Resolution of the Board of the National Bank of the Kyrgyz Republic No. 60/1 of December 31, 2014 on Amendments and Additions to the Board Resolution — NBKR — KG

NATIONAL BANK OF THE KYRGYZ REPUBLIC

RESOLUTION

of December 31, 2014 No. 60/1

On Amendments and Additions to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation "On the Procedure for Conducting Credit Auctions by the National Bank of the Kyrgyz Republic for Refinancing and Liquidity Support" dated November 27, 2014 No. 45/13

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:

To make amendments and additions to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation "On the Procedure for Conducting Credit Auctions by the National Bank of the Kyrgyz Republic for Refinancing and Liquidity Support" dated November 27, 2013 No. 45/13 (attached).
The Legal Department:

publish this resolution on the official website 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.

This resolution enters into force after 15 days from the date of official publication.
The Monetary Operations Department to bring this resolution to the attention of commercial banks and relevant structural subdivisions of the National Bank of the Kyrgyz Republic.
Control over the implementation of this resolution is entrusted to the Deputy Chairman of the National Bank of the Kyrgyz Republic N. Zhenish.



Chairman	T. Abdylgulov


	Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic of "31" December 2014 No. 60/1

Amendments and Additions to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation "On the Procedure for Conducting Credit Auctions by the National Bank of the Kyrgyz Republic for Refinancing and Liquidity Support" dated November 27, 2013 No. 45/13

To make the following amendments and additions to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation "On the Procedure for Conducting Credit Auctions by the National Bank of the Kyrgyz Republic for Refinancing and Liquidity Support" dated November 27, 2013 No. 45/13:

in the Regulation "On the Procedure for Conducting Credit Auctions by the National Bank of the Kyrgyz Republic for Refinancing and Liquidity Support", approved by the aforementioned Resolution:

1) in paragraph 16:

exclude the words "(for payment of supplies of products under contracts and agreements of legal and natural persons)";
supplement the paragraph with the following text:
"It is not permitted to provide loans for consumer purposes, including for improving the borrower's housing conditions, as well as for other purposes that do not have a commercial/production character.";

2) rephrase the first paragraph of paragraph 20 as follows:
"20. The nominal annual interest rate on loans issued by the Bank from the credit resources of the National Bank shall not exceed the interest rates determined by the CDMO, which are brought to the attention of the Banks.";

3) in paragraph 24, exclude the words "and 25";

4) in paragraph 26:

in the first paragraph, replace the words "for purposes" with "for lending to NFKU";
supplement the second paragraph after the words "copy of the loan agreement" with the word ", concluded";
supplement with the following paragraphs:
"- Within 30 (thirty) calendar days from the date of providing the loan, the NFKU is obliged to place the monetary funds received from the Bank among its borrowers. In case of non-use or partial use of credit resources within the timeframes specified in this paragraph, the NFKU must return the unutilized portion of credit resources to the Bank on the next working day after the expiration of the established deadline;
During the term of the loan, funds received from NFKU borrowers in repayment of loans obtained by them from funds issued within the framework of credit auctions must subsequently be placed by the NFKU among its clients with subsequent submission of a report on placement to the National Bank by the 5th day of the following month.

The NFKU must place the funds repaid by borrowers within the month following the reporting period. In case the NFKU has not placed the funds among its clients in accordance with this paragraph, the NFKU is obliged to return to the Bank the entire amount of unplaced funds after the expiration of the established placement deadlines.";

5) in paragraph 28, replace the digit "45" with the digit "44";

6) rephrase paragraph 10 of paragraph 29 as follows:
"- not have overdue monetary obligations to the National Bank on received loans and interest on them, as well as not have unutilized credit resources on previously received or currently being processed loans from credit auctions, including under other refinancing instruments of the National Bank;";

7) rephrase paragraph 30 as follows:
"30. The CDMO periodically determines the parameters, conditions, and method of conducting the credit auction, including volumes, terms of provided credit resources, maximum nominal interest rate for final borrowers of the Bank, minimum interest rate, minimum volume of one application, requirements for collateral, and industry focus of the loan.";

8) in paragraph 31, replace the words "type of auction" with "method of conducting the auction";

