Resolution of the Board

of the National Bank

of the Kyrgyz Republic

of 28 December 2022

No. 2022-П-12/83-6-(НПА)

On Amendments

to Certain Regulatory Legal Acts

of the National Bank of the Kyrgyz Republic on Measures of Influence

In accordance with Articles 5, 9 and 64 of the Constitutional Law of the Kyrgyz Republic "On the National Bank of the Kyrgyz Republic", the Board of the National Bank of the Kyrgyz Republic resolves:

1. To introduce amendments to the following resolutions of the Board of the National Bank of the Kyrgyz Republic (attached):

• "On Approval of the Regulation "On the Supervisory Committee of the National Bank of the Kyrgyz Republic" of 19 March 2005 No. 6/2;

• "On Approval of the Regulation "On Direct Banking Supervision" of 28 May 2008 No. 22/4;

• "On Approval of the Regulation "On Liquidation of Banks" of 8 June 2017 No. 2017-П-12/23-5-(НПА);

• "On Approval of the Regulation "On the Temporary Administration" of 8 June 2017 No. 2017-П-12/23-8-(НПА);

• "On the Regulation "On Measures of Influence Applied to Banks Licensed by the National Bank of the Kyrgyz Republic" of 15 June 2017 No. 2017-П-12/25-4-(НПА);

• "On Approval of the Regulation "On the Procedure for Conducting Certain Banking Operations by Banks of the Kyrgyz Republic in the Event of the Introduction of a Temporary Administration Regime or the Commencement of Liquidation Proceedings" of 15 June 2017 No. 2017-П-12/25-9-(НПА).

2. This resolution enters into force upon the expiration of 15 (fifteen) days from the day of official publication.

3. To the Legal Department:

• from the day of receipt of the relevant documents, within 3 (three) working days, 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. To the Supervision Methodology Department, after official publication, within 3 (three) working days, to bring this resolution to the attention of the Legal Entity Association "Union of Banks of Kyrgyzstan", OJSC "State Development Bank of the Kyrgyz Republic", commercial banks, the Legal Entity Association "Association of Microfinance Organizations", OJSC "Financial Company of Credit Unions", OJSC "Guarantee Fund", the Legal Entity Association "National Association of Credit Unions and Cooperatives", the Legal Entity Association "Association of Credit Information Users", non-bank and specialized financial and credit organizations, structural subdivisions, regional departments and the representative office of the National Bank in the Batken region.

5. To the Payment Systems Department of the National Bank of the Kyrgyz Republic, after official publication, within 3 (three) working days, to bring this resolution to the attention of payment organizations and payment system operators.

6. To entrust control over the execution of this resolution to the member of the Board of the National Bank of the Kyrgyz Republic supervising the Supervision Methodology Department.

Acting Chairman Z. Chokoev

Annex
to the resolution of the Board of the National Bank of the Kyrgyz Republic of 28 December 2022 No. 2022-П-12/83-6-(НПА)

Amendments

to Certain Regulatory Legal Acts of the National Bank

of the Kyrgyz Republic on Measures of Influence

1. To introduce the following amendments to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation "On the Supervisory Committee of the National Bank of the Kyrgyz Republic" of 19 March 2005 No. 6/2:

in the Regulation "On the Supervisory Committee of the National Bank of the Kyrgyz Republic", approved by the above-mentioned resolution:

• subparagraph "d" of paragraph 2.1. shall be amended to read as follows:

"d) introduction of restrictions and prohibitions established in the Law of the Kyrgyz Republic "On Banks and Banking Activity" and/or in the legislation of the Kyrgyz Republic for banks, their shareholders and NFCIs;";

• the third and fourth paragraphs of paragraph 2.1-1. shall be amended to read as follows:

"- on a quarterly basis, information on compliance/non-compliance by banks/NFCIs with economic ratios, requirements and restrictions based on the results of inspections and external supervision, as well as on the results of the application of regulatory supervisory measures in respect of banks, NFCIs, credit bureaus, as well as exchange bureaus, including information from the regional departments of the National Bank and the representative office of the National Bank of the Kyrgyz Republic in the Batken region;

• on a semi-annual basis, information on compliance/non-compliance by NFCIs with economic ratios, requirements and restrictions, information on the results of inspections and external supervision, as well as on the results of the application of regulatory supervisory measures in respect of NFCIs and exchange bureaus, submitted by the heads of supervision departments of regional departments and the director of the representative office of the National Bank of the Kyrgyz Republic in the Batken region in the respective regions.";

• in paragraph 2.2.:

subparagraph "c" shall be amended to read as follows:

"c) recognition of the activity of a bank/NPCI, actions/inaction of officials of a bank/NPCI as unsound and unsafe banking practice on the basis of information provided by structural subdivisions of the National Bank, as well as the application, within the competence of the Committee, of an appropriate measure of influence in respect of the bank/NPCI, its shareholders (participants), officials of the bank/NPCI whose actions (inaction) are involved in unsound and unsafe banking practice;";

subparagraph "k" shall be amended to read as follows:

"k) decision on the transfer of relevant materials to law enforcement agencies, as well as to the authorized state body of the Kyrgyz Republic in the field of combating the financing of terrorist activities and the legalization (laundering) of criminal proceeds on issues on which the Committee has adopted decisions;";

2. To introduce the following amendments to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation "On Direct Banking Supervision" of 28 May 2008 No. 22/4:

in the Regulation "On Direct Banking Supervision", approved by the above-mentioned resolution:

• paragraph 1.1. shall be amended to read as follows:

«1.1. This Regulation applies to commercial banks licensed by the National Bank and to the State Development Bank of the Kyrgyz Republic (hereinafter – bank(s)).»;

• in paragraph 1.2, the words «microfinance companies entitled to attract time deposits from individuals and legal entities,» shall be replaced by the words «microfinance organizations attracting deposits»;

• paragraph four of paragraph 3.2 shall be stated in the following wording:

«- actions or inaction of shareholders, the bank and officials that serve the interests of shareholders, officials, affiliated persons and persons connected with them by common interests, but cause damage to the financial condition of the bank or the interests of depositors and other creditors of the bank;»;

• paragraph two of paragraph 3.3 shall be stated in the following wording:

«- there is a frequent change (1) of the bank's management (chairman, members of the Board of Directors), while there is non-fulfillment/improper fulfillment of instructions and other requirements of the National Bank, the inability of the bank's management to properly ensure the operation of the bank in accordance with banking legislation and legislation on countering the financing of terrorist activities and the legalization (laundering) of criminal proceeds, loss of continuity and weakening of the internal control system;».

