Resolution of the Board of the National Bank of the Kyrgyz Republic No. 2019-P-12\42-2-(BS) of 14 August 2019 on Amending and Supplementing Resolution No. 38/8 on Islamic Banking Operations

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Creation date: 2019-08-19

Resolution of the Board

National Bank

of the

Kyrgyz Republic

of 14 August 2019

No.

2019-P-12\42-2-(BS)

On Amending and Supplementing the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approving the Regulation "On Operations Conducted in Accordance with Islamic Principles of Banking and Financing" of 23 September 2009 No. 38/8

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. To make amendments and additions to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approving the Regulation "On Operations Conducted in Accordance with Islamic Principles of Banking and Financing" of 23 September 2009 No. 38/8 (attached).

2. This resolution enters into force upon the expiration of fifteen days from the date of its official publication.

3. The Legal Department:

• to publish this resolution on the official website of the National Bank of the Kyrgyz Republic;
• after official publication, to 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 is to bring this resolution to the attention of JSC "Commercial Bank KYRGYZSTAN", ZAO "BTA Bank", ZAO "EcoIslamicBank", JSC "BAKAI BANK",
   LLC "Union of Banks of Kyrgyzstan", corresponding structural subdivisions, regional departments, and the representative office of the National Bank of the Kyrgyz Republic in the Batken region.

5. Control over the implementation of this resolution is entrusted to the Member of the Board of the National Bank of the Kyrgyz Republic, overseeing the Department of Supervision and Licensing Methodology.

Chairman T. Abdygulov

Appendix
to the Resolution of the Board of the National Bank of the Kyrgyz Republic of 14 August 2019 No.

2019-P-12\42-2-(BS)

Amendments and Additions to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approving the Regulation "On Operations Conducted in Accordance with Islamic Principles of Banking and Financing" of 23 September 2009 No. 38/8

To make the following amendments and additions to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approving the Regulation "On Operations Conducted in Accordance with Islamic Principles of Banking and Financing" of 23 September 2009 No. 38/8":

in the Regulation "On Operations Conducted in Accordance with Islamic Principles of Banking and Financing", approved by the aforementioned resolution:

• supplement Chapter 2.2 "Contract/Partnership of Musharaka/Mudaraba" with paragraphs 2.2.34 and 2.2.35 of the following content:

"2.2.34. Contracts/Partnerships used in the agricultural sector:

1) Musakat contract (irrigation partnership) is a contract under which one party provides certain agricultural trees/plants to another party, which takes care of them, with the condition of dividing the harvest/fruits between the parties according to shares determined at the time of concluding the contract.

2) Muzaraa contract is a contract under which one party provides land to another party for organizing agricultural work for a share of the harvest agreed upon at the time of concluding the contract.

3) Mugaraas contract is a contract under which one party provides treeless land to another party for planting trees on it, with subsequent division of trees and harvest/fruits in accordance with the coefficient agreed upon in the contract.

2.2.35. For the proper implementation of financing in accordance with Islamic principles of banking and financing for the development of agriculture, it is necessary to adhere to Shariah standards, and there must be employees in the bank with the corresponding knowledge to apply them in their work.";

• in paragraph 2.12.2.2, replace the words "savings accounts" with "demand deposit accounts".

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