulation defines the procedure for the National Bank of the Kyrgyz Republic (hereinafter referred to as NBKR) to issue licenses to credit unions.

1.2. A credit union must obtain a license from the NBKR to commence its activities for the following operations:

1) attracting funds from its members by acquiring their savings shares;
2) providing credit unions with loans on terms of term, repayability, and cost.

Before obtaining an NBKR license, a credit union is prohibited from engaging in any activity as a legal entity, except for organizational activities related to the establishment of a credit union.

1.3. Operations of a credit union for accepting deposits (deposits) on terms of term, repayability, and cost are conducted on the basis of an NBKR license, provided that the activities of credit unions meet the minimum requirements established by the NBKR.

1.4. The issuance of a license to a credit union is carried out on a paid basis. A license is issued upon submission by the applicant of a payment document confirming the payment for the issuance of the license (reissuance of the license, issuance of a duplicate license) in the amount and order established by the legislation of the Kyrgyz Republic.

1.5. Documents for obtaining a license may be submitted by the credit union at its location to the Limited Liability Company "Financial Company for Support and Development of Credit Unions in the Kyrgyz Republic" (hereinafter - FCPSD) and its branches, or to the NBKR and its regional (regional) departments.

(In the edition of Resolution of the Board of the National Bank of the Kyrgyz Republic dated July 9, 2003 No. 21/3)

2. Procedure for considering documents
   submitted by the credit union

2.1. A credit union acquires the status of a legal entity from the moment of its state registration in accordance with the legislation of the Kyrgyz Republic.

2.2. For preliminary consideration and obtaining a letter of consent for registration in the Ministry of Justice of the Kyrgyz Republic, the credit union submits the following original documents (original) in one copy to the FCPSD or the regional (regional) department of the NBKR:

1) application of the credit union for the issuance of a license (Appendix 1);
2) protocol of the general (founding) meeting of the participants of the credit union on the formation of the credit union, election (appointment) of members of the Board, Credit Committee, and Revision Commission;
3) founding agreement on the creation of the credit union;
4) charter of the credit union;
5) written confirmation from a commercial bank about the presence on the savings (deposit) account of the participants of the credit union of funds in the amount of the minimum authorized capital established by the NBKR;
6) questionnaires for the Chairman of the Board and the chief accountant of the credit union in accordance with Appendix 6.

7) credit policy or lending guidelines,
approved by the General Meeting of participants of the credit union.

The General Meeting of participants of the credit union has the right to approve as the credit policy (credit guidelines) of the credit union the "Guidelines for Credit Operations for Credit Unions in Kyrgyzstan", approved by the Resolution of the Directorate of the FCPSD No. 5/2a of 06.02.2003.

Credit policy (credit guidelines), as a rule, should include:

• rules and procedures for the borrower to provide documents and calculations required by the credit union;
• terms and rules for providing loans by the credit union;
• functions and powers of the Credit Committee;
• rules for creating a reserve to cover potential losses and losses on credit operations;
• procedure for monitoring loans;

8) forecast calculations with the presentation of a forecast balance by the volume of attracted savings shares, the volume of loans, and the number of participants of the credit union.

(In the edition of Resolution of the Board of the National Bank of the Kyrgyz Republic dated July 9, 2003 No. 21/3, dated March 27, 2004 No. 6/6)

2.3. The FCPSD or NBKR considers the documents of the credit union within 10 working days from the date of submission of the application by the credit union.

2.4. In case of incomplete submission of documents or non-compliance of founding documents with established samples, the FCPSD or NBKR returns the documents for revision with a written explanation of the reasons within the time limits allocated for consideration of documents.

2.5. In case of election (appointment) of a new candidate for the Chairman of the Board (Revision Commission) of the Credit Committee or the chief accountant, the credit union within 10 working days sends the following documents to the FCPSD:

1) a copy of the corresponding decision of the credit union on the election (appointment) of the Chairman of the Board (Revision Commission) of the Credit Committee or the chief accountant;
2) questionnaires of candidates in accordance with Appendix 6 (only for the Chairman of the Board and the chief accountant);
3) a copy of a document confirming completion of training in economic disciplines (for example, accounting, financial and economic analysis of activities, etc.).