3. To introduce the following changes to the resolution of the Board of the National Bank of the Kyrgyz Republic «On approval of the Regulation «On liquidation of banks» dated 8 June 2017 No. 2017-П-12/23-5-(НПА):

in the Regulation «On liquidation of banks» approved by the above-mentioned resolution:

• paragraph 1 shall be stated in the following wording:

«1. This Regulation establishes qualification and other requirements for liquidators, as well as the specifics of implementing measures for the liquidation of banks in accordance with the Law of the Kyrgyz Republic «On banks and banking activity» (hereinafter – the Law) and other regulatory legal acts of the Kyrgyz Republic.»;

• in paragraph 9-1:

in paragraph six, the figure «182» shall be replaced by the figure «115»;

paragraph seven shall be stated in the following wording:

«Funds provided by the National Bank to the bank's liquidator for administrative expenses are not included in the liquidation estate and are classified as administrative expenses of the liquidator in accordance with Articles 116 and 121 of the Law, and must also be repaid by the liquidator outside the order of repayment of creditors' claims established by the Law.»;

• paragraph 15 shall be stated in the following wording:

«15. Replacement of the liquidator shall be carried out in the cases provided for by the Law of the Kyrgyz Republic «On banks and banking activity».»;

• paragraph 19 shall be stated in the following wording:

«19. The period for conducting the liquidation of a bank may not exceed 24 (twenty-four) months. If necessary, this period may be extended by the court upon the petition of the liquidator with the written consent of the National Bank in the case of forced liquidation.

In the case of voluntary liquidation, the period may be extended upon the petition of the liquidator with the written consent of the National Bank.

In this case, the bank's liquidator, 3 (three) months before the end of the bank's liquidation period, shall send to the National Bank a petition to extend the bank's liquidation period, attaching the reports of the bank being liquidated for the past period as of the latest reporting date, indicating the grounds and reasons justifying the need to extend the bank's liquidation period. The National Bank, within 30 (thirty) calendar days from the moment of receipt of the petition from the bank's liquidator, shall consider the information specified in the petition on the need to extend the bank's liquidation period. The grounds for extending the bank's liquidation period must be circumstances that significantly impede the completion of the liquidation procedure within the established timeframes and affect the interests of the bank's creditors. Based on the results of consideration of the liquidator's petition to extend the bank's liquidation period, the Board of the National Bank may adopt one of the following reasoned decisions:

• 1) agree with the liquidator's petition to extend the bank's liquidation period;

• 2) agree with the liquidator's petition, but with an extension of the liquidation procedure for a different period;

• 3) disagree with the liquidator's petition to extend the bank's liquidation period.

After receiving the written consent of the National Bank to extend the period of forced liquidation, the liquidator shall send the corresponding application for approval to the court.

In the event of the National Bank's refusal to extend the liquidation periods, the bank's liquidator must eliminate the remarks that served as grounds for refusal to agree to the extension of the liquidation period and submit a repeated petition, or apply to the court (in the case of forced liquidation), or to the National Bank (in the case of voluntary liquidation), in the manner established by this Regulation, with an application to complete the bank's liquidation.

Extension of the liquidation period is not allowed without consideration and approval by the court of the liquidator's report for the previous period in the case of forced liquidation, and in the case of voluntary liquidation – by the National Bank.»;

• to supplement the Regulation with paragraph 19-1 of the following content:

«19-1. During the period of the bank's liquidation, upon a reasoned application of the liquidator with the consent of the National Bank, the court may suspend the liquidation procedure for a period of not more than 6 (six) months.

In this case, the bank's liquidator, not less than 3 (three) months before the end of the bank's liquidation period, shall send to the National Bank a petition to suspend the bank's liquidation procedure, attaching the reports of the bank being liquidated for the past period as of the latest reporting date, indicating the grounds and reasons justifying the need to suspend the bank's liquidation procedure. Also, the petition must be accompanied by information on the expenses necessary to continue functioning, as well as the measures proposed by the liquidator to eliminate the grounds for suspending the bank's liquidation procedure.

The National Bank, within 30 (thirty) calendar days from the receipt of the petition from the bank's liquidator, reviews the information specified in the petition regarding the necessity of suspending the bank's liquidation procedure.

The grounds for suspending the bank's liquidation procedure must be objective reasons, the existence of which does not allow, at the given moment, continuation of the implementation of the necessary measures for the bank's liquidation.

Based on the results of reviewing the liquidator's petition to suspend the bank's liquidation procedure, the Board of the National Bank may adopt one of the following reasoned decisions:

• 1) to agree with the liquidator's petition to suspend the bank's liquidation procedure;

• 2) to grant the liquidator's petition, but with suspension of the liquidation procedure for a different period;

• 3) to disagree with the liquidator's petition to suspend the bank's liquidation procedure.

After receiving the written consent of the National Bank to suspend the forced liquidation procedure, the liquidator sends the corresponding application for approval to the court.

In the event of the National Bank's refusal to suspend the liquidation procedure, the bank's liquidator must eliminate the remarks that served as grounds for the refusal to agree to the suspension of the liquidation procedure, and submit a repeated petition to the National Bank or apply to the court with an application to complete the bank's liquidation.

