Regulation on Minimum Requirements for Standard Contracts of Microfinance Organizations and Credit Unions Concluded in Accordance with Islamic Principles of Banking and Finance

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Date of creation: 2026-05-13

Approved

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

of October 23, 2013 No. 39/9

REGULATION

on minimum requirements for standard contracts of microfinance organizations and credit unions concluded in accordance with Islamic principles of banking and finance

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of March 18, 2015 No. 17/2, December 21, 2016 No. 49/8, May 31, 2017 No. 21/10, December 20, 2023 No. 2023-P-12/80-3, October 23, 2025 No. 2025-P-12/55-4-(NPA), April 27, 2026 No. 2026-P-12/26-3-(NPA))

This Regulation applies to microfinance organizations, including microfinance organizations with an "Islamic window," and credit unions holding a license (certificate) from the National Bank of the Kyrgyz Republic to conduct operations in accordance with Islamic principles of banking and finance (hereinafter - MFO).

(Preamble in the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/10)

Chapter 1. General Provisions

1. The purpose of this Regulation is to standardize standard contracts concluded between the MFO and the client for transactions corresponding to Islamic principles of banking and finance.

2. This Regulation uses definitions set forth in the Laws of the Kyrgyz Republic "On Credit Unions," "On Microfinance Organizations in the Kyrgyz Republic," and in the regulatory legal acts of the National Bank of the Kyrgyz Republic.

3. Standard contracts concluded in accordance with Islamic principles of banking and finance must meet the following requirements:

a) compliance with Shariah standards; b) freedom of contract; c) legality of contracts; d) the contract must indicate at least:

• names of the parties;
• subject matter of the contract;
• term of validity of the contract;
• main conditions for providing financing, including the purpose, amount, remuneration, repayment procedure and term, and type of collateral;
• rights and obligations of the borrower, including in case of non-performance or improper performance of obligations assumed under the contract;
• rights and obligations of the MFO;
• the client's right to repay the debt early at any time without any penalties, provided that the MFO is notified at least thirty days before the date of such repayment;
• if the subject matter of the contract is the production of goods in the future, the contract must provide for an exact description of the goods' properties and the term of their manufacture;
  e) contract conditions must not violate the property rights of a third party(-ies); f) actions arising from the contract conditions must not contradict the legislation of the Kyrgyz Republic and Shariah standards; g) contracts must not provide for the receipt of interest income by the parties; h) a contract cannot be concluded if it contains uncertainty (ambiguity) regarding the type or quantity of the subject matter of the contract, as well as uncertainty (ambiguity) regarding the term of the contract; i) it is not permitted to conclude contracts related to gambling, the production and sale of meat products containing pork, weapons and ammunition, as well as other types of entrepreneurial activity prohibited by the Shariah Council of the MFO and the legislation of the Kyrgyz Republic; j) contracts must provide for the exclusion of a speculative nature of the transaction, which is prohibited by Shariah standards; k) in case the contract conditions provide for the receipt of profit, the contract must provide for the procedure for profit distribution between the parties.

4. The MFO may, at its discretion, include additional conditions in the standard contract concluded in accordance with Islamic principles of banking and finance, provided they do not contradict this Regulation and Shariah standards.

5. The MFO has the right to approve, in the established manner, the types of standard contracts concluded for specific operations corresponding to Islamic principles of banking and finance.

6. All types of standard contracts concluded by the MFO in accordance with Islamic principles of banking and finance must be coordinated in the established manner with the Shariah Council of the MFO.

7. In the event of early repayment of financing by the client, and provided that the MFO is notified at least thirty days before the date of such repayment, the MFO has no right to charge the client penalties.

8. The font used in the contract with all appendices must be uniform throughout the text of the contract. The font size must be no less than 12.

9. For violation of this Regulation, the MFO will bear responsibility in accordance with the legislation of the Kyrgyz Republic.

