Resolution of the Board of the National Bank of the Kyrgyz Republic No. 21/3 of July 9, 2003 on Amendments and Additions to the Regulation on Licensing of Credit Unions

EXPIRED

(In accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic dated May 4, 2005 No. 14/3)

Registered in the Ministry of Justice of the Kyrgyz Republic on August 15,
2003. Registration number 90-03
Bishkek, July 9, 2003 No. 21/3

RESOLUTION OF THE BOARD OF THE NATIONAL BANK OF THE KYRGYZ REPUBLIC

On Amendments and Additions to the "Regulation on Licensing of Credit Unions"

Having considered the amendments and additions to the "Regulation on Licensing of Credit Unions", developed on the basis of the Law of the Kyrgyz Republic "On Credit Unions", the Law of the Kyrgyz Republic "On the National Bank of the Kyrgyz Republic", the Law of the Kyrgyz Republic "On Licensing" and the Credit Agreement between the Kyrgyz Republic and the Asian Development Bank under the project "Rural Financial Institutions" (Loan No. 1529 KGZ (SF)), as well as for the purpose of improving the procedure for issuing licenses to credit unions, the Board of the National Bank of the Kyrgyz Republic resolves:

1. Approve the attached amendments and additions to the "Regulation on
   licensing of credit unions"](https://cbd.minjust.gov.kg/30230) and bring them into force upon the expiration of 30 days from the date of publication.

2. The Department of Supervision and Licensing Methodology, jointly with
   the Legal Department, shall register the amendments and additions to the "Regulation on Licensing of Credit Unions" in the Ministry of Justice of the Kyrgyz Republic in the established manner.

3. The Department of External and Public Relations shall publish in the media
   of republican significance the amendments and additions to the "Regulation on Licensing of Credit Unions" within 10 days after state registration in the Ministry of Justice of the Kyrgyz Republic.

4. The Department of Supervision and Licensing Methodology shall bring
   this resolution to the attention of the regional (regional) offices of the National Bank, and the Limited Liability Company "Financial Company for Support and Development of Credit Unions in the Kyrgyz Republic".

5. The Limited Liability Company "Financial Company for Support and Development of Credit
   Unions in the Kyrgyz Republic" shall bring this resolution to the attention of credit unions.

6. Control over the implementation of this resolution shall be entrusted to
   Abdybaly Tegin Suerkula, a member of the Board of the National Bank.

Chairman of the Board U. Sarbanov

Appendix
to the Resolution of the Board of the National Bank of the Kyrgyz Republic of July 9, 2003 No. 21/3

Amendments and Additions to the "Regulation on Licensing of Credit Unions", approved by Resolution of the Board of the NBKR No. 8/1 dated 13.02.2002

1. Supplement Section 1 of the Regulation with the following paragraph:

"1.5. Documents for obtaining a license may be submitted by a credit union at its location to the Limited Liability Company "Financial Company for Support and Development of Credit Unions in the Kyrgyz Republic" (hereinafter - FCPRCS) and its representative offices, or to the NBKR and its regional (regional) offices."

2. In paragraph 2.2 of the Regulation, replace the words: "Financial Company for
   Support and Development of Credit Unions (hereinafter in the text - FCPRCS)" with the word "FCPRCS" and supplement with the following sub-paragraphs:

"7) credit policy or lending guidelines, approved by the General Meeting of participants of the credit union. The General Meeting of participants of the credit union has the right to approve as the credit policy (lending guidelines) of the credit union the "Guidelines for Credit Operations for Credit Unions in Kyrgyzstan", approved by Resolution of the Directorate of FCPRCS No. 5/2a dated 06.02.2003.

Credit policy (lending guidelines), as a rule, must include:

• rules and procedures for the borrower to submit documents and calculations
  required by the credit union;
• terms and rules for providing loans by the credit union;
• functions and powers of the Credit Committee;
• rules for creating a reserve to cover potential losses and
  losses on credit operations;
• procedure for monitoring loans;

8) forecast calculations with a forecast balance by volume
of attracted savings shares, volume of loans and number of participants of the credit union."

3. Rephrase paragraph 2.5 of the Regulation as follows:

"In the event of the election (appointment) of a new candidate for the Chairman of the Board (Supervisory Committee) of the Credit Committee or the chief cashier, the credit union within 10 working days sends to FCPRCS the following documents:

1) a copy of the corresponding decision of the credit union on the election
(appointment) of the Chairman of the Board (Supervisory Committee) of the Credit Committee or the chief cashier;
2) questionnaires of candidates in accordance with Appendix 6 (only for
the Chairman of the Board and the chief cashier);
3) a copy of the document confirming completion of training in
economic disciplines (for example, accounting, financial- economic analysis of activities, etc.)."

4. Supplement Section 2 with the following paragraphs:

"2.6. FCPRCS examines the submitted documents for compliance of candidates and informs the NBKR in writing for the purpose of making the appropriate entry in the register of credit unions.

