Regulation on the Batch Clearing System for Small Retail and Regular Payments in the Kyrgyz Republic

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Creation date: 2021-12-01

Registered in the Ministry of Justice of the Kyrgyz Republic

January 18, 2006. Registration number 8-06

Approved

by the ruling of the Board

of the National Bank

of the Kyrgyz Republic

of December 15, 2005 No. 37/8

REGULATION

on the Batch Clearing System for Small Retail and Regular Payments in the Kyrgyz Republic

(In the edition of the rulings of the Board of the National Bank of the Kyrgyz Republic of June 27, 2008 No. 25/12, December 10, 2008 No. 45/6, April 29, 2009 No. 23/5, July 11, 2012 No. 29/8, June 14, 2017 No. 2017-P-19/24-8, November 24, 2021 No. 2021-P-14/64-6-(PS))

1. General Provisions

1.1. (Lost force in accordance with the ruling of the Board of the National Bank of the Kyrgyz Republic of June 14, 2017 No. 2017-P-19/24-8)

1.2. This Regulation defines the main concepts and rules for the functioning of the Batch Clearing System for Small Retail and Regular Payments on the territory of the Kyrgyz Republic (hereinafter - the System).

1.3. This Regulation applies to legal and natural persons when conducting small retail and regular payments in non-cash form.

1.4. The System is intended for the processing of small retail and regular payments of participants for which immediate final settlement is not required.

2. Terms and Definitions

The following terms and definitions are used in this Regulation:

Sender – a bank-sender, as well as a system participant initiating a payment document or message in the system.

Receiver

– a bank-receiver, as well as a system participant receiving a payment document or message from the system.

Return payment - a payment returned by the bank-receiver of the payment after final settlement of an erroneously credited amount to its correspondent/current account.

Clearing - the process of collecting, processing, confirming payments and calculating mutual multilateral net positions of system participants.

Clearing session - a period of time established in the system during which clearing is carried out. The clearing session ends with final settlement of the net positions of system participants.

Clearing day - a period of time established in the system during which clearing is carried out. The clearing day may consist of one or more clearing sessions.

Client-payer

– the sender's client, on whose funds the settlement is carried out.

Client-payee

– the receiver's client, in whose favor funds are received as a result of settlement.

Priority code - a code determining the order of processing payment documents in clearing. The priority code is assigned to the payment document by the payment sender.

Credit payment - a payment made by the bank at the instruction of the payer to debit funds from the payer's account and credit them to the receiver's account.

Monitoring - tracking the processes of conducting payments and risk management in the system in order to limit or prevent them.

Final settlement - settlement conducted on accounts of financial and credit organizations opened at the National Bank of the Kyrgyz Republic (hereinafter - the National Bank), through the gross settlement system in real-time mode. Final settlement is unconditional and irrevocable.

(Passage lost force in accordance with the ruling of the Board of the National Bank of the Kyrgyz Republic of June 14, 2017 No. 2017-P-19/24-8)

Batch - a set of payments or messages sent to one bank-receiver, grouped by the same type and settlement date of payments and formed in electronic form.

Payment - fulfillment of a monetary obligation using cash funds, or the process of transferring non-cash funds by the payer in the form established by legislation.

Payment using a bank payment card - a payment received by the system from a participant after processing in a unified interbank processing center. Payments using a bank payment card are made when paying for goods, works, and services, as well as obtaining cash funds through ATMs and terminals.

Payment document - a document of a established form, оформленный by a legal or natural person in accordance with legislation and on the basis of which a payment is made.

System personnel - specialists of the clearing center providing maintenance, support, and functioning of the system.

Pre-authorization (preliminary acceptance) - preliminary issuance by the client of permission to the bank during a certain period of time and/or within a certain amount to debit their settlement/current account upon receipt of an invoice for payment from the specified recipient of funds.

Processing center - a legal entity or its structural unit carrying out the collection, processing, and distribution of information on completed transactions to the issuer, acquirer, and settlement agent.

