Regulation on Requirements for Standard Contracts Concluded in Accordance with Islamic Principles of Banking and Financing

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Creation date: 2026-05-13

Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic of September 30, 2009 No. 39/4

REGULATION

on requirements for standard contracts concluded in accordance with Islamic principles of banking and financing

(As amended by resolutions of the Board of the National Bank of the Kyrgyz Republic of August 28, 2013 No. 32/8, February 10, 2016 No. 7/3, December 21, 2016 No. 49/8, May 31, 2017 No. 21/10, February 24, 2022 No. 2022-P-12/9-4, November 16, 2022 No. 2022-P-12/70-1, December 14, 2022 No. 2022-P-12/78-10, 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 is mandatory for use by commercial banks holding a license from the National Bank of the Kyrgyz Republic to conduct operations in accordance with Islamic principles of banking and financing, as well as banks having an "Islamic window" (hereinafter - banks).

(As amended by Resolution of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/10)

Section I

General Provisions

1.1. The purpose of this Regulation is to standardize standard contracts concluded between a bank and a client for transactions corresponding to Islamic principles of banking and financing.

1.2. This Regulation uses definitions set forth in the Law of the Kyrgyz Republic "On Banks and Banking Activity".

(As amended by Resolution of the Board of the National Bank of the Kyrgyz Republic of December 14, 2022 No. 2022-P-12/78-10)

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

a) mandatory compliance with Sharia standards:

• contracts must not provide for the receipt of interest income by the parties;
• a contract cannot be concluded if it contains uncertainty (ambiguity) regarding the type, quantity of the subject matter of the contract, as well as uncertainty (ambiguity) regarding the term of the contract;
• the conclusion of contracts related to gambling, the production of tobacco and alcohol products is not permitted;
• contracts must provide for the exclusion of a speculative nature of the transaction, which is prohibited by Sharia standards;

b) freedom of contract conclusion:

• the contract must be concluded on a voluntary basis. If one of the parties was forced to conclude the contract for any reason, such contract is invalid;

c) presence of the subject matter of the contract:

• the subject matter of the contract must be available (exist) at the time of concluding the contract;
• if the subject matter of the contract is the production of goods in the future, the contract must provide for a precise description of the properties of the goods and the term of their manufacture;

d) legality of contracts:

• contract conditions must not violate the property rights of a third party(-ies);
• actions arising from the contract conditions must not contradict the legislation of the Kyrgyz Republic, Sharia standards, as well as public order and moral-ethical principles of the parties to the contract;

e) the following must be defined:

• subject matter of the contract;
• quantity and volume of the subject matter of the contract;
• rights and obligations of the parties to the contract.

In the event that the contract conditions provide for the receipt of profit, the contract must provide for the procedure for profit distribution between the parties.

1.4. Banks have the right to approve subtypes of standard contracts concluded for specific operations corresponding to Islamic principles of banking and financing in the established manner.

1.5. All types of standard contracts concluded by the bank in accordance with Islamic principles of banking and financing must be coordinated in the established manner with the Sharia Board of the bank.

1.6. 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.

(As amended by Resolution of the Board of the National Bank of the Kyrgyz Republic of February 10, 2016 No. 7/3)

1.7. The client has the right to repay the asset carrying credit risk in full or in parts at any time without charging any commissions, penalties, and other payments in accordance with the requirements of the legislation of the Kyrgyz Republic. Early repayment by one participant of a group of joint liability (hereinafter - GSO) is possible with the written consent of the GSO participants.

(As amended by Resolutions of the Board of the National Bank of the Kyrgyz Republic of February 10, 2016 No. 7/3, October 23, 2025 No. 2025-P-12/55-4-(NPA))

1.8. Contracts in accordance with Islamic principles of banking and financing, 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 consent is bound/stored in the client/partner's file. Contracts are drawn up in no less than two copies. One copy of the contract remains with the bank, the other is transferred to the client.

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

1.9. The bank is recommended to pay special attention to issues of interaction and assistance to clients with disabilities, including those concerning:

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

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

1.10. When serving a client with visual or hearing impairment, the bank 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 bank must provide a client who is unable to sign due to existing impairments with the opportunity to sign contracts (including facsimile signature) and other documents signed by the client, taking into account the requirements of the legislation of the Kyrgyz Republic.

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

1.11. The bank's 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.

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

Section II

Types of standard contracts concluded in accordance with Islamic principles of banking and financing

Chapter 1

Mudaraba Contract

1.1. General Provisions.

1.1.1. A Mudaraba contract may be concluded in the form of:

a) a contract for limited/special Mudaraba, in the event that the investor has the right to establish a 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 the event that the Mudarib has the right to use the provided funds at their discretion.

1.1.2. The parties to the Mudaraba contract are the Mudarib and the investor. The bank may act as both the investor and the Mudarib.

1.1.3. The Mudaraba contract must provide for a prohibition on the misuse of funds, including the issuance of loans to third parties, and the provision of gifts and donations for charitable purposes.