(In the edition of Resolution of the Board of the National Bank of the Kyrgyz Republic dated July 9, 2003 No. 21/3)

2.6. The FCPSD studies the submitted documents for compliance of candidates and informs the NBKR in writing for the entry of the corresponding record into the register of credit unions.

2.7. Candidates for the position of Chairman of the Board (Revision Commission) of the Credit Committee and the chief accountant of the credit union cannot be elected (appointed) if there is a court decision regarding these persons prohibiting them from engaging in this type of activity, or holding the corresponding position in financial and credit institutions.

(In the edition of Resolution of the Board of the National Bank of the Kyrgyz Republic dated July 9, 2003 No. 21/3)

3. Procedure for issuing the main license
   to the credit union

3.1. To obtain a license, the credit union submits the following documents to the NBKR:

1) application of the credit union for the issuance of a license (Appendix 1);
2) protocol of the general (founding) meeting of the participants of the credit union on the formation of the credit union, election (appointment) of members of the Board, Credit Committee, and Revision Commission;
3) founding agreement on the creation of the credit union;
4) charter of the credit union, registered in the justice authorities;
5) copy of the certificate of state registration;
6) conclusion of the FCPSD on the possibility of issuing a license, containing confirmation of the consideration of the credit union's documents for their compliance with the requirements of legislation (conclusion is not required in case of submission of documents by the credit union directly to the NBKR);
7) list of managers of the Management Bodies and the accountant of the credit union, indicating the Chairman of the Board, Chairman of the Credit Committee, Chairman of the Revision Commission, containing information on the full name and address of each person.

All documents, except for the certificate of state registration, are submitted in originals.

3.2. The credit union is responsible for the accuracy of the information indicated in the submitted documents in accordance with the legislation of the Kyrgyz Republic.

3.3. Documents for obtaining a license, provided for in paragraph 3.1 of this Regulation, in the Chuy region and the city of Bishkek are submitted by credit unions to the Department for Supervision of Non-Bank Institutions of the NBKR, in other regions - to the corresponding regional (regional) departments of the NBKR.

(In the edition of Resolution of the Board of the National Bank of the Kyrgyz Republic dated July 9, 2003 No. 21/3)

3.4. The license is signed by a person authorized by the order of the Chairman of the NBKR, and in regional (regional) departments of the NBKR - by the heads of departments, certified with the seal of the NBKR and issued within 5 working days from the date of receipt of the corresponding documents in the NBKR after state registration in the Ministry of Justice of the Kyrgyz Republic.

(In the edition of Resolution of the Board of the National Bank of the Kyrgyz Republic dated July 9, 2003 No. 21/3)

3.5. The license is drawn up in 2 copies in accordance with the attached form (Appendices 2, 3) after verification of the completeness and compliance of the documents submitted for obtaining a license by the credit union, as well as the compliance of the candidates for the Chairman of the Board and the chief accountant with the minimum requirements of the NBKR (Appendix 5).

3.6. The license is issued upon presentation of a document confirming the identity of the head of the credit union, or an authorized person - in the presence of a power of attorney from the credit union.

3.7. Information on the issuance of a license is entered into the unified register of licenses of credit unions.

Regional (regional) departments of the NBKR after verification of the completeness and compliance of the documents submitted for obtaining a license by the credit union, as well as the compliance of the candidates for the Chairman of the Board and the chief accountant with the minimum requirements of the NBKR (Appendix 5), apply to the Department for Supervision of Non-Bank Institutions of the NBKR to assign a license number and enter data into the unified register of licenses of credit unions.

Information on credit unions having an NBKR license is published in the media.

(In the edition of Resolution of the Board of the National Bank of the Kyrgyz Republic dated July 9, 2003 No. 21/3)

3.8. The Department for Supervision of Non-Bank Institutions (regional (regional) department of the NBKR) notifies the FCPSD of the issuance of a license to a credit union within 3 working days from the date of issuance of the license (in cases of consideration of documents of the credit union by the regional (regional) department of the NBKR without the participation of the FCPSD, copies of the founding documents submitted by the credit union for obtaining a license are attached).

(In the edition of Resolution of the Board of the National Bank of the Kyrgyz Republic dated July 9, 2003 No. 21/3)

3.9. The license of a credit union is non-transferable (named).
Rights arising from this license are not subject to transfer to third parties. Such transfer leads to the withdrawal of the license with the prohibition of the activity of the credit union.