Direct debit - a form of settlement in which the participant debits the client's account and transfers the payment to the receiver based on pre-authorization valid for a certain period of time and/or within a certain amount.

Settlement - debiting funds from the payer's settlement account and crediting to the receiver's settlement account according to the submitted payment documents. Settlement is the completion of the payment.

Retail and regular payments - payments for medium and small amounts that are not urgent and/or regular.

Batch Clearing System for Small Retail and Regular Payments - a component of the payment system, representing a set of technologies, rules, procedures, and tools, with the help of which system participants present, receive data or documents regarding their payments through the clearing center, including a mechanism for determining multilateral net positions of participants for final settlement.

Message - electronic information about requests, responses, and confirmations in the system.

Electronic information - information in electronic representation, with which operations are performed in computer systems, computer communications, and related electronic equipment.

(Passage lost force in accordance with the ruling of the Board of the National Bank of the Kyrgyz Republic of June 14, 2017 No. 2017-P-19/24-8)

(Passage lost force in accordance with the ruling of the Board of the National Bank of the Kyrgyz Republic of June 14, 2017 No. 2017-P-19/24-8)

(Passage lost force in accordance with the ruling of the Board of the National Bank of the Kyrgyz Republic of November 24, 2021 No. 2021-P-14/64-6-(PS))

Net position - the sum of all transfers of a system participant received up to a certain point in time from all other participants minus the sum of all his transfers sent by him to all other participants up to that same point in time. If the difference is positive, the participant is in a net credit position; if the difference is negative, the participant is in a net debit position. The net credit or net debit position at the end of the clearing session is called the final net position.

"All or Nothing" principle

– used when conducting final settlement of net positions of system participants calculated in retail payment systems. In the event that at least one of the system participants has insufficient funds to pay for its net debit position, the system does not conduct final settlement of net positions for all participants until their full settlement.

(In the edition of the rulings of the Board of the National Bank of the Kyrgyz Republic of April 29, 2009 No. 23/5, June 14, 2017 No. 2017-P-19/24-8, November 24, 2021 No. 2021-P-14/64-6-(PS))

3. Purpose and Tasks of the System

3.1. The purpose of the system is to ensure reliable, safe, and efficient exchange of payment documents between participants and to reduce financial risks in the process of conducting payments in the system.

3.2. The main tasks of the system are the collection, formation, processing of payments and messages, and the determination of multilateral net positions of system participants for final settlement.

4. System Architecture

4.1. The system architecture consists of a central node, automated workstations of participants, and a communication network.

4.2. The central node represents a hardware and software complex intended for the clearing center to perform functions of centralized collection and processing of payment documents and messages, formation and transmission of output batches of payments and messages, calculation of final multilateral net positions of system participants, and their transmission to the gross settlement system in real-time mode for final settlement.

4.3. Automated workstations of participants represent a hardware and software complex intended for participants to receive, prepare, and transmit batches of payment documents and messages to the system and to carry out monitoring.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of April 29, 2009 No. 23/5, November 24, 2021 No. 2021-P-14/64-6-(PS))

4.4. The communication network represents a hardware and software complex intended for organizing interaction between the central node and the automated workstations of participants.

5. Clearing Center

5.1. The clearing center is an organization providing operator services for carrying out clearing between system participants, according to the rules and procedures established by the National Bank.

5.2. The clearing center may be the National Bank or, by decision of the National Bank, a legal entity (resident) in the form of a joint-stock company, operating on the basis of a license of the National Bank and regulatory legal acts of the National Bank.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of June 14, 2017 No. 2017-P-19/24-8)

5.3. The clearing center ensures the functioning of the system and provides participants with services for carrying out clearing.

6. System Participants

6.1. (Lost force in accordance with the ruling of the Board of the National Bank of the Kyrgyz Republic of June 14, 2017 No. 2017-P-19/24-8)

6.2. A direct participant of the system is a participant who has a correspondent/current account opened at the National Bank and a direct connection to the system, having concluded an agreement on participation in the system with the clearing center.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of June 14, 2017 No. 2017-P-19/24-8)

6.3. An indirect participant of the system is a participant who has a correspondent/current account opened at the National Bank but does not have a direct connection to the system. An indirect participant uses the connection of one of the direct participants of the system.