9-1. Contracts in accordance with Islamic principles of banking and finance, including in the form of an electronic document signed by means of an electronic signature that allows verifying its belonging to the party to the contract, with all appendices thereto and other contracts/agreements, are drawn up in the state language and, if necessary, in the official language (if necessary, the text of the contract may be translated into another language). This agreement is bound/stored in the client/partner's file. The number of original copies of the contract must be no less than the number of parties to the contract. The MFO must ensure the preservation of original copies of the contract in accordance with the legislation of the Kyrgyz Republic.

The text of the contract must be accessible for perception and understanding by the client/partner. The rights and obligations of the participant arising from the contract conditions must be reflected in a separate section of the contract. Throughout the text of the contract and in all appendices thereto, the font must be uniform and its size must be no less than 12 (no less than 16 - for a client with visual impairment upon request).

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3)

9-2. The MFO is recommended to pay special attention to issues of interaction and assistance to clients with disabilities, including regarding:

• etiquette rules when communicating with the client;
• rules for accompanying the client when an MFO employee and the client perform necessary operations within the framework of service;
• the application of accessible measures for the most comfortable service;
• communication with the client themselves, not with their companion, if the client has not chosen another method of communication;
• minimization of stressful factors and full (detailed, specific) explanation of banking procedures during the client's service.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3)

9-3. When serving a client with visual or hearing impairment, the MFO must, at the client's request, ensure audio playback/sign language interpretation of the text of the contract and other documents signed by the client.

The MFO must provide a client who is unable to sign independently due to existing impairments with the opportunity to sign (including a facsimile signature) in contracts and other documents signed by the client, taking into account the requirements of the legislation of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 20, 2023 No. 2023-P-12/80-3)

9-4. The MFO contract for providing financing for consumer purposes must be drawn up in accordance with the requirements of the Law of the Kyrgyz Republic

"On Consumer Credit," regulatory legal acts of the National Bank, and this Regulation, taking into account the specifics of Islamic financing principles.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of April 27, 2026 No. 2026-P-12/26-3-(NPA))

Chapter 2. Types of Standard Contracts Concluded in Accordance with Islamic Principles of Banking and Finance

§ 1. Mudaraba Contract

10. A Mudaraba contract may be concluded in the form of:
    a) a contract for limited/special Mudaraba, in case the investor has the right to set the list of assets or objects for investment by the Mudarib. In this case, a separate contract is concluded between the Mudarib and the investor for each investment object; b) a contract for unlimited/general Mudaraba, in case the Mudarib has the right to use the provided funds at their discretion.

11. The parties to the Mudaraba contract are the Mudarib and the investor. The MFO may act as both the investor and the Mudarib. MFOs that do not attract deposits form financing sources (attracted funds) in accordance with the legislation of the Kyrgyz Republic.

12. The Mudaraba contract must provide for a prohibition on the non-targeted use of funds, including issuing loans to third parties.

13. The Mudaraba contract must necessarily indicate the list of documents on the basis of which the parties have the right to sign the contract.

14. The Mudaraba contract must provide for the rights and obligations of the parties.

14.1. The rights and obligations of the investor provide for:

• the investor's obligation to act in accordance with the contract conditions;
• the investor's obligation to provide the Mudarib with funds within the timeframes established in the contract;
• the investor's right to control the expenditure of the funds provided by them;
• the investor's obligation not to interfere in the current activities of the Mudarib in the execution of the contract, limiting themselves to monitoring and consultations;
• the investor's right to advise the Mudarib during the execution of the contract, including legal issues;
• the investor's right to check the progress of the contract execution by the Mudarib, for which the Mudarib provides the investor with any reports that the latter may request;
• the investor's right to receive profit within the timeframes established in the contract;
• the investor's right to demand early repayment from the Mudarib of the amount provided under the contract, including at the expense of the collateral provided by the Mudarib, in case of non-performance or improper performance of the conditions of the Mudaraba contract.

