NATIONAL BANK OF THE KYRGYZ REPUBLIC

RESOLUTION

of October 17, 2018 No. 2018-P-12/43-2-(NPA)

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

In accordance with Articles 20 and 68 of the Law of the Kyrgyz Republic "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 following resolutions of the Board of the National Bank of the Kyrgyz Republic (attached):

• "On Approval of the Instruction on Work with Bank Accounts, Accounts for Bank Deposits (Deposits)" of October 31, 2012 No. 41/12;

• "On Approval of the Regulation "On Minimum Requirements for Operational Risk Management in Commercial Banks of the Kyrgyz Republic" of December 15, 2005 No. 37/5;

• "On Approval of the Instruction "On the Procedure for Compliance with Limits of Open Currency Position and Open Position in Precious Metals by Commercial Banks on the Territory of the Kyrgyz Republic" of December 29, 2004 No. 36/13;

• "On Main Requirements to the Audit Committee" of November 20, 2003 No. 32/7;

• "On Approval of the Regulation "On Minimum Requirements for Risk Management in Banks of the Kyrgyz Republic" of June 15, 2017 No. 2017-P-12/25-8-(NPA);

• "On Approval of the Instruction on Accounting for Payment Designations in Banks" of November 25, 2004 No. 30/5;

• "On Approval of the Chart of Accounts for Accounting in Commercial Banks and Other Financial and Credit Organizations of the Kyrgyz Republic" of May 30, 2007 No. 28/3;

• "On Approval of the Regulation "On Pre-trial Regulation of Disputes between the National Bank of the Kyrgyz Republic and Commercial Banks, Organizations Carrying Out Certain Types of Banking Operations, and Their Founders (Participants), Legal and Physical Persons" of May 17, 2017 No. 19/13.

2. 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 after the expiration of fifteen days from the date of official publication.

4. The Department of Supervision and Licensing Methodology shall bring this resolution to the attention of commercial banks, the specialized financial and credit organization JSC "Financial Company of Credit Unions", microfinance organizations, credit unions, exchange offices, credit bureaus, corresponding structural subdivisions, regional departments, and the representation of the National Bank of the Kyrgyz Republic in the Batken Region.

5. Control over the execution of this resolution is entrusted to the 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 of October 17, 2018 No. 2018-P-12/43-2-(NPA)

AMENDMENTS AND ADDITIONS in certain regulatory legal acts of the National Bank of the Kyrgyz Republic

1. Make the following amendments and additions to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Instruction on Work with Bank Accounts, Accounts for Bank Deposits (Deposits)" of October 31, 2012 No. 41/12:

in the Instruction on Work with Bank Accounts, Accounts for Bank Deposits (Deposits), approved by the aforementioned resolution:

• paragraph 13 is worded as follows:

"13. Bank accounts are intended for conducting payments and settlements with third parties and are divided into:

• correspondent accounts;

• settlement (current) accounts;

• special accounts;

• accounts for bank deposits (deposits).";

• in paragraph 18:

the fifth paragraph is worded as follows:

"In cases where the amount of a term bank deposit (deposit) is not claimed by the client after the expiration of the term, the contract is considered extended on the terms of a bank deposit (deposit) on demand, unless otherwise provided by the contract.";

the seventh paragraph is worded as follows:

"The Bank must provide statements for the depositor's accounts upon their request no later than three working days from the moment of receiving the request.";

• paragraph 18-1 is worded as follows:

"18-1. The Bank and the client may conclude a deposit contract on other terms of return. A deposit contract on other terms of return is understood as a contract under which the Bank is obliged to return the deposit and pay accrued interest upon the occurrence (non-occurrence) of a certain circumstance (event) specified in the concluded contract.

If the storage terms of the deposit (deposit) on other terms of return are defined by the contract, such a deposit (deposit) is accounted for as a term bank deposit (deposit). In the event that the storage terms of the deposit (deposit) on other terms of return are not defined by the contract, it is accounted for as a bank deposit (deposit) on demand.

In cases where the client does not demand the return of the deposit amount deposited on other terms of return, upon the occurrence of circumstances provided for in the contract, the contract is considered extended on the terms of a bank deposit (deposit) on demand, in effect on the day of the expiration of the deposit term, unless otherwise provided by the contract.