The term of validity of the license is unlimited. Copies of the license are invalid.

3.10. In case of loss of the original license, the credit union submits an application to the NBKR for the issuance of a duplicate with attached documents confirming the loss of the document. The issuance of a duplicate license is carried out automatically within 5 working days from the date of submission of documents. A fee is charged for the issuance of a duplicate in the amount established by legislation.

3.11. In case of amendments and additions to the founding documents, the credit union no later than 30 calendar days submits a notification letter to the NBKR with attachments:

1) a copy of the protocol of the General Meeting of participants of the credit union on the introduction of amendments and additions to the charter;
2) the original of the new edition of the charter or an appendix to the charter with amendments and additions, registered in the Ministry of Justice of the Kyrgyz Republic;
3) a copy of the certificate of state re-registration of the credit union.

3.12. In case of changes in the information indicated in the license of the credit union, the license is subject to reissuance in the manner established by legislation. When reissuing the license, a fee is charged in the amount established by legislation.

4. Procedure for issuing a license to a credit union
   for the implementation of additional operations

4.1. A credit union with an NBKR license may carry out the following additional operations:

1) provision of financial leasing (leasing);
2) attracting deposits (deposits) from participants of the credit union on terms of term, repayability, and cost.

4.2. The issuance of a license to a credit union for additional operations is carried out on the basis of a conclusion of the FCPSD on the possibility of issuing a license to the NBKR.

The FCPSD gives a conclusion on the possibility of issuing a license for attracting deposits (deposits) only after an on-site inspection of the credit union for compliance with the minimum requirements of the NBKR to credit unions for accepting deposits (deposits) from participants of the credit union (Appendix 4).

4.3. The FCPSD considers documents within 15 working days from the date of submission of the application by the credit union.

4.4. To obtain a license for the right to provide financial leasing (leasing), the credit union must provide the FCPSD with the following documents, in two copies:

1) application of the credit union for obtaining a license (Appendix
1);
2) economic justification for carrying out operations on financial leasing with participants of the credit union with the presentation of a forecast balance, the expected volume and number of operations of the credit union on financial leasing.

In case of amendments to the founding documents, in addition to the above-listed documents, the original protocol of the general meeting of participants of the credit union on the expansion of the circle of operations carried out by the credit union, the original charter of the credit union and a copy of the certificate of state re-registration of the credit union (in case of passing re-registration in the justice authorities) are submitted.

4.5. To obtain a license for attracting deposits (deposits)
the credit union must provide the FCPSD with the following documents, in two copies:

1) application of the credit union for obtaining a license (Appendix
1);
2) original protocol of the general meeting of participants of the credit union
on the expansion of the circle of operations carried out by the credit union and on the approval of the deposit policy;
3) economic justification for carrying out operations on
attracting deposits from participants of the credit union with the presentation of a forecast balance, the expected volume and number of operations of the credit union on the acceptance of deposits;
4) certificate (document) of completion of training by the Chairman
of the Board or the person responsible for managing liquidity of the credit union in accordance with the requirements of Appendix 4;
5) reporting and information of the credit union confirming
compliance of the activities of the credit union with the minimum requirements of the NBKR for obtaining a license (Appendix 4) according to the form, developed by the FCPSD with written confirmation of the accuracy of the provided data signed by the Chairman of the Board and the chief accountant, with a visa of acquaintance by the Chairman of the Credit Committee;
6) copy of a document confirming the testing of the Chairman
of the Board and the chief accountant of the credit union at the NBKR.

In case of amendments to the founding documents, in addition to the above-listed documents, the original protocol of the general meeting of participants of the credit union on the expansion of the circle of operations carried out by the credit union, the original charter of the credit union and a copy of the certificate of state re-registration of the credit union (in case of passing re-registration in the justice authorities) are submitted.

4.6. The license of the credit union for the implementation of additional
operations is signed by a person authorized by the order of the Chairman of the NBKR, and in regional departments - by the heads of departments, certified with the seal of the NBKR and issued within 5 working days from the date of receipt of the corresponding documents in the NBKR and FCPSD.