6.4. A sub-participant of the system is a participant who does not have a correspondent/current account opened at the National Bank. A sub-participant is identified in the system through a direct participant. A sub-participant may have a direct connection to the system under an agreement with the clearing center.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of June 14, 2017 No. 2017-P-19/24-8)

6.5. A special participant of the system is a participant who does not have a correspondent/current account at the National Bank, but has a direct connection to the system and the ability to transmit/receive system messages, having concluded an agreement on participation in the system with the clearing center.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of June 14, 2017 No. 2017-P-19/24-8)

6.6. A direct participant performs functions of forming and transmitting electronic payment documents to the clearing center, carries out monitoring, control of the passage of payments in the system, and ensures liquidity on its correspondent/current account necessary for final settlement.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of June 14, 2017 No. 2017-P-19/24-8)

6.7. Termination of the agreement on participation in the system entails deprivation of the status of a system participant with subsequent exclusion of the participant from the system. A participant experiencing financial difficulties as assessed by the National Bank may be temporarily deprived by a corresponding order of the clearing center of the right to participate in the interbank payment system without terminating the agreement.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of November 24, 2021 No. 2021-P-14/64-6-(PS))

7. Basic Rules for the Functioning of the System

7.1. The following types of payments are processed in the system;

• credit payments;

• credit payments with a future settlement date;

• direct debit;

• direct debit with a future settlement date;

• payments using bank payment cards;

• return payments.

7.2. Payments using bank payment cards have the highest priority for final settlement compared to other payments.

7.3. The following dates for payment processing are defined in the system:

• creation date - the date indicated in the primary document by the client-sender or payment sender;

• presentation date - a date is automatically assigned to payments upon their entry into the system. The presentation date for credit payments is the date of their inclusion in the calculation of net positions;

• processing date - the date of inclusion of the payment by direct debit in the calculation of net positions;

• settlement date - the date on which final settlement must be conducted. The settlement date is indicated by the sender in credit payments; in payments by direct debit, the settlement date is automatically assigned upon their entry into the system.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of November 24, 2021 No. 2021-P-14/64-6-(PS))

7.4. Exchange of payment documents between system participants is carried out through the clearing center.

7.5. Payment documents or messages transmitted to the system are combined into batches. A batch is formed in the system in accordance with the format established by regulatory legal acts of the National Bank. The batch is signed with an electronic signature, which certifies all payments or messages submitted in this batch.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of November 24, 2021 No. 2021-P-14/64-6-(PS))

7.6. Receipt of batches of payment documents and messages is carried out only during the clearing session/day. The system may establish the conduct of several clearing sessions during the clearing day.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of November 24, 2021 No. 2021-P-14/64-6-(PS))

7.7. The system forms and transmits confirmations to system participants on all received payment documents and messages from them. Confirmations are signed with an electronic signature.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of November 24, 2021 No. 2021-P-14/64-6-(PS))

7.8. Payments with a future settlement date are accepted by the system no more than five days before the settlement is conducted.

7.9. Payments that do not meet the requirements established by regulatory legal acts of the National Bank are rejected by the system and not accepted for processing. In the system, an entire batch may be rejected, or a single individual payment. All rejected payments are recorded by the system and transmitted to participants with an indication of the rejection reason code.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of November 24, 2021 No. 2021-P-14/64-6-(PS))

7.10. Batches of payment documents are transmitted to receivers during a time period defined in the rules and procedures for conducting payments in the system, established in the corresponding regulatory legal acts of the National Bank for this system. In the event of detection of an incorrect payment, the receiver may refuse and return it to the sender within a time period defined in the corresponding regulatory legal acts of the National Bank. Refused payments are transmitted by the receiver to the system as new payment documents containing additionally all details identifying the incorrect payment document of the sender.