14.2. The rights and obligations of the Mudarib provide for:

• the Mudarib's obligation to act in accordance with the contract conditions;
• the Mudarib's obligation to make all necessary efforts to achieve the goal of the contract - obtaining maximum profit;
• the Mudarib's obligation to maintain full control over the quality of the implemented business project in order to comply with the necessary requirements of Shariah standards and contract conditions, as well as financial discipline in the expenditure of funds;
• the Mudarib's obligation to act personally (with the participation of their available labor resources) during the execution of the contract. In case it is necessary to perform work beyond the scope of activities/competence of the Mudarib for the execution of the contract, the latter has the right to attract third parties who have the necessary knowledge or licenses and permits to perform work under this contract;
• the Mudarib's obligation to act in good faith and in the manner that is best for the execution of the contract and achievement of the goal, in accordance with the contract conditions and legislative requirements, and in the absence of such conditions and requirements in accordance with business customs or other commonly imposed requirements;
• the Mudarib's right to use funds received from the investor only for the purposes provided for by the Mudaraba contract;
• the Mudarib's obligation to keep records of the use of funds received from the investor and received during the execution of the contract (income), allowing the determination of the profit obtained during the term of the Mudaraba contract for distribution between the parties to the contract. The Mudarib must document all costs related to the execution of the Mudaraba contract;
• the Mudarib's right to independently, without the participation of the investor, conduct entrepreneurial activities during the execution of the contract, while the Mudarib may consult with the investor for the effective execution of the Mudaraba contract;
• the Mudarib's right to receive remuneration according to the Mudaraba contract.

15. The term of validity and execution of the contract is determined by the parties.

16. The contract must provide for the possibility for the investor to obtain collateral (pledge) from the Mudarib for the provided funds, as well as the investor's right to collect the subject matter of the collateral to cover losses in case of unlawful actions, negligence, or violation of the contract by the Mudarib, resulting in losses.

17. The Mudaraba contract must provide for conditions regarding the fact that the profit of each of the parties to the contract is determined as a share (percentage ratio) of the profit obtained by the Mudarib during the use of funds provided by the investor.

18. The following conditions must be included in the Mudaraba contract:
    a) in case as a a result of the execution of the contract the Mudarib not only did not receive profit but also incurred losses, the investor bears losses in the amount of the provided sum of funds, and the Mudarib in such case does not receive remuneration for their labor. This rule of loss distribution applies if the losses did not arise due to the fault of the Mudarib; b) in case of losses arising as a result of culpable or unlawful actions of the Mudarib, the losses must be compensated at the expense of the Mudarib. At the same time, the investor has the right to receive from the Mudarib the funds transferred under the contract as collateral, and in case of insufficiency of collateral - at the expense of other property of the Mudarib; c) the contract should indicate the priority order for the repayment of the asset carrying credit risk for which the contract conditions are not fulfilled.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 21, 2016 No. 49/8)

19. The Mudaraba contract must provide for the possibility of its termination in the following cases:
    a) upon expiration of the term of validity of the contract; b) by agreement of the parties to the contract; c) or other cases provided for by the legislation of the Kyrgyz Republic and the contract.

The standard Mudaraba contract is provided in Appendix 1 to this Regulation.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 18, 2015 No. 17/2)

§ 2. Murabaha Contract

20. The parties to the Murabaha contract may be the MFO and the client who submitted an application for the acquisition for them by the MFO of a certain good, or a good that is in the property of the MFO at the time of the client's appeal.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/10)

21. Under the Murabaha contract, the MFO undertakes to acquire the subject matter of the contract in its own name by order of the client, or that is in the property of the MFO at the time of the client's appeal, and sell it to the latter on installment. The subject matter of the Murabaha contract must be insured in cases provided for by the legislation of the Kyrgyz Republic in the field of mandatory insurance.