(In the edition of the Resolution of the Board of the National Bank dated March 27, 2004 No. 6/6)

5. Refusal to issue a license to a credit union

5.1. A credit union may be refused a license in the following cases:

1) when carrying out a certain type of activity prohibited by
legislative acts for credit unions;
2) if there is a court decision regarding the applicant prohibiting
him from engaging in this type of activity;
3) in case of non-compliance of the founding documents with the legislation
of the Kyrgyz Republic;
4) upon discovery in the documents provided by the applicant
of unreliable information;
5) in case of non-compliance with the minimum requirements established by the NBKR
for obtaining a license to accept deposits (deposits);
6) in case of non-compliance of the candidate for the Chairman of the Board or
the chief accountant of the credit union with the minimum requirements of the NBKR.

5.2. In case of refusal to issue a license, the applicant is given a reasoned
response in writing and the documents are returned within the time limit established for the issuance of the license.

6. Suspension, revocation and termination
   of the license

6.1. The NBKR has the right to suspend the action of the license of the credit union, having previously received a warning, for a period of up to three months for non-fulfillment of preventive measures and sanctions.

After the elimination of the reasons for which the action of the license was suspended, the license is resumed.

6.2. The license of the credit union may be revoked by the NBKR in cases:

1) failure to eliminate within the established time limits the reasons for which the NBKR
suspended the action of the license;
2) non-fulfillment by the credit union of the requirements contained in
the license;
3) prohibition by the court of the credit union to engage in that type of
activity for the implementation of which it has a license;
4) systematic non-fulfillment by the credit union of
preventive measures and sanctions of the FCPSD;
5) engagement in activities not provided for by legislation for
credit unions;
6) in other cases provided for by legislation.

6.3. The license ceases to be valid in cases:

1) cessation of activities of a legal entity to which the license was issued;
2) revocation of the license from the credit union;
3) other cases provided for by legislation.

6.4. In case of refusal to issue a conclusion, refusal to issue, suspension of the action of the license or its revocation, the credit union has the right to appeal this decision to the Deputy Chairman of the NBKR, supervising the Department of Banking Supervision.

Appendix 1

NATIONAL BANK
OF THE KYRGYZ REPUBLIC

APPLICATION

I request to issue a license to the credit union "______" for the implementation of the following operations:

---

---

(indicate the exact and full name of the operations)

Additional information:

---

---

---

(First Name, Middle Name, Last Name) (signature)

"_" ______ 200 year

Appendix 2

NATIONAL BANK OF THE KYRGYZ REPUBLIC

LICENSE No. ______

from "_" ______ 200 year

Issued to the credit union ______
(full name of the credit union) legal address of the credit union ______ (name of the city, district, ______ _ settlement, street, house, phone)

This license permits the following operations:
1) attracting funds from its members by
acquiring their savings shares;
2) providing participants of the credit union with loans on terms
of term, repayability, and cost.

The license of the credit union is non-transferable (named). Rights arising from this license are not subject to transfer to third parties. Such transfer leads to the withdrawal of the license with the prohibition of the activity of the credit union.

The term of validity of the license is unlimited.
Copies of the license are invalid.

Seal

Head of the Department of Banking Supervision of the NBKR (Head of the regional department of the NBKR)

Appendix 3

NATIONAL BANK OF THE KYRGYZ REPUBLIC

LICENSE No. 000/0

from "_" ______ 200 year

Issued to the credit union ______
(full name of the credit union) legal address of the credit union ______ (name of the city, district, ______ _ settlement, street, house)

This license permits the implementation of the following operation:
1) acceptance of deposits (deposits) in its own name on terms
of term, repayability, and cost, agreed with the depositor - participant of the credit union.

This license is an integral part of the main license of the credit union.

This license of the credit union is non-transferable (named). Rights arising from this license are not subject to transfer to third parties. Such transfer leads to the withdrawal of the license with prohibition of the activity specified in this license of the credit union.

The term of validity of the license is unlimited.
Copies of the license are invalid.

Seal

Head of the Department of Banking Supervision of the NBKR (Head of the regional department of the NBKR)

Appendix 4

Minimum requirements of the National Bank of the Kyrgyz Republic to credit unions

for accepting deposits (deposits)

The National Bank of the Kyrgyz Republic, in order to reduce possible risk in the implementation of operations with deposits, presents uniform requirements to credit unions having the right to accept deposits (deposits) on terms of term, repayability, and cost.

