Resolution of the Board of the National Bank of the Kyrgyz Republic No. 25/4 of 6 September 2006 on Amendments and Additions to the Regulation on Measures of Influence Applied to Banks and Certain Other Financial and Credit Institutions Licensed by the National Bank of the Kyrgyz Republic

REPEALED in accordance with resolution of the Board of the National Bank of the Kyrgyz Republic No. 2017-P-12/25-4 of 15 June 2017

Registered with the Ministry of Justice of the Kyrgyz Republic

9 September 2006. Registration number 104-06

Bishkek city

of 6 September 2006 No. 25/4

RESOLUTION OF THE BOARD

OF THE NATIONAL BANK

OF THE KYRGYZ REPUBLIC

"On Amendments and Additions to the Regulation

"On Measures of Influence Applied to Banks and

Certain Other Financial and Credit Institutions

Licensed by the National Bank of the Kyrgyz Republic"

Having considered the draft amendments and additions to the Regulation "On Measures

of Influence Applied to Banks and Certain Other Financial and Credit

Institutions Licensed by the National Bank of the Kyrgyz Republic", approved by resolution of the Board of the National

Bank of the Kyrgyz Republic No. 16/2 of 19.05.05 (registration

number of the Ministry of Justice of the Kyrgyz Republic 78-05 of 24.06.05),

guided by Articles 7, 30, 32 of the Law of the Kyrgyz Republic

"On the National Bank of the Kyrgyz Republic", Articles 39, 45-1, 48

of the Law of the Kyrgyz Republic "On Banks and Banking Activity in

the Kyrgyz Republic", the Board of the National Bank of the Kyrgyz

Republic resolves:

1. To approve the amendments and additions to the Regulation "On Measures

of Influence Applied to Banks and Certain Other Financial and Credit

Institutions Licensed by the National Bank of the Kyrgyz Republic" (attached).

2. The Supervision and Licensing Methodology Department, together with

the Legal Department, shall carry out in the established procedure the state

registration of this resolution with the Ministry of Justice of the Kyrgyz

Republic.

3. This resolution enters into force from the moment of official

publication after state registration with the Ministry

of Justice of the Kyrgyz Republic.

4. After publication of the registered normative act, the Legal

Department shall inform the Ministry of Justice of the Kyrgyz

Republic of the source of publication (name of the publication, its number

and date).

5. Control over the execution of this resolution shall be entrusted to

the Deputy Chairman of the National Bank of the Kyrgyz Republic

Dzhanybekova S. E.

Chairman of the Board Alapaev M.O.

Approved

by resolution of the Board

of the National Bank

of the Kyrgyz Republic

of 6 September 2006

No. 25/4

Amendments and additions to the Regulation "On Measures of Influence

Applied to Banks and Certain Other Financial and Credit

Institutions Licensed by the National Bank

of the Kyrgyz Republic"

I. Section "General Provisions" of the Regulation, after the fifth paragraph,

shall be supplemented with the following words:

"The activity of a bank, its actions (inaction), creating a real threat

and a high probability of losses or damages for the bank's depositors,

other creditors, shareholders or the banking

system, are considered unhealthy and unsafe banking practice.

The NBKR determines unhealthy and unsafe banking practice in

each individual case, based on an assessment of:

• the factors and circumstances accompanying it;

• the potential threat to depositors' funds, the stability of the bank

and/or the banking system as a whole.

The presence of one or several signs of activity, actions

(inaction) of a bank, which may relate to unhealthy and

unsafe banking practice (given in Annex 1 to

this Regulation), also constitute grounds for the NBKR in

determining unhealthy and unsafe banking practice.

Banks must not engage in unhealthy and unsafe banking

practice.

The NBKR may apply to any bank whose activity is recognized

as unhealthy and unsafe banking practice measures

of influence, up to revocation of the licence, in accordance

with the legislation of the Kyrgyz Republic".

II. The Regulation shall be supplemented with a new Annex 1 of the following content:

"Signs of activity, actions (inaction) of a bank, which

may relate to unhealthy and unsafe banking practice:

1. Inability of the Board of Directors and the Management Board of the bank to ensure

adequate supervision and management in order to prevent unhealthy and

unsafe banking practice and violation of legislation.

2. Creation of an inadequate reserve to cover potential

losses and damages on assets and off-balance-sheet liabilities.

3. Inability to keep accounting in accordance with IFRS and normative

legal acts of the NBKR.

4. Conduct of operations falling under the criteria of suspicious

banking operations. (note-1).

5. Conduct of activity without a proper level of internal

control.

6. Absence of adequate internal audit.

7. Conduct of operations with insiders and affiliated persons

of the bank in violation of NBKR requirements - (note-2).

8. Conduct of activity for which the bank lacks

qualified and experienced employees.

9. Conduct of activity in the absence of corresponding

policies and/or procedures, or when they do not correspond to the scale

of the bank's activity and level of risks.

10. Provision of loans to borrowers who have not fulfilled their

obligations to this bank or any other bank, or

provision of loans to borrowers with repeated prolongation

of loans and unstable financial position.

11. Submission of untimely, incomplete or unreliable

reports to the NBKR".

III. Annex 1 ("Matrix of Application of Monetary Fines")

of the Regulation shall be considered Annex 2.

IV. In paragraph 7.4 of the Regulation, the words "Annex 1" shall be replaced with the words

"Annex 2".

Note:

(note-1)

In accordance with the Regulation "On Minimum Requirements for the System

of Internal Control in Commercial Banks and Other Financial and Credit

Institutions Licensed by the NBKR, for the Purposes of Countering the Legalization

("Laundering") of Income Obtained by Criminal Means and the Financing

of Terrorism" (approved by resolution of the Board of the NBKR No. 5/9 of 2.03.06,

registration number of the Ministry of Justice of the Kyrgyz Republic 27-06 (DSP) of 31.03.06)

(note-2)

According to the Instruction "On Requirements for Operations with

Insiders and Affiliated Persons of Commercial Banks and Other

Financial and Credit Institutions Licensed by the National Bank

of the Kyrgyz Republic" (approved by resolution of the Board

of the NBKR No. 34/10 of 10 December 2003, registration number of the Ministry of Justice of the Kyrgyz Republic

2-04 of 5.01.04).