The deposit (deposit) contract on other terms of return may define conditions (for example, illness, death, force majeure, etc.) under which such a deposit (deposit) may be returned before the occurrence of a certain circumstance (event) specified in the contract.";

• in paragraph 24:

the second sentence of the first paragraph is worded as follows:

"A bank account contract is considered concluded from the moment of signing, and a bank deposit (deposit) contract - from the day the amount of the bank deposit (deposit) enters the Bank into the bank deposit (deposit) account.";

the second paragraph is worded as follows:

"The bank account contract may provide for the confirmation of rights to dispose of monetary funds located in the account by electronic communication means and other documents using analogs of the handwritten signature, electronic signature, facsimile signature (facsimile) in accordance with the Law of the Kyrgyz Republic "On Rights and Guarantees for Persons with Disabilities", codes, passwords, and other means confirming that the disposal is given by the person authorized to do so.";

• in the first sentence of paragraph 31, the words "banking" and "legal entities" are excluded;

• sub-paragraph 4 of paragraph 43 is worded as follows:

"4) a copy of the constituent documents depending on the organizational and legal form of the organization, with amendments and additions, certified by the seal of the legal entity and the signature of the head;";

• the first sentence of the third paragraph of paragraph 52 is worded as follows:

"The Bank notifies the client at the last known address and/or by telephone/electronic message to the client's mobile number/electronic mail of the need to receive the balance of monetary funds, and in the absence of the client and/or absence of confirmation of receipt of the mobile/electronic message, the balance of monetary funds is stored in the system accounting (on the balance sheet) of the Bank.";

• in Appendix 1 to the Instruction on Work with Bank Accounts, Accounts for Bank Deposits (Deposits):

paragraph 4 is supplemented with fourth, fifth, and sixth paragraphs of the following content:

"The conduct of operations by the Bank related to the transfer/withdrawal of monetary funds from the client's account must be carried out in the presence of the client (depositor, if the depositor is a physical person) or a person having properly documented confirming the presence of corresponding powers to execute the order on the account (if the depositor is a physical or legal person). This requirement does not apply to operations conducted remotely without direct contact.

In the event that the client has previously presented a payment order to the Bank, which was registered in the established order on the day of the appeal, indicating a specific date for the transfer of monetary funds, then on the day of the transfer, the presence of the client is not mandatory.

At the same time, the Bank must take necessary measures to minimize the Bank's operational risks, including those related to fraud.";

in the fourth paragraph of sub-paragraph 1 of paragraph 5, the digit "18" is replaced by the digit "16";

• paragraph 6-1 of Appendix 3 to the Instruction on Work with Bank Accounts, Accounts for Bank Deposits (Deposits) is worded as follows:

"6-1. Paragraph 5 does not apply to foreign currency accounts opened for bank-residents created as a result of the re-registration of microfinance companies into a bank, for the purpose of ensuring the implementation of the main activity. These accounts may operate until the moment of opening by the bank-resident, created as a result of the re-registration of microfinance companies into a bank, a correspondent account in a non-resident bank, but for no more than six months from the moment of receiving the banking license.".

2. Make the following change to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation "On Minimum Requirements for Operational Risk Management in Commercial Banks of the Kyrgyz Republic" of December 15, 2005 No. 37/5:

in the Regulation "On Minimum Requirements for Operational Risk Management in Commercial Banks of the Kyrgyz Republic", approved by the aforementioned resolution:

• the first sentence of the third paragraph of paragraph 3.1.7-1 is worded as follows:

"- the possibility of the Bank's access to the service provider's financial reporting, including in cases where the financial condition of the service provider may affect the fulfillment of its obligations under the outsourcing agreement and other information related to the object of outsourcing.".

3. Make the following change to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Instruction "On the Procedure for Compliance with Limits of Open Currency Position and Open Position in Precious Metals by Commercial Banks on the Territory of the Kyrgyz Republic" of December 29, 2004 No. 36/13:

in the Instruction "On the Procedure for Compliance with Limits of Open Currency Position and Open Position in Precious Metals by Commercial Banks on the Territory of the Kyrgyz Republic", approved by the aforementioned resolution:

• paragraph 5.1 is worded as follows:

"5.1. In the event of a violation by the Bank as of the end of each operating day of the established limits of the open position, the National Bank applies impact measures in the form of a fine of 5% of the violation amount, but not more than 10% of the minimum charter capital norm of the Bank.".

4. Make the following change to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Main Requirements to the Audit Committee" of November 20, 2003 No. 32/7:

in the Main Requirements to the Audit Committee, approved by the aforementioned resolution:

• paragraph 3.1 is worded as follows:

"3.1. The Committee is created by the Board of Directors and must consist of at least three members of the Board of Directors of the Bank. Two of the three members of the Board of Directors must be independent members of the Board of Directors, meeting the criteria established by the legislation of the Kyrgyz Republic. At the same time, the Chairman of the Audit Committee must necessarily be one of the independent members of the Board of Directors of the Bank, who does not head the Risk Committee.".

5. Make the following change to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation "On Minimum Requirements for Risk Management in Banks of the Kyrgyz Republic" of June 15, 2017 No. 2017-P-12/25-8-(NPA):

in the Regulation "On Minimum Requirements for Risk Management in Banks of the Kyrgyz Republic", approved by the aforementioned resolution:

• paragraph 19 is worded as follows:

"19. Members of the Risk Committee and the Chairman of the Risk Committee are approved by the Board of Directors, at the same time, as members of the Board of Directors of the Bank, they are elected by the shareholders' meeting.".