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/10, October 23, 2025 No. 2025-P-12/55-4-(NPA))

22. When selling the subject matter of the contract to the client under the Murabaha contract, the MFO must have ownership rights to the subject matter of the contract.

23. Ownership rights to the subject matter of the contract transfer to the client after full payment of the price of the subject matter of the contract by them, unless otherwise established by the conditions of the contract.

24. The MFO may conclude a sales contract both independently and through an agent. The MFO may appoint the client as an agent, who acts on behalf of and at the expense of the MFO.

25. In case when the client acts on behalf of the MFO as an agent, the following conditions must be observed:
    a) the MFO must pay the seller and not deposit the price of the goods into the account of the client as an agent; b) the MFO must obtain documentary confirmation from the seller about the completion of the sale.

The MFO must receive the goods from the territory of the supplier or any other place that was indicated in the delivery conditions.

All expenses related to delivery and purchase of the goods are borne by the MFO. These expenses are subsequently included in the cost of the goods.

The MFO assumes responsibility as the owner of the goods and bears subsequent risks, which may be insured. The insurance remuneration that arises before the sale of the goods to the client belongs entirely to the MFO.

Insurance expenses are included in the price of the goods purchased under the Murabaha contract.

26. All documents and contracts related to the purchase and sale of the subject matter of the contract must be in the name of the MFO, even if the client acts as the agent of the MFO.

27. The MFO must receive the subject matter of the contract from the territory of the supplier or any other place that was indicated in the delivery conditions.

28. The MFO may include the following conditions in the Murabaha contract:
    a) the MFO does not bear responsibility for any defects of the subject matter of the contract after the goods have transferred to the client's ownership; b) in case of the client's refusal to purchase the subject matter of the contract after the Murabaha contract has come into effect, the MFO has the right to sell the subject matter of the Murabaha contract to a third party, imposing on the client the obligation to compensate the MFO's uncovered costs related to the acquisition of the subject matter of the contract.

29. The MFO has no right to conduct Murabaha transactions:
    a) regarding precious metals (gold, silver, etc.) and foreign currency; b) with working capital, where the collateral of assets is accounts receivable; c) in the case of refinancing the transaction.

30. The MFO may sell the subject matter of the contract if the client delays payments for more than the term specified in the contract. If the MFO sells the subject matter of the contract, the payments already received from the client are reimbursed.

31. In case the MFO has received collateral from the client, the client gives instructions to the MFO to sell the pledge to cover the debt without going to court. The pledged property must be insured in cases where the legislation of the Kyrgyz Republic in the field of mandatory insurance or the pledge contract imposes on the pledgor the obligation to insure the pledged property.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of October 23, 2025 No. 2025-P-12/55-4-(NPA))

32. The Murabaha contract must provide for the price and payment procedure. The Murabaha contract must include a condition that the price of selling the subject matter of the contract by the MFO is determined by the parties as the sum of the purchase price and the markup agreed upon by the parties to the contract. The markup may be set in the form of:

• a fixed lump-sum payment;
• a share of the cost of the subject matter of the contract.

An essential condition of the Murabaha contract is the mandatory indication and separation in the selling price of the size of the markup. The contract must additionally indicate the markup in nominal annual percentage terms, calculated in accordance with the Regulation "On Minimum Requirements for the Pricing Policy of Banks, Payment Services and Services Provided by Microfinance Organizations, and for the Implementation of Marketing Activities," approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 29, 2021 No. 2021-P-12/75-1-(BS).

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of April 27, 2026 No. 2026-P-12/26-3-(NPA))

33. The Murabaha contract may provide that payment for the price of the subject matter of the contract will be made in regular installments on a short-term or long-term basis. In case the client does not make the next payment for the sold on installment subject matter of the contract within the established term, the client pays a penalty in the amount determined by the parties. At the same time, the size of the penalty accrued for the entire period of validity of the contract must not exceed 10 percent of the financing amount. Funds received as a penalty are directed to charitable purposes. The Shariah Council of the MFO must ensure control over the targeted use of funds received as a penalty.