In the event the court adopts a decision to suspend the liquidation procedure, the period for conducting the bank's liquidation is extended by the court in proportion to the period of suspension of the liquidation procedure.";

• paragraph 20 shall be set out in the following wording:

"20. Banks in the process of liquidation shall provide to the National Bank accounting, statistical reporting and other reports of the bank being liquidated in the manner and volume provided for by this Regulation, according to the form of liquidation.";

• paragraph 21 shall be supplemented with a second paragraph of the following content:

"The National Bank has the right to request from the liquidator information regarding the liquidator's activities, including on the planned and actual administrative expenses for conducting the bank's liquidation procedure and the reasons for their deviations.";

• in paragraph 22:

in the second paragraph, the word "loans" shall be replaced by the word "credits";

the third paragraph shall be set out in the following wording:

"- a preliminary list of the bank's creditors' claims broken down by priority as provided for by the Law of the Kyrgyz Republic "On Banks and Banking Activity";";

• paragraph 23 shall be set out in the following wording:

"23. In the report on the state of the bank's assets at the beginning of the liquidation procedure, assets are classified on the basis of collateral, broken down into "fully collateralized", "partially collateralized" and "not collateralized by pledge", as well as "by other types of security for the obligation.";

• paragraph 24 shall be set out in the following wording:

"24. In the explanatory note to the report on the financial state of the bank at the beginning of liquidation, the liquidator shall reflect the following information:

• justification of the realizable value for each asset item;

• disclosure of information on assets and liabilities that are collateralized, partially collateralized and not collateralized by pledge, as well as by other types of security;

• information on the value of assets recorded off-balance-sheet;

• information on payments on deposits subject to protection in accordance with legislation on the protection of bank deposits.";

• subparagraph 2 of paragraph 32 shall be set out in the following wording:

"2) the basis for revaluation and the fact of engaging an appraiser/appraisal organization;";

• in paragraph 38, the word "off balance sheet" shall be replaced by the word "off-balance-sheet";

• in the title of chapter 5, the word "liquidation" shall be replaced by the word "liquidation";

• paragraph 42 shall be set out in the following wording:

"42. Voluntary liquidation of banks must be carried out in mandatory accordance with the general provisions on liquidation specified in the Law of the Kyrgyz Republic "On Banks and Banking Activity".";

• in paragraph 43, the figures "2/3" shall be replaced by the words "two thirds";

• in paragraph 44:

subparagraph 5 shall be set out in the following wording:

"5) the voluntary liquidation plan approved by the general meeting of shareholders of the bank;";

shall be supplemented with subparagraph 6 of the following content:

"6) a list of the bank's assets (property), including information on the composition and characteristics of the property, the timeframes for its sale, the form and conditions of public auctions, the form for submitting proposals on the price of the property, the initial price of its sale, the forms and timeframes for publishing and posting announcements on the sale of the property.";

• paragraph 47 shall be set out in the following wording:

"47. Upon revocation of the license by the National Bank and the commencement of voluntary liquidation of the bank, all powers of the general meeting of shareholders transfer to the bank's liquidator, except for approval of the liquidator's final report, the bank's liquidation balance sheet and adoption of a decision on completing the bank's liquidation procedure.";

• paragraph 48 shall be set out in the following wording:

"48. In the course of implementing measures for the voluntary liquidation of the bank, the liquidator is obliged to comply with the requirements provided for in the Law of the Kyrgyz Republic "On Banks and Banking Activity", in order to prevent violation of the rights of the bank's creditors and other interested persons.";

• paragraph 50 shall be set out in the following wording:

"50. After completing all measures and fulfilling the duties provided for by the Law of the Kyrgyz Republic "On Banks and Banking Activity", the liquidator must obtain a decision of the general meeting of shareholders of the bank on approval of the final report, the liquidation balance sheet and on completing the bank's liquidation procedure. After that, the liquidator sends a corresponding communication to the National Bank.";

• paragraph 53 shall be set out in the following wording:

"53. Forced liquidation of a bank is initiated on the grounds provided for by the Law of the Kyrgyz Republic "On Banks and Banking Activity".";

• paragraph 54 shall be set out in the following wording:

«54. After the revocation of the license for the right to carry out banking activities, the National Bank within 5 (five) working days applies to the court with an application to initiate the procedure for compulsory liquidation of the bank in the manner established by the Law of the Kyrgyz Republic "On Banks and Banking Activities". Before the appointment of a liquidator by the court, the National Bank appoints a temporary administration to the bank in order to ensure the safety of the bank's assets and protect the interests of depositors. If at the time of revocation of the license a temporary administration was operating in the bank, it retains its powers until the court appoints a liquidator.»;

• paragraph 56 shall be stated in the following wording:

«56. The liquidation plan must comply with the requirements of the Law of the Kyrgyz Republic "On Banks and Banking Activities".»;

• paragraph 58 shall be stated in the following wording:

«58. The decision of the Board of the National Bank on approval of the liquidation plan is adopted if it complies with the requirements of the Law of the Kyrgyz Republic "On Banks and Banking Activities" and ensures the rights of creditors of the liquidated bank.».»;

• the first sentence of paragraph 59 shall be stated in the following wording:

«59. After completion of all measures and fulfillment of obligations provided for by the Law of the Kyrgyz Republic "On Banks and Banking Activities", the liquidator applies to the court with a petition for approval of the final report, the liquidation balance sheet and on completion of the bank liquidation procedure.»;

• paragraph 61 shall be stated in the following wording:

«61. The liquidator within 15 (fifteen) calendar days after the entry into force of the court ruling on approval of the final report and completion of the liquidation procedure closes accounts in the bank, destroys in the established manner the seals and stamps of the bank, submits the court decision to the authorized state body for entering a record on exclusion of the bank from the state register of legal entities, and also sends all documentation of the liquidated bank for storage to the National Archival Fund of the Kyrgyz Republic and publishes a notice on completion of the bank liquidation procedure in the republican mass media.»;

• paragraph 69 shall be supplemented with a third paragraph of the following content:

«In case of voluntary liquidation, the property is sold according to the liquidation plan.»;

• paragraph 83 shall be stated in the following wording:

«83. From the day of the start of the liquidation procedure, the accrual of penalties (fines, penalties) and interest on all debt obligations in relation to the liquidated bank is terminated in accordance with the Law of the Kyrgyz Republic "On Banks and Banking Activities".»;

• paragraph 84 shall be stated in the following wording:

«84. Penalties (fines, penalties) and interest accrued at the time of the start of liquidation in relation to the liquidated bank shall be paid in the order of priority established by the Law of the Kyrgyz Republic "On Banks and Banking Activities".»;

• in paragraph 102, the word "Liquidator" shall be replaced by the word "liquidator";

• paragraph 111 shall be stated in the following wording:

«111. In the part not regulated by this Regulation, the liquidator is guided by the Law of the Kyrgyz Republic "On Banks and Banking Activities" and other regulatory legal acts.».