6. Make the following change to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Instruction on Accounting for Payment Designations in Banks" of November 25, 2004 No. 30/5:

in the Instruction on Accounting for Payment Designations in Banks, approved by the aforementioned resolution:

• the first paragraph of paragraph 1.1 is worded as follows:

"Instruction on Accounting for Payment Designations in Banks (hereinafter - the Instruction) establishes requirements for the collection and accounting of information on payment designations by the National Bank of the Kyrgyz Republic (hereinafter - the National Bank) for the purpose of compiling the balance of payments statistics of the Kyrgyz Republic.".

7. Make the following changes to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Chart of Accounts for Accounting in Commercial Banks and Other Financial and Credit Organizations of the Kyrgyz Republic" of May 30, 2007 No. 28/3:

in the Chart of Accounts for Accounting in Commercial Banks and Other Financial and Credit Organizations of the Kyrgyz Republic, approved by the aforementioned resolution:

• in Class 9. Off-balance sheet accounts:

group "92600 Obligations Related to Certain Transactions - Counter-accounts" is worded as follows:

"Group 92600 Obligations Related to Certain Transactions - Counter-accounts

92601 Bid Guarantees - Counter-accounts

92609 Performance Guarantees - Counter-accounts

92611 Advance Guarantees - Counter-accounts

92619 Trade Import Letters of Credit - Counter-accounts

92621 Trade Export Letters of Credit - Counter-accounts

92631 Self-liquidating Obligations for Granting Loans - Counter-accounts

92641 Call Option - Counter-accounts

92642 Put Option - Counter-accounts";

• in Appendix 1 to the Chart of Accounts for Accounting in Commercial Banks and Other Financial and Credit Organizations of the Kyrgyz Republic:

in Class 9. Off-balance sheet accounts:

group "92600 Obligations Related to Certain Transactions - Counter-accounts" is worded as follows:

"Group 92600 Obligations Related to Certain Transactions - Counter-accounts

92601 Bid Guarantees - Counter-accounts

92609 Performance Guarantees - Counter-accounts

92611 Advance Guarantees - Counter-accounts

92619 Trade Import Letters of Credit - Counter-accounts

92621 Confirmed Trade Export Letters of Credit - Counter-accounts

92631 Self-liquidating Obligations for Granting Loan - Counter-accounts

92641 Call Option - Counter-accounts

This account accounts for transactions on option contracts (call option). This account is kept in the nominal currency. The debit of the account reflects the closure of this account. The credit of the account reflects the amount of the purchased option contract.

92642 Counter-account to option contract (put)

This account accounts for transactions on option contracts (put option). This account is kept in the nominal currency. The debit of the account reflects the amount of the purchased option contract. The credit of the account reflects the closure of this account.".

8. Make the following changes to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation "On Pre-trial Regulation of Disputes between the National Bank of the Kyrgyz Republic and Commercial Banks, Organizations Carrying Out Certain Types of Banking Operations, and Their Founders (Participants), Legal and Physical Persons" of May 17, 2017 No. 19/13:

in the Regulation "On Pre-trial Regulation of Disputes between the National Bank of the Kyrgyz Republic and Commercial Banks, Organizations Carrying Out Certain Types of Banking Operations, and Their Founders (Participants), Legal and Physical Persons", approved by the aforementioned resolution:

• in paragraph 2:

the fourth paragraph is worded as follows:

"Bank" - a commercial bank or another financial and credit organization licensed by the National Bank, and/or subject to supervision by the National Bank in accordance with the legislation of the Kyrgyz Republic.";

in the seventh paragraph, the word "may" is replaced with the words "may be";

the tenth paragraph is worded as follows:

"Hearing" - the process of considering a complaint (hereinafter - an appeal statement) against a decision of the National Bank in accordance with this Regulation.";

• throughout the text of Chapter 2, the word "adopted" is replaced with the word "adopted" (neuter gender);

• in paragraph 8:

in the second paragraph, the word "arising" is replaced with the word "arising" (neuter gender);

in the fifth paragraph, the word "are accepted" is replaced with the word "is accepted";

• in paragraph 16, the digit "15" is replaced by the digit "25";

• in paragraph 17:

the first sentence is worded as follows:

"The responsible structural subdivision, within 10 calendar days from the moment of receipt by the National Bank of the appeal statement, but no later than the date of the meeting determined by the Chairman of the National Bank or the Deputy Chairman/Board Member of the National Bank, for the consideration of the appeal statement in accordance with paragraph 12 of this Regulation, is obliged, upon receipt of the appeal statement, to check the compliance of the appeal statement with the requirements of paragraph 11 of this Regulation.";

the second paragraph is worded as follows:

"In the event of failure to eliminate the shortcomings indicated by the National Bank, the appeal statement is recognized as inadmissible and left without consideration.";

• in paragraph 22, the digit "3" is replaced by the digit "7".