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of December 21, 2016 No. 49/8, October 23, 2025 No. 2025-P-12/55-4-(NPA))

34. The Murabaha contract must provide that expenses included in the price of the subject matter of the contract purchased under the Murabaha contract include:

• insurance expenses;
• subsequent costs of the MFO related to the acquisition of goods, as well as transportation costs, import duties, and other expenses related to the execution of the contract.

35. The Murabaha contract must provide that the MFO, as proof of the conclusion of the agreed contract and to ensure its execution, may receive an advance from the client towards payments due under the Murabaha contract.

36. When concluding a Murabaha contract, all conditions on the basis of which the transaction will be carried out should be agreed upon, including:
    a) a condition that all expenses of the MFO, including payments to a third party by the MFO, are included in the selling price. At the same time, expenses for paying salaries to MFO employees cannot be attributed to expenses; b) the selling price; c) the size of the markup in absolute terms with additional disclosure of the nominal annual percentage value - remuneration that the MFO will receive from this transaction.

At the same time, the selling price or markup cannot be set in an indefinite manner, for example, depending on any indicators that will be known in the future. It is permitted to set the selling price and markup at the stage of concluding the contract depending on indicators known in advance to the client. The size of the markup cannot depend on the time factor.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of April 27, 2026 No. 2026-P-12/26-3-(NPA))

37. The Murabaha contract may provide for the right of the MFO to demand early repayment from the client in case of unjustified delay of the next installment, provided that the client is notified in advance of the payment deadlines.

38. The Murabaha contract must provide for the right of the MFO, in case of the client's delay in payment for the subject matter of the contract for a longer term than provided for by the contract, at their discretion:
    a) to sell the goods to third parties with reimbursement to the client of the funds received from the latter towards partial payment of the subject matter of the contract, if such payments were made; b) not to register the client's ownership rights to the goods until the subject matter of the contract is paid in full.

39. Commission remuneration and fees for providing financing under the Murabaha contract are not charged from the client.

40. Expenses for preparing documents for the Murabaha contract are divided between the MFO and the client, unless otherwise provided for by the contract. At the same time, all expenses of the parties must be distributed between them fairly and taking into account the actual volume of work performed by each party.

41. The MFO may charge for the preparation of a technical-economic justification if it is prepared at the request of the client and for their benefit, and the client has expressed consent to its payment.

42. The MFO, in order to ensure proper execution by the client of the obligation under the Murabaha contract, must conclude a pledge contract for funds or another type of collateral with the client. The monetary amount transferred as collateral cannot be invested by the MFO unless otherwise provided for by the contract.

43. Upon the client's application, the monetary amount transferred as collateral may be credited towards the payment for the goods in accordance with the Murabaha contract.

44. The MFO is obliged to return the collateral after the client has fulfilled their obligations under the Murabaha contract.

45. The MFO bears all risks related to damage, destruction, or loss of goods during transportation or storage, and they cannot be covered at the expense of the collateral.

The standard Murabaha contract is provided in Appendix 2 to this Regulation.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 18, 2015 No. 17/2)

45-1. The pledged property must be insured in cases where the legislation of the Kyrgyz Republic in the field of mandatory insurance or the pledge contract imposes on the pledgor the obligation to insure the pledged property.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of October 23, 2025 No. 2025-P-12/55-4-(NPA))

§ 3. Salam Contract

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 18, 2015 No. 17/2)

46. The Salam contract is concluded between the MFO and the client. Within the framework of the Salam contract, the MFO acts as the Buyer, and in Parallel Salam, the MFO acts as the Seller.

47. The subject matter of the contract cannot be foreign currency or precious metals.

48. The Salam contract is concluded for goods that can be weighed, measured, or counted.

49. The MFO carries out...