Resolution of the Board of the National Bank of the Kyrgyz Republic No. 29/6 of July 11, 2012 on Amendments to the Regulation on Direct Banking Supervision

NATIONAL BANK OF THE KYRGYZ REPUBLIC

RESOLUTION

of July 11, 2012 No. 29/6

On Amendments and Additions to the Regulation "On Direct Banking Supervision", approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of May 28, 2008 No. 22/4, registered in the Ministry of Justice of the Kyrgyz Republic on June 26, 2008, registration number 47-08

In accordance with Articles 7 and 43 of the 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. Make amendments and additions to the Regulation "On Direct Banking Supervision" (attached).

2. Publish this Resolution on the official website of the National Bank of the Kyrgyz Republic.

3. After official publication, direct the Legal Department to submit 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. This Resolution shall enter into force one month after its official publication.

5. Assign control over the implementation of this Resolution to the Deputy Chairman of the National Bank of the Kyrgyz Republic Z.L. Chokoev.

Chairman	Z. Asankozhoeva

	Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic of July 11, 2012 No. 29/6

AMENDMENTS AND ADDITIONS to the Regulation "On Direct Banking Supervision"

Make the following amendments and additions to the Regulation "On Direct Banking Supervision", approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of May 28, 2008 No. 22/4, registered in the Ministry of Justice of the Kyrgyz Republic on June 26, 2008, registration number 47-08:

1. Throughout the text, replace the abbreviation "NBKR" with the words "National Bank" in the appropriate cases.

2. In paragraph 1.2 of Section 1, after the words "credit unions attracting deposits", add the words "from participants".

3. Redraft paragraph 2.2 of Section 2 as follows:

"2.2. To perform the tasks of direct banking supervision, the CPN sends authorized employees to the bank (hereinafter - the supervision group) and appoints their Leader (hereinafter - the Leader of the supervision group).

2.2.1. The number and composition of the supervision group are determined depending on the grounds for introducing direct banking supervision.

2.2.2. When carrying out direct banking supervision, for the control of the bank's payment operations, the Leader of the supervision group may, if necessary, attract authorized employees of structural subdivisions of the National Bank and bank employees possessing sufficient experience and knowledge in the operations being conducted. In the case of attracting authorized employees of structural subdivisions of the National Bank, the Leader of the supervision group must first coordinate this decision with the CPN and obtain written consent from the employees themselves and their managers.".

4. In paragraph 2.3 of Section 2:

• in the fourth paragraph, replace the word "supervisor" with the words "Leader of the supervision group";

• in the fifth paragraph, replace the words "supervisor (including his powers)" with the words "supervision group (including its powers)";

• in the sixth paragraph, replace the word "supervisor" with the words "supervision group".

5. Redraft paragraph 2.4 of Section 2 as follows:

"2.4. The CPN's Resolution on the introduction of direct banking supervision is brought to the attention of the Bank's Board by the External Supervision Department of the National Bank on the day of introducing direct banking supervision.

An extract from the CPN's Resolution containing the full preamble and operative part of the CPN's Resolution on the introduction of direct banking supervision is sent to the Bank.".

6. Redraft paragraph 2.5 of Section 2 as follows:

"2.5. The Leader and members of the supervision group, who are sent to the bank (including branches and other separate subdivisions), are appointed from among the employees of the supervisory block and/or regional departments/representatives of the National Bank to perform the tasks of direct banking supervision.

2.5.1. The Leader of the supervision group is responsible for:

• implementation of the CPN's Resolution on the implementation of direct banking supervision;

• performance of the tasks of direct banking supervision, including those specified in paragraph 4.2 of this Regulation;

• management of the supervision group's activities;

• distribution of duties among the members of the supervision group.

2.5.2. The Leader of the supervision group, with the agreement of the CPN, may delegate the authority to control the activities of a bank branch to a bank employee possessing sufficient experience and knowledge in banking activities.".

7. In paragraph 2.6 of Section 2:

• in the first sentence, replace the word "introduction" with the word "implementation";

• in the second, fourth, and fifth paragraphs, replace the word "supervisor" with the words "Leader of the supervision group" in the appropriate cases;

• in the third paragraph, replace the word "supervisor" with the words "supervision group".

8. In paragraph 2.7 of Section 2:

• in the first sentence:

• replace the words "supervisor, who" with the words "supervision group, which";

• replace the words "sample of the supervisor's signature" with the words "sample of the Leader of the supervision group's signature";

• after the words "if available", add the word "his";

• in the second sentence, replace the word "supervisor" with the words "Leader of the supervision group".

9. In paragraph 2.8 of Section 2:

• in the first sentence, replace the words "by the supervisor to the supervisory body" with the words "by the Leader of the supervision group to the External Supervision Department";

• in the second sentence, replace the word "supervisor" with the words "Leader of the supervision group".