(As amended by Resolution of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/10)

1.1.3. The Mudaraba contract must necessarily include a list of documents on the basis of which the parties have the right to sign the contract.

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

1.2.1. The rights and obligations of the investor include:

1. the obligation of the investor to act in accordance with the terms of the contract;
2. the obligation of the investor to provide funds to the Mudarib within the timeframes established in the contract;
3. the right of the investor to control the expenditure of the funds provided by them;
4. the obligation of the investor not to interfere in the current activities of the Mudarib in the performance of the contract, limiting themselves to monitoring and consultations;
5. the right of the investor to advise the Mudarib during the performance of the contract, including legal issues;
6. the right of the investor to check the progress of the contract performance by the Mudarib, for which the Mudarib provides the investor with any reports that the latter may request;
7. the right of the investor to receive profit within the timeframes established in the contract;
8. the right of the investor to demand early repayment from the Mudarib of the amount provided under the contract, including from the collateral provided by the Mudarib, in the event of non-performance or improper performance of the terms of the Mudaraba contract.

1.2.2. The rights and obligations of the Mudarib include:

1. the obligation of the Mudarib to act in accordance with the terms of the contract;
2. the obligation of the Mudarib to make all necessary efforts to achieve the goal of the contract - to obtain maximum profit;
3. the obligation of the Mudarib to maintain full control over the quality of the implemented business project in order to comply with the necessary Sharia standards and contract conditions, as well as financial discipline in the expenditure of funds;
4. the obligation of the Mudarib to act personally (with the participation of their available labor resources) during the performance of the contract. In the event that the performance of the contract requires work beyond the scope of activities/competence of the Mudarib, the latter has the right to attract third parties who have the necessary knowledge or licenses and permits to perform the work under this contract;
5. the obligation of the Mudarib to act in good faith and in the manner that is best for the performance of the contract and achievement of the goal, in accordance with the terms of the contract and legislative requirements, and in the absence of such conditions and requirements - in accordance with business customs or other commonly required standards;
6. the right of the Mudarib to use funds received from the investor only for the purposes provided for in the Mudaraba contract;
7. the obligation of the Mudarib to keep an account of the use of funds received from the investor and income received during the performance of the contract, allowing the determination of the profit to be distributed between the parties to the contract during the term of the Mudaraba contract. The Mudarib must document all costs related to the performance of the Mudaraba contract;
8. the right of the Mudarib to independently, without the participation of the investor, conduct business activities during the performance of the contract, while the Mudarib may consult with the investor for the effective performance of the Mudaraba contract;
9. the right of the Mudarib to receive remuneration according to the Mudaraba contract.

1.3. Contract Term.

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

1.4. Method of Security.

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

1.5. Profit Distribution or Remuneration Payment.

1.5.1. The Mudaraba contract must provide for conditions regarding the fact that the profit of each party to the contract is determined in a share (percentage ratio) of the profit received by the Mudarib during the use of funds provided by the investor.

1.5.2. The following conditions must be included in the Mudaraba contract on a mandatory basis:

1. in the event that as a result of the performance 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 arose not due to the fault of the Mudarib;
2. in the event 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. In this case, the investor has the right to receive from the Mudarib the funds transferred under the contract from the collateral, and in the event of insufficient collateral - from other property of the Mudarib.

(As amended by Resolution of the Board of the National Bank of the Kyrgyz Republic of December 21, 2016 No. 49/8)

1.6. Termination of the Mudaraba Contract.

The Mudaraba contract must provide for the possibility of its termination in the following cases:

1. upon expiration of the term of the contract;
2. by agreement of the parties to the contract;
3. or other cases provided for in the contract.

The sample of the standard Mudaraba contract (limited) is provided in Appendix 1 to this Regulation.

Chapter 2

Murabaha Contract

2.1. General Provisions of the Murabaha Contract.

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

(As amended by Resolution of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/10)

2.1.2. Under the Murabaha contract, the bank undertakes to acquire the subject matter of the contract in its own name by order of the client, or that is in the ownership of the bank 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.

(As amended by 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))

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

2.1.4. 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 terms of the contract.

2.1.5. The bank may conclude a sales contract independently or through an agent. As an agent, the bank may appoint the client, in which case the client acts at the expense, in the name and on behalf of the bank, on the terms stipulated in the agency contract, which must reflect the following: the subject matter of the contract, the names of the parties and the goods, payment terms, documents confirming the sales operation, other terms.

In the event that the client acts on behalf of the bank as an agent, the following conditions must be observed:

a) the bank itself must pay the Seller for the goods without crediting funds to the account of the client acting as an agent. The bank may provide funds to the client acting as an agent only in the following cases:

• if the seller of the goods is an individual entrepreneur operating in accordance with the current legislation of the Kyrgyz Republic;
• when the goods are purchased outside the Kyrgyz Republic.

In this case, the size of the total volume of funds provided to clients acting as agents within the framework of agency contracts is established by the National Bank;

b) the bank must obtain documentary confirmation from the seller that the sale was carried out.