9) supplement paragraph 32 with the following third sentence:
"An application to participate in the auction must be accompanied by a decision of the authorized body of the Bank to participate in the credit auction and provide collateral, with an attached list of collateral for the loan.";

10) in paragraph 35, replace the words "total volume" with "50 percent of the total volume";

11) in the second sentence of sub-paragraph 3 of paragraph 41, after the word "must", add the words "be issued from the Bank's own funds in national currency and";

12) supplement with paragraph 41-1 as follows:
"41-1. In case the Bank provides collateral in the form of claims under loans, at least 20% of the amount of the loan requested by the Bank, taking into account the application of the corresponding collateral coefficient, must be secured by collateral specified in sub-paragraphs 1 and 2 of paragraph 41 of this Regulation and owned by the Bank.";

13) supplement with paragraph 51-1 as follows:
"51-1. By decision of the CDMO, auctions may be conducted using one of the following methods:

1) Method I. – Multiple Rate Auction. This method involves satisfying applications admitted to the auction at the level of the proposed interest rate, starting from the maximum, until the established volume of credit resources for this auction is fully exhausted (up to the cut-off rate). In case multiple applications are submitted at the cut-off rate, the distribution of credit resources among these applications is carried out on a proportional basis with rounding to the thousandth place;

2) Method II. – Uniform Rate Auction. This method provides for the satisfaction of all admitted applications, within the established volume of credit resources for this auction, at the cut-off rate. In case multiple applications are submitted at the cut-off rate, the distribution of credit resources among these applications is carried out on a proportional basis with rounding to the thousandth place;

3) Method III. – Fixed Rate Auction. When conducting an auction with a fixed interest rate, all applications are satisfied at the rate established by the CDMO. In case the total volume of applications exceeds the volume of offered credit resources at the auction, the satisfaction of applications is carried out on a proportional basis with rounding to the thousandth place.";

14) rephrase paragraph 52 as follows:
"52. The National Bank conducts the credit auction and forms the auction results; however, by decision of the Chairman of the CDMO or a person replacing him, the volume of credit resources may be reduced based on the total volume of received applications. In case less than two participants participate in the auction, the auction is recognized as unsuccessful.";

15) in paragraph 61, after the words "Appendix 5", add the digits ", 6, 7";

16) in paragraph 62, replace the words "on the next working day" with "within 3 working days";

17) in paragraph 73:

exclude the digit ", 25";
supplement the second sentence after the words "6 months" with the words "and/or prohibit Banks from using credit resources obtained at the credit auction for subsequent lending to NFKUs that violated the requirements for targeted use of funds, for a period of up to 6 months";

18) supplement with paragraph 73-1 as follows:
"73-1. The Bank and/or NFKU are responsible for controlling the targeted use of funds issued to borrowers of the Bank/NFKU from resources obtained within the framework of the credit auction. In case of violation by the borrower of the Bank/NFKU of the requirements for targeted use of credit resources, the National Bank has the right to demand early repayment from the Bank of the amount of credit resources used in violation of the requirements of this Regulation, impose a fine of 1 percent of the amount used not for its intended purpose, and also apply other measures specified in this Regulation or in the General Agreement to the Bank and/or NFKU.";

19) supplement paragraph 78 with the following second sentence:
"In case the letter of petition is not provided within the timeframes specified in this paragraph, the loan will not be extended.";

20) in Appendix 1:

from paragraph 2.7, exclude the words "in the auction parameters";
in paragraph 2.11, after the words "copy of the loan agreement", add the word ", concluded";
supplement Chapter 5 with paragraphs 5.3.1. - 5.3.3. as follows:
"5.3.1. During the term of the Credit Agreement, the Bank is obliged to re-evaluate the collateral provided as security for the loan. In case of a decrease in the total cost of the collateral, taking into account the collateral coefficients applied by the Collateral Holder, the Bank is obliged to notify the Collateral Holder in writing and submit a list of proposed new/additional collateral within 5 working days from the moment of the decrease in the value of the collateral.

5.3.2. In case the Bank fails to meet the requirements for providing collateral or additional collateral, or replacing the subject of collateral provided by the Bank as security for the loan, in accordance with the requirements of this General Agreement and the Pledge Agreement, the National Bank has the right to unilaterally deduct from the correspondent account of the Bank opened at the National Bank the entire amount of the Bank's debt under the Credit Agreement for the issuance of the loan, including the principal amount of the loan, accrued interest on it, penalty sanctions, or the corresponding amount equivalent to the missing collateral.