4. To introduce the following changes to the resolution of the Board of the National Bank of the Kyrgyz Republic "On approval of the Regulation "On Temporary Administration" dated 8 June 2017 No. 2017-P-12/23-8-(NPA):

in the Regulation "On Temporary Administration" approved by the above-mentioned resolution:

• in paragraph 2:

the first paragraph shall be stated in the following wording:

«2. This Regulation uses the definitions set out in the laws of the Kyrgyz Republic "On Banks and Banking Activities" and "On the Payment System of the Kyrgyz Republic", as well as the following concepts:»;

the fifth paragraph shall be stated in the following wording:

«Temporary administrator - a person appointed by the National Bank as a temporary administrator or head of the temporary administration in order to implement the temporary administration regime in a bank/PO/OPS.»;

the sixth paragraph shall be stated in the following wording:

«Obstruction of the Temporary Administration – action or inaction of management bodies and/or individual officials and employees of the bank/PO/OPS (branch/subsidiary) and other persons associated with the bank/PO/OPS, impeding or causing the impossibility of performance by the temporary administrator or the head/members of the temporary administration of the functions defined by the Law of the Kyrgyz Republic "On Banks and Banking Activities" and this Regulation.»;

• paragraph 3 shall be stated in the following wording:

«3. A temporary administration is introduced into a bank/PO/OPS if there are grounds specified in the Law of the Kyrgyz Republic "On Banks and Banking Activities", as well as regulatory legal acts of the National Bank.»;

• in paragraph 21:

the first paragraph shall be stated in the following wording:

«21. The Board/Supervisory Committee/Payment System Committee of the National Bank has the right to appoint another temporary administrator in case of:»;

the fifth paragraph shall be stated in the following wording:

«- inability to act, perform the functions and duties assigned to the temporary administrator by the Law of the Kyrgyz Republic "On Banks and Banking Activities" and this Regulation;»;

• paragraph 23 shall be stated in the following wording:

«23. Combination of the work of a temporary administrator with positions in banks, non-bank financial and credit organizations or other legal entities supervised by the National Bank, as well as in other organizations, including on a part-time basis (with the exception of teaching, research and creative activities) is not allowed.»;

• the second sentence of paragraph 30 shall be stated in the following wording:

«The rules of finality of settlements in payment systems and securities settlement systems are regulated by the Law of the Kyrgyz Republic "On Banks and Banking Activities" and the Regulation "On the procedure for conducting certain banking operations by banks of the Kyrgyz Republic in the event of the introduction of a temporary administration regime or the start of a liquidation procedure", approved by a resolution of the Board of the National Bank.»;

• supplement the Regulation with paragraph 46-1 with the following content:

"46-1. The general meeting of shareholders of the bank may adopt a decision on changing the activity and re-registration as a microfinance company, which is approved by the temporary administrator.";

• restate paragraph 47 as follows:

"47. Within a period not later than 15 (fifteen) calendar days from the day of introduction of the temporary administration into the bank/PO/OPS, the temporary administrator is obliged to prepare and submit to the Management Board/Supervisory Committee/Payment System Committee of the National Bank a report on the current financial condition and assessment of the activity of the bank/PO/OPS. The report may be prepared with the help of an external auditor, the cost of whose services is included in the expenses for the temporary administration. The report of the temporary administrator includes an assessment of the value of assets that may be realized upon liquidation of the bank, bankruptcy of the PO/OPS, a full determination of the volume of obligations and remaining capital resources, as well as one of the following recommendations with corresponding justification:

• resumption of independent activity of the bank/PO/OPS in connection with the elimination of problems or after their elimination;

• revocation of the bank's license and commencement of compulsory liquidation of the bank;

• revocation of the license of the PO/OPS;

• implementation of measures for the restructuring of the bank;

• implementation of measures for changing the activity and re-registration as a microfinance company upon the proposal of the general meeting of shareholders of the bank.";

• restate paragraph 48 as follows:

"48. The Management Board/Supervisory Committee/Payment System Committee of the National Bank, having considered the report and recommendations of the temporary administrator, adopts one of the following decisions:

• on the resumption of independent activity of the bank/PO/OPS in connection with the elimination of problems or after their elimination;

• on revocation of the bank's license and commencement of compulsory liquidation of the bank in accordance with legislation;

• on revocation of the license of the PO/OPS;

• on supporting the proposal to commence restructuring of the bank;

• on supporting the implementation of measures for changing the activity and re-registration as a microfinance company upon the proposal of the general meeting of shareholders of the bank.

On the basis of the decision adopted by the Management Board/Supervisory Committee/Payment System Committee of the National Bank, the temporary administrator, within the period established by the National Bank, prepares a plan of measures for the further activity of the bank/PO/OPS, which is submitted for consideration to the Management Board/Supervisory Committee/Payment System Committee of the National Bank.";

• in paragraph 52, replace the word "Government" with the words "Cabinet of Ministers";

• restate paragraph 66 as follows:

"66. The decision on participation in the recapitalization of a systemically important bank is adopted by the Cabinet of Ministers of the Kyrgyz Republic on the recommendation of the National Bank. Recapitalization of a systemically important bank with the attraction of funds allocated by the Cabinet of Ministers of the Kyrgyz Republic is carried out after the implementation of the measures specified in subparagraphs 1 and 2 of paragraph 64 of this Regulation. The procedure for adopting a decision on the participation of the Cabinet of Ministers of the Kyrgyz Republic in the recapitalization of a systemically important bank is adopted in accordance with the joint normative legal act of the Cabinet of Ministers of the Kyrgyz Republic and the National Bank on the issue of recapitalization of a systemically important bank.";

• in paragraph 68, replace the word "systemic" with the words "systemically important";

• restate paragraph 69 as follows:

"69. The temporary administrator may send to the participants (shareholders) of the bank a written proposal for the improvement of the financial condition of the bank.