7.11. The sender may recall a payment previously sent by him by transmitting an order for its cancellation to the system. Receipt of orders for cancellation or recall of payment documents is carried out during a time period defined in the rules and procedures for conducting payments in the system, established in the corresponding regulatory legal acts of the National Bank for this system.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of November 24, 2021 No. 2021-P-14/64-6-(PS))

7.12. During the clearing session/day, calculation of current multilateral net positions is carried out. The current multilateral net debit position of a system participant on the settlement date must not exceed the limit established in the system. In the event of a participant exceeding the limit established for him, payments debiting his account are not included in the calculation of net positions and are saved in the system until the net debit position is settled within the limit.

7.13. A time period is established in the system during which the calculation of final net positions of participants in the current clearing session/day is carried out. Final net positions are calculated for all payments with a settlement date equal to the current date. If a participant exceeds the limit of the debit net position, payments exceeding this limit are not included in the calculation of the debit net position and may be processed in the next clearing session. At the end of the clearing day, payments exceeding this limit are rejected by the system with notification of the participant.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of December 10, 2008 No. 45/6)

7.14. Final net positions are transmitted to the Gross Settlement System in Real-Time for final settlement and are processed in the system according to the "all or nothing" principle.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of April 29, 2009 No. 23/5, November 24, 2021 No. 2021-P-14/64-6-(PS))

7.15. The receiver forms a return payment after final settlement in the event of receiving an erroneous document and submits it to the system no later than the next clearing day. Return payments are transmitted by the receiver to the system as new payment documents containing additionally all details identifying the erroneous payment document of the sender.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of November 24, 2021 No. 2021-P-14/64-6-(PS))

7.16. Reports are formed and transmitted to system participants at the end of the clearing session/day.

7.17. For the client-payer, the payment is irrevocable from the moment of receiving confirmation and/or a copy of the payment document with the sender's mark of acceptance for execution and debiting of his account, and final after conducting final settlement of net positions in the gross settlement system in real-time mode and debiting the correspondent/current account of the sender.

7.18. For the sender, payments are irrevocable after the onset of the period of calculation of final net positions for them and final after conducting final settlement of net positions in the gross settlement system in real-time mode and debiting his correspondent/current account.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of April 29, 2009 No. 23/5, November 24, 2021 No. 2021-P-14/64-6-(PS))

7.19. For the receiver, payments are irrevocable after conducting final settlement and crediting his correspondent/current account.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of November 24, 2021 No. 2021-P-14/64-6-(PS))

7.20. For the receiver, the payment becomes irrevocable and final at the moment of crediting the client-payee's account by the receiver. The receiver credits the client-payee's account only after conducting final settlement in the gross settlement system in real-time mode.

(In the edition of the ruling of the Board of the National Bank of the Kyrgyz Republic of April 29, 2009 No. 23/5, November 24, 2021 No. 2021-P-14/64-6-(PS))

7.21. The procedure for forming, receiving, processing payment documents and messages in the system, transmission of confirmations and response messages to participants, and the schedule of system work are determined in the rules and procedures for conducting payments in the system, established in the corresponding regulatory legal acts of the National Bank for this system.

8. Liability of the Clearing Center and System Participants

8.1. The clearing center is responsible for ensuring uninterrupted functioning of the system, timely processing of payments, and ensuring the integrity, security, and confidentiality of information in the system.

8.2. The clearing center establishes tariffs for services for conducting payments in the system in accordance with the pricing policy and establishment of tariffs for payment services developed by the National Bank.

8.3. All internal rules and procedures for servicing the system are developed by the clearing center in accordance with regulatory legal acts of the National Bank and agreed upon with system participants.

8.4. A system participant is responsible for ensuring sufficient liquidity on the correspondent/current account necessary to cover the final net position.

8.5. A system participant is responsible for the accuracy of transmitted payment documents and messages, compliance with security and confidentiality conditions, compliance with the rules for using an electronic signature, the schedule and order of work in the system, established by regulatory legal acts