For the implementation of the acceptance of deposits (deposits) by credit unions the following requirements are presented:

1. Work experience of at least 18 months.
2. Capital size of not less than 200 thousand som.
3. Compliance with the capital adequacy ratio.
4. Ratio of the amount of overdue loans (principal amounts
   of loans) to the total amount of all loans issued to participants of the credit union not more than 10%.
5. Compliance with economic standards during the last 3
   months of activity.
6. Presence of a settlement account in a commercial bank or
   Settlement and Savings Company.

To obtain a license to accept deposits (deposits), the credit union must obtain a conclusion from the FCPSD on the compliance of activities with these minimum requirements.

Appendix 5

Minimum requirements of the National Bank of the Kyrgyz Republic to candidates for the position of Chairman of the Board and chief accountant of the credit union

The National Bank of the Kyrgyz Republic, in order to reduce possible risks in the activities of credit unions, establishes minimum requirements for candidates for the following positions:

a) Chairman of the Board; b) Chief accountant (accountant in the absence of a chief accountant position in the staff).

Requirements for candidates

1. Chairman of the Board:
   a) preferably the presence of higher or secondary special economic education;
2. Chief accountant (accountant in the absence of a chief accountant position in the staff):
   a) the presence of higher or secondary special education (the presence of confirming documents), or the presence of a certificate or other document of completion of special training and preparation in specialized educational institutions on issues of banking (in the framework of international projects); b) the presence of special training on issues of accounting (the presence of confirming documents).

Candidates for the position of Chairman of the Board and chief accountant cannot be appointed to the position if:

1) there is a court decision prohibiting the candidate from engaging in this

type of activity;

2) a candidate for the position until the day of appointment (election) to this position was among the managers of a bank or other financial and credit institution that was declared bankrupt. A candidate may apply for the position of Chairman of the Board or chief accountant of a credit union no earlier than three years after the recognition of that institution as bankrupt;

3) there is a court decision recognizing the candidate as guilty of committing a crime against property, bribery, forgery of documents, money and securities, fraud, violation of tax legislation;

4) there is a decision of the NBKR or FKPKRS to replace the Chairman of the Board or chief accountant of a credit union within the framework of preventive measures and sanctions applied to credit unions.

Appendix 6

APPLICATION

of the candidate for ______ |

(proposed position) |

______ |

(name of the credit union) |

1. Full Name ______ ------

Date and place of birth ______ (for photo)

Passport series ______ number _______ issued by ______

______ date of issue ______

Citizenship ______

Home address, phone number according to documents ______

Home address, phone number of the actual place of residence at the current moment ______

2. Marital status ______

3. Education ______

---

(higher, incomplete higher, secondary special, secondary)

diploma N ______ date of issue ______ issued by ______

---

Name	Faculty	Year	Year	If not	Specialty
educational	or	of entry	of graduation	graduated,	according
institution	department			how many	to the
and its				courses	diploma
location				studied

---

Training at courses

---

Topic of	Organizer	Place	Date	Availability
seminars	of the	of	of	of certificate
or courses	seminar	attendance	attendance

---

4. Work performed since the beginning of employment:

Total work experience ______ including in the financial or economic sphere ______

---

Date of entry	Date of departure	Position held	Name of institution,	Reason
at work			location	for leaving

---

5. Indicate all other organizations, associations, institutions of legal entities, credit unions as a member, employee or member of which
   You are.

---

|Name of organization|Location of organization|Position held|

---

6. Indicate existing family ties with employees of the credit union and members of the supervisory body, ties with persons or companies controlling the credit union, all mutual obligations and contracts, etc.

---

---

7. Do you have a court decision prohibiting the exercise of this type of activity ______

8. Do you have any relation to a bank or other financial and credit institutions undergoing bankruptcy proceedings or ceasing activity due to bankruptcy ______

---

(if yes, indicate the name of the bank or financial and credit institution ______

institution, the position you held)

9. Were preventive measures and sanctions applied to you by the NBKR or FKPKRS ______

I, ______

(last name, first name, patronymic)

confirm that the above information is true and complete and undertake to further provide the FKPKRS with information about all changes that have occurred in it. I acknowledge that in the event of omissions and errors on my part, this may serve as grounds for refusal to approve the recommended position, as well as entail further application of sanctions against me and the credit union in accordance with the legislation of the Kyrgyz Republic.

______ "___" ______ y.

(signature)