Participants (shareholders) and creditors of the bank may submit proposals to the temporary administrator on the capitalization of the necessary amount of funds for restoring the solvency of the bank. In this case, the necessary amount and the period for its contribution are determined by the temporary administrator in agreement with the National Bank.";

• in paragraph 70, after the word "participants", supplement with the word "(shareholders)";

• restate paragraph 73 as follows:

"73. Upon transfer or sale of the assets and obligations of the bank, all or part of the assets and obligations of the bank may be transferred or sold in any volume and in any ratio, taking into account the requirements of the Law of the Kyrgyz Republic "On Banks and Banking Activity".";

• restate the second paragraph of paragraph 74 as follows:

"A notice on the transfer or sale of the assets and obligations of the bank is published by the National Bank in the mass media and on the official website of the National Bank.";

• restate paragraph 86 as follows:

"86. The official publication of the notice on the establishment of a "bridge" bank is made not later than the next day after the issuance of the license by the National Bank.";

• restate paragraph 89 as follows:

"89. The consequences of the introduction of temporary administration, provided for by the Law of the Kyrgyz Republic "On Banks and Banking Activity" and this Regulation, do not apply to the "bridge" bank.";

• restate paragraph 91 as follows:

"91. The "bridge" bank, as a legal entity, is not the successor of the restructured bank and is not liable for any of its obligations, except for those obligations that were transferred to it in accordance with the Law of the Kyrgyz Republic "On Banks and Banking Activity" and this Regulation.";

• restate the second paragraph of paragraph 107 as follows:

"Expenses for the remuneration of the Temporary Administrator and specialists attracted by him who are not employees of the National Bank, incurred at the expense of the National Bank, are reimbursed by the bank/PO/OPS in the event of termination of the activity of the Temporary Administration, and in the event of the commencement of the compulsory liquidation procedure in respect of the bank – in accordance with the order of satisfaction of creditors' claims, in the procedure established by the Law of the Kyrgyz Republic "On Banks and Banking Activity".";

• restate paragraph 134 as follows:

«134. The term of the temporary administration may be extended once by a decision of the Board/Supervisory Committee/Payment System Committee of the National Bank, in accordance with the Law of the Kyrgyz Republic "On Banks and Banking Activities", for a period of not more than 6 (six months).»;

• paragraph 136 shall be stated in the following wording:

«136. A notice of the extension of the temporary administration shall be published in the mass media and on the official website of the National Bank.»;

• paragraph 137 shall be stated in the following wording:

«137. The temporary administration shall be terminated from the moment the resolution of the Board/Supervisory Committee/Payment System Committee of the National Bank on its termination and on the release of the temporary administrator from his duties enters into force.

The decision of the Board of the National Bank on the termination of the temporary administration shall be adopted upon the petition of the temporary administrator or the supervisory body. The decision of the Board/Supervisory Committee/Payment System Committee of the National Bank on the termination of the temporary administration may be adopted in the event of:

• 1) elimination of the causes that served as the basis for its introduction;

• 2) expiration of the term for which the temporary administration was introduced;

• 3) appointment of a liquidator by a court decision;

• 4) completion of measures to change the bank's activities and its re-registration as a microfinance company.»;

• paragraph 146 shall be stated in the following wording:

«146. A notice of the termination of the temporary administration shall be published in the mass media and on the official website of the National Bank.»;

• subparagraph 7 of paragraph 1 of Appendix 2 shall be stated in the following wording:

«7) other data which, in the opinion of the National Bank, are necessary for submission as part of the monthly report (upon request).»;

• in the second paragraph of paragraph 11 of Appendix 7, the word "administrative" shall be excluded.

5. To introduce the following amendments to the resolution of the Board of the National Bank of the Kyrgyz Republic "On the Regulation 'On Measures of Influence Applied to Banks Licensed by the National Bank of the Kyrgyz Republic'" dated 15 June 2017 No. 2017-P-12/25-4-(NPA):

in the Regulation "On Measures of Influence Applied to Banks Licensed by the National Bank of the Kyrgyz Republic", approved by the above-mentioned resolution:

• the preamble shall be stated in the following wording:

«The purpose of this Regulation is to establish the procedure for the application by the National Bank of the Kyrgyz Republic (hereinafter – the National Bank) of measures of influence to commercial banks, including those carrying out operations in accordance with Islamic principles of banking and financing, banks having an "Islamic window" (hereinafter – banks).

This Regulation also applies to the State Development Bank of the Kyrgyz Republic, taking into account the specifics provided for by the Law of the Kyrgyz Republic "On the State Development Bank of the Kyrgyz Republic".

The purpose of the application by the National Bank of measures of influence in respect of banks is prompt early response, correction and elimination of problems to maintain the stability and soundness of banks and the banking system, counteraction to the financing of terrorist activities and the legalization (laundering) of criminal proceeds, suppression of monopolistic activity in the market of banking services, protection of the interests of depositors, other consumers and other creditors. For these purposes, the National Bank has the right to apply measures of influence in cases where a bank conducts risky activities that may lead to the occurrence of risks related to banking activities, in order to take corrective measures based on forward-looking assessments.

Measures of influence shall be applied by the National Bank independently on the grounds and in the procedure provided for by the legislation of the Kyrgyz Republic and this Regulation. Measures of influence by the National Bank may be applied both sequentially and selectively, depending on the nature, type of violation committed and the financial condition of the bank. The National Bank independently determines the expediency, type (combination of types) and procedure for applying measures of influence to banks.