2.7. Candidates for the position of Chairman of the Board (Supervisory
Committee) of the Credit Committee and the chief cashier of the credit union cannot be elected (appointed) if there is a court decision prohibiting them from engaging in this type of activity, or holding the corresponding position in financial and credit institutions."

5. In paragraph 3.3, replace the words: "Banking Supervision Department" with
   the words: "Non-Banking Institutions Supervision Department".

6. In paragraph 3.4, replace the words: "head of the Banking Supervision Department"
   with the words: "person authorized by the order of the Chairman of the NBKR".

7. Regarding paragraph 3.7:

• in the first paragraph of the paragraph, exclude the words: ", which is kept in
  the Banking Supervision Department";
• in the second paragraph of the paragraph, replace the words: "Banking Supervision
  Department" with the words: "Non-Banking Institutions Supervision Department".

8. In paragraph 3.8, replace the words: "Banking Supervision Department" with
   the words: "Non-Banking Institutions Supervision Department".

9. Rephrase paragraph 4.2 as follows:

"4.2. To obtain a license for accepting deposits (deposits) on terms of term, repayability and remuneration, a credit union must submit to FCPRCS the following documents, in two copies:

1) an application of the credit union for obtaining a license (Appendix 1);
2) the original protocol of the general meeting of participants of the credit union on
expanding the range of operations carried out by the credit union (acceptance of deposits);
3) economic justification for conducting operations on accepting
deposits (deposits) from participants of the credit union with a forecast balance, expected volume and number of depositors of the credit union;
4) a certificate (document) confirming the completion of training by the Chairman
of the Board or the person responsible for managing liquidity of the credit union in accordance with the requirements of Appendix 4;
5) reporting and information of the credit union confirming
the compliance of the credit union's activities with the minimum requirements of the NBKR for obtaining a license (Appendix 4) according to the form developed by FCPRCS, with written confirmation of the accuracy of the provided data and the absence of facts of falsification of reporting data signed by the Chairman of the Board, the Chairman of the Credit Committee and the chief cashier.

In the event of changes to the constituent documents of the credit union, in addition to the above documents, the original charter of the credit union and a copy of the certificate of state re-registration of the credit union are submitted."

10. In the second paragraph of paragraph 4.3, replace the words: "Banking Supervision Department (regional (regional) office of the NBKR)" with the word
    "NBKR".

11. In paragraph 4.5, replace the words: "head of the Banking Supervision Department"
    with the words: "person authorized by the order of the Chairman of the NBKR".

12. Rephrase sub-paragraph 3 of paragraph 5.1 as follows:

"3) in case of non-compliance with the legislation of the Kyrgyz Republic of the constituent and other documents submitted for obtaining a license;"

13. Supplement paragraph 5.1 with sub-paragraph 7 of the following content:

"7) in case of non-payment of the fee for consideration of the application and issuance of a license."

14. Rephrase paragraph 5.2 as follows:

"In case of refusal to issue a license, the applicant is given a reasoned response in writing within the time limit established for issuing the license. One copy of the documents submitted for obtaining a license of the credit union remains with the NBKR or with FCPRCS depending on the procedure for submitting documents."

15. Rephrase paragraph 6.4 as follows:

"6.4. In the event of refusal to issue a license or suspension/revocation of the license, the credit union has the right to prepare a justified complaint and submit it for consideration to the Chairman of the NBKR. The term for consideration of the complaint is 30 calendar days."

16. In Appendices 2 and 3, replace the words: "Head of the Banking Supervision Department of the NBKR"
    with the words: "Person authorized by the order of the Chairman of the NBKR."

17. Rephrase Appendix 4 of the Regulation as follows:

Appendix 4

Minimum Requirements of the National Bank of the Kyrgyz Republic to Credit Unions for Accepting Deposits (Deposits) from Participants of the Credit Union

The National Bank of the Kyrgyz Republic, in order to reduce possible risk in the implementation of deposit operations, imposes uniform requirements on credit unions having the right to accept deposits (deposits) from participants of the credit union on terms of term, repayability and remuneration.

To carry out the acceptance of deposits (deposits), the following requirements are imposed on credit unions:

1. Two years of profitable activity.

2. Capital size of not less than 200 thousand soms.

3. Presence of institutional capital of the credit union in the amount
   of not less than 12% of total assets.

4. Ratio of the amount of overdue loans (principal amounts of loans)
   to the total amount of all loans issued to participants of the credit union not more than 5%.

5. Compliance with economic standards during the last 2 years.

6. Presence of confirming documents on completion of appropriate
   special training by personnel involved in lending, deposits, liquidity management, financial management, accounting.

To obtain a license for accepting deposits (deposits), the credit union must obtain a conclusion from FCPRCS on the compliance of activities with these minimum requirements and correspond to the highest rating on risk assessment from FCPRCS.