Resolution of the Board of the National Bank of the Kyrgyz Republic No. 49/5 of 23 December 2008 on Amending and Supplementing Resolution No. 19/3 of 28 June 2006 on Approval of the Regulation on Minimum Requirements for Country Risk Management in Commercial Banks and Other Financial and Credit Institutions Licensed by the National Bank of the Kyrgyz Republic

NATIONAL BANK OF THE KYRGYZ REPUBLIC

RESOLUTION

Registered with the Ministry of Justice of the Kyrgyz Republic

26 January 2009. Registration number 11-09

dated 23 December 2008 No. 49/5

On Amending and Supplementing the Resolution of the Board of the National Bank of the Kyrgyz Republic dated 28 June 2006 No. 19/3 "On Approval of the Regulation "On Minimum Requirements for Country Risk Management in Commercial Banks and Other Financial and Credit Institutions Licensed by the National Bank of the Kyrgyz Republic"

Having considered the draft amendments and supplements to the resolution of the Board of the National Bank of the Kyrgyz Republic dated 28 June 2006 No. 19/3 "On Approval of the Regulation "On Minimum Requirements for Country Risk Management in Commercial Banks and Other Financial and Credit Institutions Licensed by the National Bank of the Kyrgyz Republic", registered with the Ministry of Justice of the Kyrgyz Republic on 4 August 2006, registration number 86-06, and also guided by 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. To introduce into the resolution of the Board of the National Bank of the Kyrgyz Republic dated 28 June 2006 No. 19/3 "On Approval of the Regulation "On Minimum Requirements for Country Risk Management in Commercial Banks and Other Financial and Credit Institutions Licensed by the National Bank of the Kyrgyz Republic", registered with the Ministry of Justice of the Kyrgyz Republic on 4 August 2006, registration number 86-06, the amendments and supplements in accordance with the annex to this resolution.

2. The Supervision and Licensing Methodology Department, together with the Legal Department, shall in the established procedure send this resolution for state registration to the Ministry of Justice of the Kyrgyz Republic.

3. This resolution shall enter into force after state registration with the Ministry of Justice of the Kyrgyz Republic and subsequent official publication.

4. Commercial banks shall bring their internal normative acts on country risk management into compliance with this resolution, after its entry into force, by 1 June 2009.

5. After publication of the registered normative legal 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).

6. Control over the execution of this resolution shall be assigned to the Deputy Chairman of the NBKR Bokontaev K.K.

Chairman	M. Alapaev

	Annex to the resolution of the Board of the National Bank of the Kyrgyz Republic dated 23 December 2008 No. 49/5

AMENDMENTS AND SUPPLEMENTS to the Resolution of the Board of the National Bank of the Kyrgyz Republic dated 28 June 2006 No. 19/3 "On Approval of the Regulation "On Minimum Requirements for Country Risk Management in Commercial Banks and Other Financial and Credit Institutions Licensed by the National Bank of the Kyrgyz Republic", registered with the Ministry of Justice of the Kyrgyz Republic on 4 August 2006, registration number 86-06

To introduce into the Regulation "On Minimum Requirements for Country Risk Management in Commercial Banks and Other Financial and Credit Institutions Licensed by the National Bank of the Kyrgyz Republic", approved by the resolution of the Board of the National Bank of the Kyrgyz Republic dated 28 June 2006 No. 19/3 "On Approval of the Regulation "On Minimum Requirements for Country Risk Management in Commercial Banks and Other Financial and Credit Institutions Licensed by the National Bank of the Kyrgyz Republic", registered with the Ministry of Justice of the Kyrgyz Republic on 4 August 2006, registration number 86-06, the following amendments and supplements:

1. In paragraph 1.2 of Section I, exclude the words ", OAO "Settlement-Savings Company", ZAO "Kyrgyz Agricultural Finance Corporation"".

2. Restate subparagraph 3.3.7 of Section III as follows:

"3.3.7. Procedure for assessing country risk when creating a reserve to cover potential losses and damages".

3. In paragraph 4.2 of Section IV, after the words "at least annually," add the words: "or more often, if there is concern about an increase in country risk".

4. Restate the title of Section V as follows:

"V. Deductions to the reserve to cover potential losses and damages".

5. Restate paragraphs 5.1, 5.3, 5.4 of Section V as follows:

• "5.1. When creating reserves to cover potential losses and damages (RPPU), the bank must assess the risks (including indirect ones) associated with the borrower's activities, the placement of assets and collateral for them in foreign states".

• "5.3. Reserves to cover potential losses and damages on assets placed in foreign states shall be created taking into account the classification of countries into the following risk categories and within the corresponding ranges:

1) low-risk countries - from 0 to 2 percent;

2) medium-risk countries - more than 2 to 5 percent;

3) high-risk countries - more than 5 to 25 percent.

The bank may not create a reserve for an asset placed in a foreign state classified as normal in accordance with the Regulation "On Classification of Assets and Corresponding Deductions to the Reserve to Cover Potential Losses and Damages".

• "5.4. The list of countries classified by risk categories, including countries in whose territory the bank is not permitted to conduct active operations, must be approved by the bank's Board of Directors. The said list shall be reviewed as necessary, but not less than once a quarter".