Violations of banking activity in the Kyrgyz Republic shall be deemed to be actions (inaction) of banks, their shareholders and officials that contradict the legislation of the Kyrgyz Republic, including the Laws of the Kyrgyz Republic "On Banks and Banking Activities", "On Countering the Financing of Terrorist Activities and the Legalization (Laundering) of Criminal Proceeds", "On the Protection of Bank Deposits" and the regulatory legal acts of the National Bank.»;

• the seventeenth paragraph of paragraph 2 shall be stated in the following wording:

«- fulfillment by officials or shareholders of the bank of recommendations and/or requirements of the National Bank;»;

• paragraph 9 shall be stated in the following wording:

«9. Banks, their shareholders and officials must not be involved in unsound and unsafe banking practices.»;

• paragraph 10 shall be stated in the following wording:

«10. The National Bank may apply to any bank, its shareholder and official whose activity is recognized as unsound and unsafe banking practice, measures of influence, up to revocation of the license in accordance with the legislation of the Kyrgyz Republic.»;

• the second paragraph of paragraph 19 shall be stated in the following wording:

«The National Bank has the right to apply stricter measures of influence, up to revocation of the license, for non-fulfillment or improper fulfillment of the requirements contained in the resolutions of the Board of the National Bank, the Supervisory Committee of the National Bank, instructions or requirements of the deputy chairman/member of the Board of the National Bank supervising the supervisory block, and the heads of structural subdivisions of the National Bank.»;

• the second paragraph of paragraph 20 shall be stated in the following wording:

«1) introduction of a temporary administration;»;

• paragraph 21 shall be supplemented with a third paragraph of the following content:

«An instruction may be applied as both a primary and an additional measure of influence.»;

• in paragraph 24:

the first paragraph shall be stated in the following wording:

«24. Fine – a measure of influence of the National Bank in the form of a monetary penalty imposed in case of violation by a bank/official of a bank of the norms, requirements and restrictions established by the laws of the Kyrgyz Republic "On Banks and Banking Activities", "On Countering the Financing of Terrorist Activities and Legalization (Laundering) of Criminal Proceeds", "On Protection of Bank Deposits", other regulatory legal acts of the Kyrgyz Republic, regulatory legal acts of the National Bank, as well as for non-fulfillment or improper fulfillment of other measures of influence of the National Bank.»;

supplement paragraph with second paragraph of the following content:

«The fine may be applied as both a primary and an additional measure of influence.»;

• in paragraph 27 in the text in the official language, replace the words "не устранения" with the word "неустранения";

• restate paragraph 30 as follows:

«30. The fine may also be imposed in accordance with the Code of the Kyrgyz Republic on Offenses.»;

• restate paragraph 31 as follows:

«31. The decision on the application of a penalty is taken by the commission of the National Bank for the consideration of cases on offenses in accordance with the regulatory legal acts of the National Bank.»;

• restate paragraph 33 as follows:

«33. The National Bank has the right to present to the bank a requirement to conduct measures for the financial rehabilitation of the bank.

The bank is obliged to have a plan for the financial rehabilitation of the bank approved by the board of directors in case of financial difficulties and problems.

The plan for the financial rehabilitation of the bank is drawn up in accordance with the requirements contained in Appendix 2 to this Regulation. The plan is drawn up for 1 (one) calendar year and must be submitted to the National Bank by 1 February of the calendar year for which it is submitted. The plan must provide for adequate measures, methods and resources for restoring the sustainable and stable activity of the bank.

The bank is obliged to conduct an assessment of the adequacy of the plan for the financial rehabilitation of the bank.»;

• restate the fifth paragraph of paragraph 36-4 as follows:

«- systematic (two or more within 12 months) violation of the requirements of banking legislation, including violation of economic norms and requirements established by banking legislation.»;

• restate paragraph 40 as follows:

«40. The National Bank presents a requirement to sell the shares of a shareholder of the bank to persons not related to him, within the period of time determined by the National Bank in cases:

• if facts of provision of unreliable (false) information are revealed, on the basis of which permission of the National Bank for participation in the capital of the bank was obtained;

• if the person has ceased to meet the requirements imposed on founders (shareholders) provided for by legislation.

At the same time, the National Bank revokes the permission for the acquisition of shares, if such permission was previously issued to the applicant.

In case of presentation of a requirement to sell the shares of a founder (shareholder) of the bank due to the fact that he has ceased to meet the requirements imposed on founders (shareholders) according to legislation, simultaneously with the revocation of the previously issued permission for the acquisition of shares to the founder (shareholder), the National Bank may issue a permission to own 10 (ten) or more percent of the voting shares of the bank (first threshold value).

• if the person acquires the right of ownership to shares by inheritance or by way of restoration of rights to them, in an amount requiring the consent of the National Bank, before obtaining permission of the National Bank, or such persons were refused issuance of permission of the National Bank;

• if a shareholder of the bank refuses to provide the bank with information on the right of ownership to shares for inclusion in the legal file according to the list and in the volume established by the National Bank;

• annulment of the permission for the acquisition of a threshold participation in the capital of the bank of a banking holding company;

• if companies that are significant participants of the bank have had their permission for the acquisition of a threshold participation in the capital of the bank annulled and a requirement has been presented by the National Bank to terminate significant participation in the bank;

• if the threshold participation in the capital of the bank was acquired by a natural or legal person without permission of the National Bank, and such person did not send an application and documents for obtaining it within the established time limits, or if such person was refused issuance of permission for the acquisition of threshold participation;

• if legal entities controlled by significant participants of the bank have had their permission for the right to be a significant participant in the bank annulled and a requirement has been presented by the National Bank to terminate significant participation in the bank.

Votes on such shares are not taken into account when calculating the quorum and when adopting decisions. All previously adopted decisions are considered invalid if the number of votes on such shares influenced the adoption of decisions on the merits.

