Regulation on the Procedure for Deposit Operations Conducted by the National Bank of the Kyrgyz Republic in the National Currency

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Date created: 2023-07-21

APPROVED by the Resolution of the Board of Directors of the National Bank of the Kyrgyz Republic No. 10\11 dated March 28, 2013

Regulation on the Procedure for Conducting Deposit Operations by the National Bank of the Kyrgyz Republic in the National Currency

(As amended by Resolutions of the Board of Directors of the National Bank of the Kyrgyz Republic dated January 29, 2014 No. 2/6, April 26, 2017 No. 17/3, August 30, 2017 No. 2017-P-09/39-6-(DCP), August 30, 2017 No. 2017-P-09/39-7-(DCP), December 14, 2022 No. 2022-P-09/78-14-(NPA))

1. GENERAL PROVISIONS

2. This Regulation on the procedure for conducting deposit operations in the national currency (hereinafter - the Regulation) defines the procedure for conducting by the National Bank of the Kyrgyz Republic (hereinafter - the National Bank) deposit operations in the national currency with commercial banks of the Kyrgyz Republic (hereinafter - Participants) through the National Bank's Automated Trading System (hereinafter - ATS).

3. The National Bank conducts deposit operations in the national currency (hereinafter - deposit operation) in accordance with the Constitutional Law of the Kyrgyz Republic "On the National Bank of the Kyrgyz Republic" and the Civil Code of the Kyrgyz Republic.

(As amended by Resolution No. 2022-P-09/78-14-(NPA) dated December 14, 2022)

3. The conditions and rules established by the Regulation on the Operation of the Automated Trading System of the National Bank of the Kyrgyz Republic (hereinafter - Regulation on ATS Operation) apply to this Regulation.

4. Deposit operations in the national currency are conducted by decision of the Monetary and Credit Policy Committee of the National Bank (hereinafter - MCPC).

(As amended by Resolution No. 2/6 dated January 29, 2014)

5. Deposit operations are conducted to temporarily absorb excess liquidity from the banking system.

6. Participants in deposit operations are commercial banks meeting the requirements of paragraph 14 of this Regulation. Also, by decision of the Board of Directors of the National Bank, other participants of the republic's financial market may be admitted to the deposit operation.

7. The relationship between a Participant and the National Bank regarding deposit operations is governed by this Regulation and the corresponding bilateral Agreement on the Procedure for Conducting Deposit Operations in the National Currency between the National Bank and the Participant, as set forth in Appendix 1 to this Regulation (hereinafter - Agreement).

8. DEFINITIONS AND TERMS

For the purposes of this Regulation, in addition to those specified below, definitions and terms established in the Regulation on ATS Operation apply:

8. Date of conducting a deposit operation – the day announced by the National Bank in the parameters of the deposit operation, on which the receipt, processing, and announcement of results of the deposit operation occur.

9. Date of execution of a deposit operation – the day announced by the National Bank in the parameters of the deposit operation, on which the actual transfer of funds occurs.

(As amended by Resolution No. 2/6 dated January 29, 2014)

10. Date of completion of a deposit operation – the day announced by the National Bank in the parameters of the deposit operation, on which the reverse crediting of the monetary amount occurs, including the accrued interest.

11. Deposit operation – an operation for the temporary absorption by the National Bank of monetary funds in the national currency on conditions of repayability, interest-bearing nature, and term.

11-1. Overnight deposit – a deposit operation by which a Participant transfers from its correspondent account a monetary amount in the national currency for 1 (one) night to the corresponding account of the National Bank. The return of the monetary amount in the national currency, including accrued interest, is made by the National Bank to the Participant's correspondent account in the National Bank on the date of completion of the deposit operation.

(As amended by Resolution No. 2/6 dated January 29, 2014)

12. Term of a deposit operation, except for the overnight deposit – the time interval calculated in calendar days, starting from the day following the date of execution of the deposit operation, including the date of completion of the deposit operation.

(As amended by Resolution No. 2/6 dated January 29, 2014)

13. Term for accruing interest on deposit operations – the time interval expressed in calendar days, calculated starting from the day following the date of debiting the monetary amount from the Participant's correspondent account and crediting it to the corresponding account of the National Bank, up to the day preceding the date of return of the deposit, inclusive.

13-1. For accruing interest on an overnight deposit, 1 (one) day is taken into account in the calculation and it is calculated using the simple interest formula based on 360 days in a year. In cases where an overnight deposit is concluded on the last trading day of the week and/or on a pre-holiday, the interest accrual term is calculated as a time interval expressed in calendar days, starting from the day following the date of conclusion of the overnight deposit, up to the day preceding the date of return of the overnight deposit, inclusive.

(As amended by Resolution No. 2/6 dated January 29, 2014)

3. GENERAL CONDITIONS FOR CONDUCTING DEPOSIT OPERATIONS

4. To gain access to a deposit operation, a Participant must submit a letter of intent for access to the National Bank and meet the following requirements:

§ hold a license from the National Bank for conducting banking operations in national and/or foreign currency and have permission to place its own and/or attracted funds on its own behalf under contractual terms;

(As amended by Resolution No. 2017-P-09/39-7-(DCP) dated August 30, 2017)

§ hold a correspondent account in the national currency at the National Bank;

§ have an Agreement concluded with the National Bank;

§ not be in processes and/or procedures stipulated by the Law of the Kyrgyz Republic "On Banks and Banking Activity" (Temporary Administration, bank liquidation).