(As amended by Resolution of the Board of the National Bank of the Kyrgyz Republic of August 28, 2013 No. 32/8)

2.1.6. All documents and contracts related to the purchase and sale of the subject matter of the Contract must be in the name of the bank, even if the client acts as an agent of the bank.

2.1.7. The bank must receive the subject matter of the contract from the territory of the supplier or any other place that was indicated in the delivery terms.

2.1.8. The bank may include the following conditions in the Murabaha contract:

a) that the bank is not responsible for any or all defects of the goods after the goods have passed into the possession of the client, and the client has the right to appeal directly to the supplier for compensation;

b) that in the event of the client's refusal to purchase the subject matter of the contract after the Murabaha contract has come into force, the bank has the right to sell the subject matter of the Murabaha contract to a third party, imposing on the client the obligation to reimburse the bank's uncovered costs related to the acquisition of the subject matter of the contract.

(As amended by Resolution of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/10)

2.1.9. The bank is not entitled to conclude Murabaha contracts:

a) regarding precious metals (gold, silver, etc.) and any currency;

b) with working capital, where the security of assets is accounts receivable;

c) in the case of refinancing obligations.

(As amended by Resolutions of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/10, November 16, 2022 No. 2022-P-12/70-1)

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

2.1.11. In the event that the bank has received collateral from the client, the client gives instructions to the bank to sell the collateral 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.

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

2.2. The Murabaha contract must provide for the price and payment procedure.

2.2.1. The Murabaha contract must include a condition that the sale price of the subject matter of the contract by the bank is determined by the parties as the sum of the purchase price and the markup agreed 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 highlighting in the sale 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 Pricing Policy of Banks, Payment Services and Services Provided by Microfinance Organizations, and for the Implementation of Marketing Activities", approved by Resolution of the Board of the National Bank of the Kyrgyz Republic of December 29, 2021 No. 2021-P-12/75-1-(BS) (hereinafter - Regulation on Banking Services Pricing Policy).

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

2.2.2. 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. And in the event that the client does not make the next payment for the sold on installment subject matter of the contract within the established period, the client pays a penalty (fine, penalty), while the size of the penalty accrued for the entire period of the contract must not exceed 10 percent of the amount of financing issued. In this case, funds received as a penalty (fine, penalty) must be directed to charitable purposes in organizations not affiliated with the financial and credit institution. Penalty sanctions and penalties may be applied in cases provided for by Sharia standards.

(As amended by Resolutions of the Board of the National Bank of the Kyrgyz Republic of February 10, 2016 No. 7/3, October 23, 2025 No. 2025-P-12/55-4-(NPA))

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

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

2.2.4. The Murabaha contract must provide that the bank, as proof of the conclusion of the agreed contract and as security for its performance, may receive an advance from the client towards the payments due under the Murabaha contract.

2.2.5. When concluding a Murabaha contract, all conditions on the basis of which the transaction will be carried out should be stipulated, including:

a) a condition that all bank expenses, including payments to a third party, the bank includes in the sale price. At the same time, expenses for the payment of salaries to bank employees cannot be attributed to expenses;

b) the implementation price;

c) the size of the markup in absolute terms with additional disclosure of the nominal annual percentage value - remuneration that the bank will receive according to the terms of the contract.

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

(As amended by Resolutions of the Board of the National Bank of the Kyrgyz Republic of November 16, 2022 No. 2022-P-12/70-1, April 27, 2026 No. 2026-P-12/26-3-(NPA))

2.2.6. The Murabaha contract may provide for the right of the bank to demand early repayment from the client in the event of unjustified delay of the next installment, subject to prior notification to the client of the payment deadlines.

2.2.7. The Murabaha contract must provide for the right of the bank, in the event of the client's delay in payment for the subject matter of the contract for a longer period than provided for in the contract, at its 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 any such funds existed;

b) not to register the client's ownership rights to the goods until the subject matter of the contract is paid in full.

2.2.8. Commission remuneration and fees for the opportunity to provide financing under the Murabaha contract are not charged from the client by the bank.

2.2.9. Expenses for the preparation of documents under the Murabaha contract are shared between the bank and the client, unless otherwise provided for in 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 of the parties.

2.2.10. The bank may charge for the preparation of a technical and 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.

2.3. Security of the Contract.

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

2.3.2. At the request of the client, the monetary amount transferred as collateral may be credited towards the payment for the goods in accordance with the Murabaha contract.

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

2.3.4. The bank bears all risks associated with damage, destruction, or loss of goods during transportation or storage, and they cannot be covered from the collateral.

2.3.5. 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.

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

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

Chapter 3. Ijarah Muntahia Bittamlik Contract

(Chapter as amended by Resolution of the Board of the National Bank of the Kyrgyz Republic of February 24, 2022 No. 2022-P-12/9-4)

3.1. Ijarah Muntahia Bittamlik contract is a do

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