10. In paragraph 3.2 of Section 3:

• redraft the fifth paragraph as follows:

"- inaction (or inability to take measures) by bank officials regarding the provision of proper assessment and control of risks during the conduct of risky operations;";

• add a paragraph of the following content:

"- loss of bank assets and collateral property stored at the bank; fraud; financial manipulations; abuse of authority, resulting in significant losses and damages to the bank.".

11. In paragraph 4.2 of Section 4:

• in the first paragraph:

• replace the words "duties and powers of the supervisor performing" with the words "powers and duties of the Leader and members of the supervision group performing";

• replace the words "directly at the bank, which, among other things, include" with the words ", the main of which are";

• redraft the fourth paragraph as follows:

"- control over the bank's settlement and cash operations, including temporary suspension of operations, as well as control over restrictions on operations established by the CPN;";

• in the seventh paragraph, replace the words "to the supervisory body" with the words "to the External Supervision Department".

12. In paragraph 4.3 of Section 4:

• in the first paragraph, replace the word "supervisor" with the words "Leader of the supervision group";

• in the second paragraph, after the words "initiate convening", add the words "Board of Directors and";

• redraft the fourth paragraph as follows:

"- submit a proposal to the Bank's Board of Directors to convene an extraordinary meeting of the Bank's shareholders;";

• add paragraphs of the following content between the fourth and fifth paragraphs:

"- have access to the bank's automated banking systems with the ability to obtain information about all bank clients and their accounts, all balance sheet accounts of the bank (reading, generating and printing reports, without the right to correct);

• have access to the bank's electronic regulatory database with the ability to read and print, without the right to correct, delete, or copy.".

13. In paragraph 4.4 of Section 4, replace the word "supervisor" with the words "Leader of the supervision group".

14. In paragraph 4.5 of Section 4:

• in the first sentence:

• replace the word "supervisor" with the words "supervision group";

• after the words "information and documents," add the words "including all materials prepared for meetings of the Board of Directors and the Bank's Management Board prior to their holding.";

• replace the word "also" with the word "Also";

• add a paragraph of the following content:

"The Bank's Management (Members of the Bank's Management Board) is obliged:

• provide the supervision group with a separate room in the bank, in which there are no audio/video devices performing audio/video recording;

• prevent any attempts by third parties to install audio/video equipment in the room provided to the supervision group;

• ensure the safe storage of the bank's and the supervision group's documents;

• provide equipment and technology necessary for the implementation of direct banking supervision.".

15. In paragraph 4.6 of Section 4, replace the word "supervisor" with the words "supervision group".

16. In paragraph 4.7 of Section 4, replace the words "provisions of the bank upon the introduction of direct banking supervision," with the words "provisions of the bank, upon the introduction of direct banking supervision".

17. Redraft paragraph 4.8 of Section 4 as follows:

"4.8. In the event of refusal by the bank and/or its officials to execute the CPN's Resolution on the introduction of direct banking supervision or creating obstacles to the implementation of direct banking supervision, as well as violations of the norms of the CPN's Resolution, including individual points of the CPN's Resolution, the supervision group draws up an Act of Resistance to Direct Banking Supervision, which is signed by the Leader and all members of the supervision group (Appendix 1).

In the event of the bank violating the requirements of this Regulation, regulatory acts of the National Bank, as well as the legislation of the Kyrgyz Republic and/or the regime of direct banking supervision established by CPN Resolutions (orders, restrictions), the National Bank has the right to apply impact measures to the bank and its management in accordance with banking legislation, including the revocation of a license to conduct banking operations.".

18. Redraft Appendix 1 to the Regulation as follows:

"Appendix 1

to the Regulation on Direct

Banking Supervision

ACT

on Resistance to Direct

Banking Supervision

---

(name of the commercial bank (branch, terminal, savings bank))

---

(location of the bank (branch, terminal, savings bank)),

---

address, telephone)

______ "___" ______ 2012

(place of drawing up)

I/we, employee(s) of the National Bank of the Kyrgyz Republic ______ ______

(full names of National Bank employees)

have drawn up this Act stating that the commercial bank in the person of:

---

(full names of bank employee(s))

hindered the conduct of direct banking supervision:

---

(did not allow into the bank building, did not provide requested

---

documents of the bank by the supervision group, etc.)

The bank employee(s) have been warned by the supervision group about the responsibility of the bank and its officials for hindering the conduct of direct banking supervision.

Act drawn up:

---

(full name of the Leader of the supervision group) (position) (Signature)

---

(full name of the Chairman of the Bank's Management Board/person

(position) (Signature)

who replaces him)

Acknowledged:

---

(full names of members of the supervision group) (position) (Signature)

---

(full names of bank employees who directly or

(position) (Signature)

indirectly created obstacles

to the implementation of direct

supervision)

Second copy of the act received ______

(full name of the bank employee)

---

(position) (Signature)

In the event of refusal by bank employees to sign this Act, the supervision group has the right to leave this Act in the bank's registry office, while registering it in the established manner, indicating in this Act the fact of such refusal.".