(As amended by Resolution No. 2022-P-09/78-14-(NPA) dated December 14, 2022)

By a separate decision of the Board of Directors of the National Bank, Participants undergoing processes and/or procedures stipulated by the Law "On Banks and Banking Activity" may also be admitted to deposit operations in the national currency.

(As amended by Resolution No. 2022-P-09/78-14-(NPA) dated December 14, 2022)

15. The basis for participation in a deposit operation is the existence of a signed Agreement and an application for participation in the deposit operation, properly formatted and submitted via the ATS.

16. The MCPC of the National Bank, according to paragraph 4 of this Regulation, determines the following conditions:

Type of deposit operation:

• auction at maximum interest rate;
• auction at fixed interest rate;
• overnight deposit.

Parameters of the deposit operation:

• interest rate (maximum/fixed and overnight deposit rate);
• monetary amount, with the volume for overnight deposits being unlimited;
• term of the deposit operation.

(As amended by Resolution No. 2/6 dated January 29, 2014)

17. The conditions for conducting deposit operations specified in paragraph 16 of this Regulation are announced by the National Bank through ATS and by placing an informational message on the National Bank's website.

18. Results of conducted deposit operations are available in the ATS, and also announced by the National Bank by placing statistical information on the National Bank's website.

19. The application must meet the conditions of the deposit operation announced by the National Bank.

20. An application that does not meet the conditions of the deposit operation announced by the National Bank is rejected by the ATS.

21. A Participant may modify or withdraw an application only within the interval between the start time and the end time for receiving applications in the ATS.

22. After the end time for receiving applications for deposit operations in the ATS is reached, Participants can no longer submit/modify applications, and applications are considered irrevocable.

23. The National Bank ensures the confidentiality of information specified in the application.

24. Early completion and extension of a deposit operation are not permitted.

25. A deposit operation, except for the overnight deposit, may be recognized by the National Bank as unsuccessful if fewer than two Participants participate in it.

(As amended by Resolution No. 2/6 dated January 29, 2014)

26. Transfer by a Participant of its monetary claims under a deposit operation to other persons is not permitted.

27. The procedure for conducting a deposit operation is established in accordance with the Regulation on ATS Operation.

28. The procedure for settlement under a deposit operation is established in accordance with this Regulation and the Regulation on ATS Operation.

29. PROCEDURE FOR CONDUCTING DEPOSIT OPERATIONS

30. A Participant may submit only 1 (one) application for an overnight deposit and for an auction at a fixed interest rate, and no more than 5 (five) applications for an auction at the maximum interest rate. In this case, subsequent applications by a Participant will be rejected and not accepted.

(As amended by Resolution No. 2/6 dated January 29, 2014)

30. When conducting an auction at a fixed interest rate, applications from Participants are accepted at the fixed interest rate announced by the National Bank, and applications are satisfied proportionally to their relative weights.

(As amended by Resolution No. 2/6 dated January 29, 2014)

31. When conducting an auction at the maximum interest rate, applications from Participants with an interest rate below or equal to the maximum interest rate announced by the National Bank are accepted. Applications from Participants offering the lowest (below the maximum interest rate announced by the National Bank) interest rates are satisfied first. Thus, satisfaction of applications is carried out from the lowest offered interest rate and then in ascending order up to the maximum interest rate of the National Bank. In case of matching offered interest rates in Participants' applications, applications are satisfied proportionally to their relative weights.

(As amended by Resolution No. 2/6 dated January 29, 2014)

32. When conducting an overnight deposit, applications from Participants are accepted between 15:00 and 16:45 at the overnight deposit rate announced by the National Bank.

(As amended by Resolutions No. 2/6 dated January 29, 2014 and No. 2017-P-09/39-6-(DCP) dated August 30, 2017)

33. The ATS performs calculations and determines the results of the deposit operation.

34. A Participant may receive information about the status of its applications for a deposit operation in real time at the Participant's workstation in the ATS.

35. On the date of execution of a deposit operation, the ATS debits from the Participant's correspondent account at the National Bank the monetary amount in accordance with the conditions of the satisfied application by the Participant and credits it to the corresponding account of the National Bank. For overnight deposits, the ATS debits funds between 16:45 and 17:00.

(As amended by Resolutions No. 2/6 dated January 29, 2014 and No. 2017-P-09/39-6-(DCP) dated August 30, 2017)

36. On the date of completion of a deposit operation, including overnight deposits, between 09:00 and 09:30, the ATS debits from the corresponding account of the National Bank the monetary amount and accrued interest in accordance with the conditions of the satisfied application by the Participant and credits them to the Participant's correspondent account at the National Bank.

(As amended by Resolution No. 2/6 dated January 29, 2014)

5. RIGHTS, OBLIGATIONS AND LIABILITY OF PARTICIPANTS

6. The rights and obligations of the Participant and the National Bank are determined in accordance with this Regulation and the Regulation on ATS Operation.

7. A Participant agrees to the conditions for concluding a deposit operation set forth in this Regulation and undertakes not to refuse to perform obligations under the concluded deposit operation.

8. Failure by a Participant to fulfill its obligations under a deposit operation is the absence of a sufficient monetary amount in the Participant's correspondent account at the National Bank on the date of execution of