5.3.3. In case the Bank allows violations of the established deadlines for providing collateral or additional collateral, or replacing the subject of collateral provided by the Bank as security for the loan, the National Bank has the right to charge a penalty in accordance with this General Agreement and the Pledge Agreement.";

from paragraph 5.4, exclude the words "and the decision of the corresponding authorized bodies of the Bank to obtain a loan";
supplement Chapter 5 with paragraphs 5.12. - 5.15. as follows:
"5.12. During the term of the loan, funds received from the Bank's borrowers in repayment of loans obtained by them from funds issued within the framework of credit auctions must subsequently be placed by the Bank among its clients with subsequent submission of a report on placement to the National Bank by the 5th day of the following month in accordance with paragraph 3.3 of the Credit Agreement. Newly issued credit resources must correspond to the purposes and directions for which credit resources were previously obtained.

5.13. The Bank is obliged to place the funds repaid by borrowers within the month following the reporting period. In case the Bank has not placed the funds among its clients in accordance with this paragraph, the Bank is obliged to return to the National Bank the entire amount of unplaced funds on the 1st day of the month following the placement period.

5.14. In case of non-transfer to the National Bank of unplaced funds by the Bank among its clients in accordance with paragraph 5.13 of this General Agreement, the Bank pays a penalty of 0.1 percent of the amount of unplaced funds for each day of delay until the full placement of funds or until the moment of return to the National Bank of the amount of unplaced funds.

5.15. The Bank is responsible for controlling the targeted use of funds issued to borrowers of the Bank from resources obtained within the framework of the credit auction. In case of violation by the borrower of the Bank of the requirements for targeted use of credit resources, the National Bank has the right to demand early repayment from the Bank of the amount of credit resources used in violation of the requirements of the Regulation, impose a fine of 1 percent of the amount used not for its intended purpose, and also apply other measures specified in this General Agreement to the Bank.";

supplement paragraph 6.4 with the following second sentence:
"In case the letter of petition is not provided within the timeframes specified in this paragraph, the loan will not be extended.";
rephrase paragraph 9.4 as follows:
"9.4. Appendices 1, 2, 3, 4, 5, 6 and 7 to this General Agreement are an integral part of it.";
in Appendix 4 (Credit Agreement):
in paragraph 3.2, replace the word "working" with "calendar";
in paragraph 5.3, after the words "Appendices 3 and 5", add the words ", 6, 7 (depending on the type of collateral)";
in Appendix 5 (Pledge Agreement for Government Securities):
supplement paragraph 2.1 with sub-paragraph 2.1.5 as follows:
"2.1.5. Ensure, with prior written notification to the Collateral Holder, the replacement of Government Securities (GS) for which the maturity date occurs before the expiration of the term of the Credit Agreement with other equivalent GS (GKVs and/or GKOs) with a later maturity date. At the same time, the replacement of GS must be carried out 30 (thirty) calendar days before the occurrence of the maturity date of the GS of the corresponding issue/issuances.";
in paragraph 3.3, replace the digits "3.1." with the digits "2.1.5.";
supplement Chapter 4 with paragraph 4.3 as follows:
"4.3. In case of non-performance or improper performance by the Pledgor of the obligations specified in paragraph 2.1.5 of this Agreement, the Pledgor pays the Collateral Holder a penalty of 0.05 percent of the nominal value of the GS subject to replacement for each day of delay (non-performance of its obligations).";
in Appendix 7 (Pledge Agreement for Claims under Loan Agreements):
recognize paragraph 2.4 as having lost force;
rephrase paragraph 3 of paragraph 4.2 as follows:
"The Pledgor, within 5 (five) working days from the date of receipt of the corresponding requirement-notification from the Collateral Holder regarding the need to provide additional collateral, undertakes to provide the Collateral Holder with additional collateral in the form of claims under loans up to an amount not lower than the required amount specified in the corresponding requirement-notification of the Collateral Holder, and to execute and register the Agreement on the provision of additional collateral in accordance with paragraph 3.2 of the General Agreement, or to repay the corresponding part of the loan obtained by the Pledgor from the Collateral Holder under the Credit Agreement for the provision of the loan.";