NATIONAL BANK OF THE KYRGYZ REPUBLIC

RESOLUTION

of October 17, 2018 No. 2018-P-12/43-3-(BS)

On Amendments and Additions to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On the Regulation 'On Impact Measures Applied to Banks and Some Other Financial and Credit Organizations Licensed by the National Bank of the Kyrgyz Republic' dated June 15, 2017 No. 2017-P-12/25-4-(NPA)"

In accordance with Articles 20 and 68 of the Law "On the National Bank of the Kyrgyz Republic, Banks and Banking Activity", the Board of the National Bank of the Kyrgyz Republic

RESOLVES:

1. Make amendments and additions to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On the Regulation 'On Impact Measures Applied to Banks and Some Other Financial and Credit Organizations Licensed by the National Bank of the Kyrgyz Republic' dated June 15, 2017 No. 2017-P-12/25-4-(NPA)" (attached).

2. This Resolution shall enter into force upon the expiration of fifteen days from the date of its official publication.

3. 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.

4. The Department of Supervision and Licensing Methodology shall bring this Resolution to the attention of commercial banks, the Non-State Partnership "Union of Banks of Kyrgyzstan", and the State Development Bank of the Kyrgyz Republic.

5. Control over the implementation of this Resolution shall be entrusted to Board Member of the National Bank of the Kyrgyz Republic T.D. Jusupov.

Chairman of the Board of the National Bank of the Kyrgyz Republic		T. Abdygulov

		Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic dated October 17, 2018 No. 2018-P-12/43-3-(BS)

AMENDMENTS AND ADDITIONS in the Resolution of the Board of the National Bank of the Kyrgyz Republic "On the Regulation 'On Impact Measures Applied to Banks and Some Other Financial and Credit Organizations Licensed by the National Bank of the Kyrgyz Republic' dated June 15, 2017 No. 2017-P-12/25-4-(NPA)"

Make the following amendments and additions to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On the Regulation 'On Impact Measures Applied to Banks and Some Other Financial and Credit Organizations Licensed by the National Bank of the Kyrgyz Republic' dated June 15, 2017 No. 2017-P-12/25-4-(NPA)":

in the Regulation "On Impact Measures Applied to Banks and Some Other Financial and Credit Organizations Licensed by the National Bank of the Kyrgyz Republic", approved by the aforementioned Resolution:

• supplement paragraph 2 with the following nineteenth paragraph:

"In the event of a bank violating requirements regarding the minimum charter capital size and/or compliance with the economic norm for own (regulatory) capital, impact measures may be applied in the manner established in Appendix 4 to this Regulation. In this regard, the procedure specified in Appendix 4 to this Regulation is not exhaustive, and any other impact measures may be applied to the bank in accordance with banking legislation."

• in paragraph 59, replace the number "39" with the number "40";

• supplement the Regulation with Appendix 4 of the following content:

		"Appendix 4 to the Regulation 'On Impact Measures Applied to Banks and Some Other FCOs Licensed by the National Bank'

PROCEDURE for applying impact measures to banks violating requirements regarding the minimum charter capital size and/or the economic norm for own (regulatory) capital

1. This Procedure applies to banks that fail to meet the requirement for the timely formation of established sizes for charter and own (regulatory) capital, provided that the capital of such banks is at a level not subject to the requirements for the mandatory introduction of a temporary administration. A bank experiencing difficulties in forming charter or own (regulatory) capital up to the size established by the National Bank may apply to the National Bank for transformation (re-registration) into a microfinance company with the right to accept term deposits from individuals and legal entities on a repayable basis for the accumulation of client savings, or for voluntary liquidation. The procedure for transforming a bank into a microfinance company or for voluntary liquidation is established by the banking legislation of the Kyrgyz Republic.

2. Upon establishing the fact of a bank's violation of requirements regarding the minimum charter capital size and/or the economic norm for own (regulatory) capital, the National Bank issues a requirement to the bank to implement measures for financial recovery in accordance with a financial recovery plan, the maximum implementation period of which must not exceed 6 (six) months from the date of its approval by the National Bank.

3. From the date of issuance of the National Bank's requirement for financial recovery, the prohibitions and restrictions specified in paragraph 35 of the Regulation are established for the bank. Additionally, restrictions may be imposed on the bank regarding the attraction of deposits (deposits) from individuals and legal entities in terms of volume and conditions, a prohibition on attracting/opening new term deposits (deposits) from individuals and individual entrepreneurs, as well as on extending terms for previously concluded contracts. The National Bank has the right to introduce certain restrictions regarding lending (limits on amounts, requirements for collateral, etc.), prohibit or restrict the satisfaction of creditors' claims regarding the bank's monetary obligations if this would lead to a deterioration of its financial condition or bankruptcy, and impose other restrictions and prohibitions in accordance with banking legislation.

4. Upon the expiration of 6 (six) months from the date of the National Bank's decision to approve the financial recovery plan, for a bank that fails to meet requirements regarding the minimum charter capital size and/or the economic norm for own (regulatory) capital, the National Bank makes a decision to restrict the list of permitted banking operations in national and/or foreign currency in the license, and the bank is prohibited from conducting all or part of the following banking operations:

1) attracting deposits (deposits) in its own name;

2) acquiring the right to demand performance of monetary obligations from third parties (factoring);

3) conducting operations with precious metals (only banking silver, gold, platinum, and coins made from these metals of high purity);

4) conducting operations with derivative financial instruments (derivatives);

5) issuing electronic money;

6) receiving, processing, and issuing financial information (processing, clearing) for payments and settlements of third parties to participants in the payment system of the respective processing, clearing center.

The National Bank may introduce other restrictions not specified above.

The bank must complete transactions concluded previously upon the expiration of their terms, unless the contracts provide for the possibility of early termination without payment of penalty sanctions.

5. After the restriction of the list of permitted banking operations, the bank must, within a period not exceeding 6 (six) months, either form the size of charter and own (regulatory) capital up to the size established for newly created banks, or make a decision on voluntary transformation (re-registration) into a microfinance company/reorganization of the bank, or the National Bank may make decisions on applying other impact measures to the bank up to the revocation of the license.

6. In the event of the bank forming the size of charter and own (regulatory) capital up to the size established by the National Bank, the National Bank cancels the restrictions previously established for the bank in accordance with the banking legislation of the Kyrgyz Republic.".