Resolution of the Board of the National Bank of the Kyrgyz Republic dated May 18, 2012 No. 19/7 on Amendments to Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic

NATIONAL BANK OF THE KYRGYZ REPUBLIC

RESOLUTION

dated May 18, 2012 No. 19/7

On Amendments to Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic dated May 31, 2017 No. 21/7)

In order to reduce credit risks, taking into account the excessive debt that has arisen in the microfinance sector, as well as to avoid the practice of repaying creditor debt to some financial and credit institutions using borrowed funds issued by other financial and credit institutions, in accordance with Articles 7 and 43 of the Law of the Kyrgyz Republic "On the National Bank of the Kyrgyz Republic" and Articles 5 and 9 of the Law "On Microfinance Organizations in the Kyrgyz Republic", the Board of the National Bank of the Kyrgyz Republic

RESOLVES:

1. Approve amendments to the following regulatory legal acts of the National Bank of the Kyrgyz Republic:

• in the Regulation on the classification of assets and corresponding contributions to the reserve to cover potential losses and damages, approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic dated July 21, 2004 No. 18/3, registered in the Ministry of Justice of the Kyrgyz Republic on August 23, 2004, registration number No. 95-04 (attached);

• in the Temporary Regulation on general principles of asset classification and formation of reserves to cover potential losses and damages of microfinance organizations in the Kyrgyz Republic that do not have the right to accept deposits from individuals and legal entities, approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic dated October 22, 2003 No. 31/3 (attached);

• in the Temporary Order for the application of special classification of loans meeting certain criteria, approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic dated March 2, 2006 No. 5/6, registered in the Ministry of Justice of the Kyrgyz Republic on April 7, 2006, registration number No. 35-06 (attached);

• in the Regulation on the classification of loans in credit unions, approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic dated April 12, 2006 No. 10/6 (attached);

- (paragraph lost force in accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic dated May 31, 2017 No. 21/7)

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic dated May 31, 2017 No. 21/7)

2. To the Legal Department:

• publish this Resolution on the official website of the National Bank of the Kyrgyz Republic;

• after official publication, send this Resolution to the Ministry of Justice of the Kyrgyz Republic for inclusion in the State Register of Regulatory Legal Acts of the Kyrgyz Republic.

3. This Resolution enters into force from the moment of official publication.

4. The Supervision and Licensing Methodology Department is to bring this Resolution to the attention of commercial banks, microfinance organizations, and credit unions.

5. Control over the execution of this Resolution is entrusted to the Deputy Chairman of the National Bank of the Kyrgyz Republic Z.L. Chokoev.

Chairman	Z. Asankozhoeva
		Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic dated May 18, 2012 No. 19/7

Amendments to Certain Regulatory Acts

of the National Bank of the Kyrgyz Republic

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic dated May 31, 2017 No. 21/7)

1. Paragraph 5.1.2 of the Regulation on the classification of assets and corresponding contributions to the reserve to cover potential losses and damages, approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic dated July 21, 2004 No. 18/3, is supplemented with fifth and sixth paragraphs as follows:

"- the presence of unpaid debt of a borrower-individual on an asset in this and/or other financial and credit institutions;

• repayment of the borrower-individual's debt and the debt of his/her spouse, parents, and children to this and/or other financial and credit institutions from a single source of income".

2. Paragraph 3.7 of the Temporary Regulation on general principles of asset classification and formation of reserves to cover potential losses and damages of microfinance organizations in the Kyrgyz Republic that do not have the right to accept deposits from individuals and legal entities, approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic dated October 22, 2003 No. 31/3, is supplemented with fifth and sixth paragraphs as follows:

"- the borrower-individual has unpaid debt on an asset in this and/or other financial and credit institutions;

• repayment of the borrower-individual's debt and the debt of his/her spouse, parents, and children to this and/or other financial and credit institutions is carried out from a single source of income".

3. Paragraph 3.5 of the Regulation on the classification of loans in credit unions, approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic dated April 12, 2006 No. 10/6, is supplemented with sub-items "d" and "e" in the following wording:

"d) the presence of unpaid debt of a borrower-individual on loan(s) in this and/or other financial and credit institutions;

e) repayment of the borrower-individual's debt and the debt of his/her spouse, parents, and children to this and/or other financial and credit institutions from a single source of income".

4. Make the following amendments to the Temporary Order for the application of special classification of loans meeting certain criteria, approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic dated March 2, 2006 No. 5/6:

a) after the words "to one person" in paragraph 4.5, add the words "in this bank/FCI";

b) supplement with paragraph 4.5-1 as follows:

"In cases where a client-individual has several loans in this and/or another bank/FCI meeting the established criteria, special classification may be applied provided that the total amount of all loans does not exceed the quantitative limit specified in paragraph 2.1. In this case, such loans must be classified as doubtful".

5. (Lost force in accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic dated May 31, 2017 No. 21/7)