The person on whose part the violation was revealed is obliged to sell the corresponding block of shares to persons not related to him, within the period of time determined by the National Bank. Otherwise, the National Bank applies to court for the forced alienation of the shares of the specified person.»;

• restate paragraph 50 as follows:

«50. The National Bank, for violations of economic norms and indicators, requirements and restrictions, as well as in cases where a trend towards deterioration has emerged in the activity of the bank, while the bank may comply with the minimum economic norms and requirements of the National Bank, may establish for the bank new and/or more stringent economic norms and indicators, requirements and restrictions.»;

• restate subparagraph 6 of paragraph 51 as follows:

«6) change other economic norms and indicators, requirements and restrictions established by the National Bank.»;

• in paragraph 54:

restate subparagraph 1 as follows:

«1) if this leads to violation by the bank of economic norms and indicators;»;

subparagraph 6 shall be stated in the following wording:

“6) in other cases provided for by the Law of the Kyrgyz Republic “On Banks and Banking Activity”.”;

• paragraph 55 shall be stated in the following wording:

“55. In cases where a bank violates the requirements on investment restrictions, including requirements and restrictions on transactions with real estate, securities and other transactions that affect the bank's compliance with economic ratios and indicators, including capital adequacy, the Supervisory Committee of the National Bank shall have the right to impose restrictions and prohibitions on making investments and transactions with real estate, securities and other transactions.”;

• paragraph 59 shall be stated in the following wording:

“59. The decision to submit a demand to restrict or prohibit a bank shareholder from further participation in the bank's activity shall be taken by the Supervisory Committee of the National Bank if facts become known and confirmed of his violation of the Law of the Kyrgyz Republic “On Banks and Banking Activity”, normative legal acts of the Kyrgyz Republic, including in the cases specified in paragraph 40 of this Regulation. Any disposal of shares, including their sale, must be carried out within the time limits specified in the decision of the Supervisory Committee of the National Bank.”;

• the third paragraph of paragraph 66 shall be stated in the following wording:

“- introduction of a temporary administration.”;

• paragraph 69 shall be stated in the following wording:

“69. Revocation of a bank's license shall be carried out on the grounds set out in the Law of the Kyrgyz Republic “On Banks and Banking Activity”, as well as in the case of violation of the Laws of the Kyrgyz Republic “On Countering the Financing of Terrorist Activity and Legalization (Laundering) of Criminal Proceeds”, “On Protection of Bank Deposits”.”;

• paragraph 71 shall be stated in the following wording:

“71. Revocation of a bank's license entails its liquidation on the grounds and in the procedure provided for by the Law of the Kyrgyz Republic “On Banks and Banking Activity”.”;

• in Appendix 1:

paragraph 7 shall be stated in the following wording:

“7. Failure to comply with the requirements of legislation in terms of identifying suspicious operations and/or operations that do not have a clear/obvious legitimate economic purpose and/or violation of the requirements of the legislation of the Kyrgyz Republic on countering the financing of terrorist activity and legalization (laundering) of criminal proceeds.”;

paragraph 18 shall be stated in the following wording:

“18. Failure to comply or improper compliance within the time limits established by the National Bank with instructions and/or other measures of influence applied by the National Bank.”;

• paragraph 1 of Appendix 4 shall be stated in the following wording:

“1. This Procedure shall apply to banks that fail to comply with the requirement for the timely formation of the established amounts of authorized and own (regulatory) capital, while the capital of these banks must be at a level that does not fall under the requirements for the mandatory introduction of a temporary administration. A bank experiencing difficulties in forming its authorized or own (regulatory) capital to the size established by the National Bank may apply to the National Bank with an application to change its activities and re-register as a microfinance company with the right to accept term deposits from individuals and legal entities on a repayable basis for the purpose of accumulating client savings, or for voluntary liquidation. The procedure for re-registering a bank as a microfinance company or for voluntary liquidation is established by the banking legislation of the Kyrgyz Republic.».

6. To make the following amendments to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation 'On the Procedure for Conducting Certain Banking Operations by Banks of the Kyrgyz Republic in the Event of the Introduction of the Temporary Administration Regime or the Commencement of the Liquidation Procedure'" dated 15 June 2017 No. 2017-П-12/25-9-(НПА):

in the Regulation "On the Procedure for Conducting Certain Banking Operations by Banks of the Kyrgyz Republic in the Event of the Introduction of the Temporary Administration Regime or the Commencement of the Liquidation Procedure", approved by the above-mentioned resolution:

• the title of the Regulation shall be worded as follows:

"'On the Procedure for Conducting Certain Banking Operations by Banks in the Event of the Introduction of the Temporary Administration Regime or the Commencement of the Liquidation Procedure'";

• in paragraph 1, the words "Temporary Administration" shall be replaced with the words "temporary administration";

• in paragraph 4:

in subparagraph 1, the words "Temporary Administration" shall be replaced with the words "temporary administration";

subparagraph 2 shall be worded as follows:

"2) in the event that a bank submits irrevocable orders for the transfer of funds or securities to a trading and/or payment system after the commencement of the temporary administration regime or the liquidation of the bank, the orders shall have no legal force and shall not be binding on third parties only if the temporary administrator or liquidator proves that the system operator was aware of the commencement of the temporary administration regime or the liquidation of the bank before the transfer orders became irrevocable.";

• in paragraph 5, the words "Temporary Administration" shall be replaced with the words "temporary administration";

• in paragraph 6, the words "Temporary Administration" shall be replaced with the words "temporary administration";

• in paragraph 7:

the second paragraph shall be worded as follows:

"temporary administrator – a person appointed by the National Bank as a temporary administrator or head of the temporary administration for the purpose of implementing the temporary administration regime in the bank;";

in the tenth paragraph, the words "Temporary Administration" shall be replaced with the words "temporary administration";

the twenty-fourth paragraph shall be worded as follows:

"problem bank – a bank in respect of which temporary administration has been introduced or the liquidation procedure has been applied (hereinafter – the bank);";

• in the title of Chapter 3, the words "Temporary Administration" shall be replaced with the words "temporary administration";

• paragraph 8 shall be worded as follows:

"8. The decision to introduce the temporary administration regime in a bank is made by the National Bank in accordance with the Law of the Kyrgyz Republic 'On Banks and Banking Activity' and the normative legal acts of the National Bank.";

