Resolution of the Board of the National Bank of the Kyrgyz Republic No. 51/3 of December 27, 2012 on Amendments to Certain Regulatory Acts

NATIONAL BANK OF THE KYRGYZ REPUBLIC

RESOLUTION

of December 27, 2012 No. 51/3

On Amendments and Additions to Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic

In order to protect the rights of consumers of financial services, 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. Approve the attached amendments and additions to the following regulatory legal acts of the National Bank of the Kyrgyz Republic:

• The Regulation "On the Calculation of the Effective Interest Rate When Disseminating Information on the Size of Remuneration for Banking Services", approved by Resolution of the Board of the NBKR No. 33/4 of August 27, 2008, registered in the Ministry of Justice of the Kyrgyz Republic on September 29, 2008, registration number 119-08;

• The Regulation on Minimum Requirements for Credit Risk Management in Commercial Banks and Other Financial and Credit Institutions Licensed by the National Bank, approved by Resolution of the Board of the National Bank of the Kyrgyz Republic No. 52/4 of June 30, 2010.

2. The Legal Department:

• publish this resolution on the official website of the National Bank of the Kyrgyz Republic and in the journal "Regulatory Acts of the National Bank of the Kyrgyz Republic";

• after official publication, 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.

3. The Supervision and Licensing Methodology Department to bring this resolution to the attention of commercial banks, the Association of Microfinance Organizations, the National Union of Credit Unions and Cooperatives of Kyrgyzstan, the Association of Credit Unions and Cooperatives of Kyrgyzstan, and JSC "Financial Company of Credit Unions".

4. This resolution enters into force after 30 days have passed since its official publication.

5. Control over the implementation of this resolution is entrusted to the Deputy Chairman of the National Bank of the Kyrgyz Republic Z.L. Chokoev.

Chairman	Z. Asankozhoeva

	Approved by Resolution of the Board of the National Bank of the Kyrgyz Republic of December 27, 2012 No. 51/3

AMENDMENTS AND ADDITIONS to certain regulatory legal acts of the National Bank of the Kyrgyz Republic

I. Make the following amendments and additions to the Regulation "On the Calculation of the Effective Interest Rate When Disseminating Information on the Size of Remuneration for Banking Services", approved by Resolution of the Board of the NBKR No. 33/4 of August 27, 2008:

1. Rephrase paragraph 2 of section 2 as follows:

"The annual effective interest rate is the interest rate in a reliable, annual, effective, comparable calculation, in which the client's payments related to obtaining a loan or remuneration to the client for placing funds in a deposit account are taken into account. The annual effective interest rate is calculated in accordance with this Regulation."

2. Rephrase point 3.3 of section 3 as follows:

"3.3. The total amount of the client's payments upon obtaining loans and all associated bank services, excluding the amount of remuneration paid to the client on a deposit account associated with the loan, includes:

1. payments for repayment of the principal debt and payment of remuneration for the loan;

2. payments to the bank related to obtaining, processing, and servicing the loan (fee for document review, commissions for obtaining cash, cost of servicing bank accounts, etc.), excluding penalties for late payments and penalties for non-compliance with the terms of the loan agreement."

3. Add point 3.3.-1 to section 3 as follows:

"3.3.-1. For loans issued using payment credit cards within established credit limits, the following are not included in the calculation of the annual effective interest rate:

• commission for transactions in a currency other than the account currency (currency of the provided loan);
• commission for issuing and servicing the credit card, including for suspension (resumption) of operations on the credit card;
• commission for obtaining the loan amount in cash using ATMs."

4. Add point 4.1-1 to section 4 as follows:

"4.1-1. In addition to information on the size of the effective interest rate, banks must provide the client with information on the total cost of credit (financing) in absolute terms, showing separately the principal amount of the credit (financing), interest (markup), commission fees, and all other payments, including payments to third parties according to current tariffs, if the client's obligation for such payments arises from the terms of the credit/financing agreement."

5. Add point 4.1-2 to section 4 as follows:

"4.1-2. When disseminating information on the size of remuneration for services, regardless of the type of carrier (advertising brochures, roadside billboards, stands, leaflets, etc.), including through mass media, banks must indicate that upon applying to the bank, the total cost of credit/financing will be calculated taking into account the client's expenses related to obtaining the credit/financing."

6. In paragraph 1 of point 4.2 of section 4, replace the word "operations" with the word "services".

7. Add the following paragraphs to point 4.3 of section 4:

"In service agreements concluded with clients, the effective interest rate and the total cost of credit/financing are printed using computer equipment in digital form, as well as in the same size and style of fonts (italic, bold, color highlighting, size) in one paragraph with other remuneration rates.

The bank may indicate the size of the total cost of credit/financing in an appendix to the credit/financing agreement, in case the credit/financing agreement itself contains a corresponding reference to this appendix."

II. Make the following amendments and additions to the Regulation on Minimum Requirements for Credit Risk Management in Commercial Banks and Other Financial and Credit Institutions Licensed by the National Bank, approved by Resolution of the Board of the National Bank of the Kyrgyz Republic No. 52/4 of June 30, 2010:

1. Add the following sentences to point 39 of section 4.2:

"The rights and obligations of the client arising from the terms of the credit agreement must be reflected in a separate section. The font used in the credit agreement with all appendices must be uniform throughout the text of the agreement. The font size must be no less than 12."

2. Rephrase the second sentence of paragraph 3 of point 42 of section 4.2 as follows:

"In cases where the bank does not provide such services, for the client's awareness, the bank must indicate the cost of such expenses according to current third-party tariffs on the date of concluding the agreement, indicating that these expenses to third parties, as well as this price, may change in the future."

3. Rephrase point 46 of section 4.2 as follows:

"46. Each page of the credit agreement with all appendices must be signed by the client.

The bank must obtain a receipt from the client or the client must make an inscription on the credit agreement stating that the client has read all the terms of the agreement, the terms of the agreement are understandable, and the client agrees with them. The receipt (if obtained) is attached to the client's credit file."

4. Add the following sentence to point 47 of section 4.2:

"The fact of the client receiving funds must be confirmed by a corresponding document."