Resolution of the Board of the National Bank of the Kyrgyz Republic No. 18/2 of April 25, 2008 on Amendments to Resolution No. 32/2 on the Implementation of Islamic Financing Principles

Registered in the Ministry of Justice of the Kyrgyz Republic

May 27, 2008. Registration number 30-08

Bishkek

April 25, 2008 No. 18/2

RESOLUTION OF THE BOARD OF THE NATIONAL BANK

OF THE KYRGYZ REPUBLIC

On Amendments to the Resolution of the Board

of the National Bank of the Kyrgyz Republic

of October 30, 2006 No. 32/2 "On the Regulation "On the Implementation

of Islamic Financing Principles

in the Kyrgyz Republic within the Framework of a Pilot

Project", registered in the Ministry of Justice of the Kyrgyz Republic on November 30, 2006,

registration number 120-06

Having considered the draft amendments to the Resolution of the Board of the National

Bank of the Kyrgyz Republic of October 30, 2006 No. 32/2 "On the Regulation "On

the Implementation of Islamic Financing Principles in the Kyrgyz Republic in the

Framework of a Pilot Project", registered in the Ministry of Justice of the

Kyrgyz Republic on November 30, 2006, registration number 120-06, guided

by Articles 7 and 43 of the Law of the Kyrgyz Republic "On the National

Bank of the Kyrgyz Republic", the provisions of the Memorandum of Understanding

between the Kyrgyz Republic, the Islamic Development Bank and JSC "EcoBank"

regarding the implementation of Islamic banking principles and financing

in the Kyrgyz Republic dated May 16, 2006, ratified by the

Decree of the President of the Kyrgyz Republic No. 373 of July 12, 2006, the Board of the National Bank

of the Kyrgyz Republic resolves:

1. Approve the amendments to the Resolution of the Board of the National

Bank of the Kyrgyz Republic of October 30, 2006 No. 32/2 "On the Regulation "On the Imple-

mentation of Islamic Financing Principles in the Kyrgyz Republic in the

Framework of a Pilot Project", registered in the Ministry of Justice of

the Kyrgyz Republic on November 30, 2006, registration number 120-06" (at- tached).

2. Send this Resolution to the Steering Committee, formed

within the framework of the implementation of the Memorandum of Understanding between

the Kyrgyz Republic, the Islamic Development Bank and JSC "EcoBank" regarding

the implementation of Islamic banking principles and financing

in the Kyrgyz Republic dated May 16, 2006.

3. The Department of Supervision and Licensing Methodology jointly with

the Legal Department, in the established manner, send this Res-

olution for state registration to the Ministry of Justice of the Kyrgyz

Republic.

4. This Resolution enters into force after state

registration in the Ministry of Justice of the Kyrgyz Republic and subsequent

official publication.

5. After the publication of the registered normative legal

act, the Legal Department is to inform the Ministry of Justice of the Kyrgyz

Republic about the source of publication (name of the edition, its number

and date).

6. Control over the implementation of this Resolution is assigned to the

Deputy Chairman of the National Bank of the Kyrgyz Republic Bokon- taev K.K.

Chairman of the Board of the National

Bank of the Kyrgyz Republic M. Alapaev

Approved

by the Resolution of the Board

of the National Bank

of the Kyrgyz Republic

of April 25, 2008 No. 18/2

AMENDMENTS

to the Resolution of the Board of the National Bank

of the Kyrgyz Republic of October 30, 2006 No. 32/2

"On the Regulation "On the Implementation of Islamic Principles

of Financing in the Kyrgyz Republic within the Framework of

a Pilot Project", registered

in the Ministry of Justice of the Kyrgyz Republic

of November 30, 2006, registration number 120-06

Make the following amendments to the Regulation "On the Implementation of Islamic Financing Prin- ciples in the Kyrgyz Republic within the Framework of a Pilot Project", approved

by the Resolution of the Board of the National Bank of the Kyrgyz Republic No.

32/2 of October 30, 2006, registered in the Ministry of Justice of the KR on

November 30, 2006, registration number 120-06:

Section 2 "Types of Transactions under Islamic Principles and the Procedure for their Imple-
mentation" is supplemented by Chapter 2.12 "Trust and Guaranteed Custody Transactions" of the following content:

"1. Wadi'ah Yad Aman Transaction

1.1. Wadi'ah Yad Aman transaction (contract) - a contract of trust custody of monetary funds or other valuables of the client. The Bank has no right
to dispose of the subject of custody and can only execute the instructions of the

owner of the deposit regarding this subject, charging a certain fee for this.

1.2. Services under the Wadi'ah Yad Aman contract are provided by the bank in

the form of storage of monetary funds or other valuables in bank safes

(compartments).

2. Wadi'ah Yad Damanah Transaction

2.1. Wadi'ah Yad Damanah transaction (contract) - a contract of guaranteed

custody, under the terms of which the Bank has the right to dispose of the entrusted

funds and receive profit from their placement.

2.2. Services under the Wadi'ah Yad Damanah contract are provided by the bank

through the opening and maintenance of savings accounts.

2.3. From the profit received from the placement of funds attracted under

the Wadi'ah Yad Damanah contract, the Bank at its own discretion may pay

remuneration to the owners of these accounts. The Bank has the right to establish the

order, amounts and rules for the payment of remuneration due to clien- ts. The amount of remuneration paid to clients is recognized as expenses

of the period.

2.4. The Bank, in order to maintain the required level of current liqui-
dity and the ability to timely fulfill obligations under the contract

Wadi'ah Yad Damanah, must maintain a sufficient volume of monetary

funds in the cash register or on a correspondent account in the National Bank

of the Kyrgyz Republic.

2.5. Wadi'ah Yad Damanah operations for maintenance are equated to depo-
sit operations and are limited by the economic ratio K5 (Norma- tive of the maximum size of risk on deposits of individuals), according to

the Regulation on economic ratios and requirements mandatory for

performance by commercial banks and financial-credit institutions,

licensed by the National Bank of the Kyrgyz Republic, approved by

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

July 21, 2004 No. 18/1 "On Approval of the Regulation on Economic

Ratios and Requirements Mandatory for Performance by Commercial

Banks and Financial-Credit Institutions Licensed by the National

Bank of the Kyrgyz Republic", registered in the Ministry of

Justice of the Kyrgyz Republic on August 23, 2004, registration

number 93-04. Also, according to this regulation, the Bank determines the risk

of concentration and manages it.

2.6. Accounts for accounting of Wadi'ah Yad Damanah operations are included in the cal-
culation of mandatory reserve requirements according to the Regulation on mandatory

reserves, approved by the Resolution of the Board of the National Bank- of the Kyrgyz Republic of August 27, 2004 No. 22/4 "On Approval

of the New Edition of the Regulation "On Mandatory Reserves", registered in

the Ministry of Justice of the Kyrgyz Republic on October 5, 2004,

registration number 108-04. When calculating the liquidity coeffi- cient, these liabilities are included in the sum of bank liabilities according to the crite- ria specified in the Regulation on economic ratios and requirements,

mandatory for performance by commercial banks and financial-credit

institutions licensed by the National Bank of the Kyrgyz

Republic.

3. Accounting of Wadi'ah Yad Damanah Deposits

3.1. Accounting of funds attracted by the Bank under the Wadi'ah Yad Da-
manah contract is kept on balance sheet accounts of client deposits for the main amount

of contribution according to the contract. Accounting of deposit accounts in foreign currency

is kept at the nominal value of the currency. Analytical accounting for client accounts

is kept by the Bank in a separate automated program, with reflection

of all operations performed on the account."