• in paragraph 9, the words "Temporary Administration" shall be replaced with the words "temporary administration";

• in paragraph 10, the words "Temporary Administration" shall be replaced with the words "temporary administration";

• in subparagraph 1 of paragraph 17, the words "Temporary Administration" shall be replaced with the words "temporary administration";

• paragraph 19 shall be worded as follows:

"19. For the purposes of this Regulation, the following are considered closing operations:

• 1) the execution of orders of the Participant for the transfer of funds or securities, as well as orders of other participants for the transfer of funds or securities in favor of the bank, submitted to the trading and/or payment system before the moment the operator receives notification of the introduction of the temporary administration regime in the bank. Such orders are recognized as irrevocable, have legal force and are binding on third parties. System operators must complete the transaction and make final settlement on all the above-mentioned orders;

• 2) settlements with other participants within the framework of bank payment card settlement systems, if transactions using cards were carried out before the moment the temporary administration regime was introduced in the bank and became irrevocable. The Participant is obliged to carry out settlements with other participants within the period established by the bank payment card settlement systems;

• 3) settlements for retail payments, including payments with the State Customs Service and/or the State Tax Service, the state budget, as well as with organizations providing utility and communication services, information on payment for which was received by the payment system before the moment the temporary administration regime was introduced in the bank. Such payments are recognized as irrevocable and settlements on them are carried out within the period established by the regulations of interbank payment systems;

• 4) settlements for cross-border payments, if the payments were made before the moment the temporary administration regime was introduced in the bank and became irrevocable, and the settlement date coincides with the period of the introduction of the temporary administration regime in the bank. The Participant is obliged to carry out settlements on them. The procedure and terms for carrying out settlements for cross-border payments in the event of the introduction of the temporary administration regime in a bank must be established in the relevant agreement between the operator of the said system and the correspondent bank;

• 5) settlements with other participants on swap and repo operations, refinancing operations, "asset exchange", when carrying out conversion transactions, if these transactions were concluded before the introduction of the temporary administration regime in the bank;

• 6) settlements with other participants within the framework of electronic money settlement systems, if transactions using electronic money were carried out before the moment the temporary administration regime was introduced in the bank and became irrevocable. The participant is obliged to carry out settlements with other participants within the period established by the rules of electronic money settlement systems;

• 7) settlements on other interbank transactions carried out in accordance with the requirements of this Regulation.";

• in the title of Chapter 5, replace the words "Временной администрации" with the words "временной администрации";

• the first sentence of paragraph 20 shall be worded as follows:

«20. If, at the time of the introduction of the temporary administration regime, the bank has reached the due dates for its obligations under repo and swap transactions, and deposit transactions in the national currency with the National Bank and vice versa, then these obligations must be performed in full in accordance with the concluded agreements (or other documents equated to them), unless otherwise established by a decision of the National Bank or other authorized bodies.»;

• in paragraph 1 of item 21, replace the words «Временной администрации» with the words «временной администрации»;

• in item 22, replace the words «Временной администрации» with the words «временной администрации»;

• in item 23, replace the words «Временной администрации» with the words «временной администрации»;

• item 25 shall be worded as follows:

«25. When conducting banknote operations in cases where a problem bank has opened «loro» accounts for a foreign bank and received cash funds for crediting to such «loro» accounts, the temporary administrator shall be entitled to cancel the operation and return the funds to the correspondent bank, subject to the following conditions:

• 1) the funds had not been credited before the temporary administration regime was introduced into the bank, despite the fact that the cash funds had already arrived at the premises of the problem bank;

• 2) in the presence of a relevant decision of the National Bank in accordance with item 9 of this Regulation;

• 3) the correspondent bank has applied with a request to terminate the transaction, despite the fact that the monetary funds have already arrived at the premises of the problem bank, and has undertaken to resolve all organizational issues, including the payment of relevant expenses, for the return shipment and transportation of cash monetary funds from the premises of the problem bank within 1 (one) business day.

In the event of non-fulfillment of the above conditions, the temporary administrator shall be entitled to credit the funds to the bank's «loro» account.»;

• in the heading of Chapter 6, replace the words «Временной администрации» with the words «временной администрации»;

• in item 27, replace the words «Временной администрации» with the words «временной администрации»;

• in the first sentence of item 28, replace the words «Временной администрации» with the words «временной администрации»;

• in items 29, 30, 31, 32, 33, replace the words «Временной администрации» with the words «временной администрации»;

• item 34 shall be worded as follows:

«34. The temporary administrator of the bank must inform the clients of the problem bank holding government securities (ГЦБ) about the introduction of the temporary administration regime in the bank no later than 2 (two) business days after the introduction of the temporary administration regime and about their right to transfer their own government securities (ГЦБ) to another bank. At the same time, if a client of a problem bank has expressed a desire to receive funds from the redemption of GSs at another bank, they must submit a written application to the problem bank for the transfer of the GSs to another bank, indicating the name of the bank to which the GSs will be transferred and a list of the GS issues to be transferred to the other bank. The temporary administrator of the bank shall be responsible for determining the list of clients of the problem bank who are owners of GSs and for obtaining the said applications from them.";

• in the first paragraph of point 35, the words "Temporary Administration" shall be replaced by the words "temporary administration";

• in the first sentence of point 37, the words "Temporary Administrator" shall be replaced by the words "temporary administrator";

• in the title of chapter 8, the words "Temporary Administration" shall be replaced by the words "temporary administration";

• point 44 shall be restated as follows:

"44. The bank may make payments and settlements with the customs service and/or tax service, the state budget, as well as with organizations providing public utilities and communication services, on the basis of a decision of the National Bank.";

• in the first sentence of point 46, the words "Temporary Administration" shall be replaced by the words "temporary administration";

• in point 58:

in the fourth sentence, in the text in the official language, the word "Liquidator" shall be replaced by the word "liquidator";

in the fifth sentence, the words "Temporary Administration" shall be replaced by the words "temporary administration";

• in point 59, in the text in the official language, the word "Liquidator" shall be replaced by the word "liquidator".