Resolution of the Board of the National Bank of the Kyrgyz Republic No. 65/1 of November 2, 2015 on Amendments and Additions to Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic

NATIONAL BANK OF THE KYRGYZ REPUBLIC

RESOLUTION

of November 2, 2015 No. 65/1

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

In accordance with Articles 7 and 43 of the Law "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 following resolutions of the Board of the National Bank of the Kyrgyz Republic (attached):

• "On Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic" dated December 28, 2009 No. 51/6;

• "On Approval of the Regulation "On Classification of Assets and Corresponding Contributions to Reserves to Cover Potential Losses and Shortfalls by Microfinance Organizations Carrying Out Operations in Accordance with Islamic Principles of Banking and Finance" dated September 24, 2014 No. 42/8;

• "On the Regulation "On General Principles of Asset Classification and Formation of Reserves to Cover Potential Losses and Shortfalls by Microfinance Organizations in the Kyrgyz Republic Not Entitled to Accept Deposits from Individuals and Legal Entities" dated October 22, 2003 No. 31/3;

• "On Approval of the Regulation "On Classification of Assets and Corresponding Contributions to Reserves to Cover Potential Losses and Shortfalls in Credit Unions Carrying Out Operations in Accordance with Islamic Principles of Banking and Finance" dated April 23, 2014 No. 16/3;

• "On Approval of the New Edition of the Regulation "On Classification of Loans in Credit Unions" dated April 12, 2006 No. 10/6.

2. This Resolution shall enter into force upon the expiration of fifteen days from the date of its official publication.

3. 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.

4. The Department of Supervision and Licensing Methodology shall bring this Resolution to the attention of CJSC "EcoIslamicBank", CJSC "Association for the Development of Islamic Economy, Finance and Industry", the Association of Microfinance Organizations, microfinance organizations, JSC "Financial Company of Credit Unions", the National Association of Credit Unions and Cooperatives, the Association of Credit Unions and Cooperatives of Kyrgyzstan, credit unions, and LLC "Barakat" Center.

5. Control over the implementation of this Resolution shall be entrusted to the Deputy Chairman of the National Bank L.Dzh.Orozbayeva.

Chairman	T. Abdygulov

Appendix

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

1. Make the following amendment to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic" dated December 28, 2009 No. 51/6:

in the Regulation "On Classification of Assets and Corresponding Contributions to Reserves to Cover Potential Losses and Shortfalls in Carrying Out Operations in Accordance with Islamic Principles of Banking and Finance", approved by the aforementioned resolution:

• subparagraph b) of paragraph 32 shall be worded as follows:

"b) two years from the date of acquisition of ownership rights - for real estate."

2. Make the following changes to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation "On Classification of Assets and Corresponding Contributions to Reserves to Cover Potential Losses and Shortfalls by Microfinance Organizations Carrying Out Operations in Accordance with Islamic Principles of Banking and Finance" dated September 24, 2014 No. 42/8:

in the Regulation "On Classification of Assets and Corresponding Contributions to Reserves to Cover Potential Losses and Shortfalls by Microfinance Organizations Carrying Out Operations in Accordance with Islamic Principles of Banking and Finance", approved by the aforementioned resolution:

• the title of the Regulation in the state language shall be worded as follows:

"Regulation on Classification of Assets and Corresponding Contributions to Reserves to Cover Potential Losses and Shortfalls by Microfinance Organizations Carrying Out Operations in Accordance with Islamic Principles of Banking and Finance";

• the twelfth paragraph of paragraph 23 shall be worded as follows:

"- presence of an unpaid debt by a client - an individual, including an individual entrepreneur, in other financial and credit institutions for any other asset, except for assets financed under targeted state programs of the Government of the Kyrgyz Republic. Note: the feature indicated in this paragraph does not apply to overdrafts within salary projects;";

• paragraph 29 shall be worded as follows:

"29. Other property is classified as losses if it has not been sold by the MFO after the following periods:

1. one year - for movable property;

2. two years from the date of acquisition of ownership rights - for real estate."

3. Make the following amendment to the resolution of the Board of the National Bank of the Kyrgyz Republic "On the Regulation "On General Principles of Asset Classification and Formation of Reserves to Cover Potential Losses and Shortfalls by Microfinance Organizations in the Kyrgyz Republic Not Entitled to Accept Deposits from Individuals and Legal Entities" dated October 22, 2003 No. 31/3:

in the Regulation "On General Principles of Asset Classification and Formation of Reserves to Cover Potential Losses and Shortfalls by Microfinance Organizations in the Kyrgyz Republic Not Entitled to Accept Deposits from Individuals and Legal Entities", approved by the aforementioned resolution:

• the third paragraph of paragraph 4.1.2 shall be worded as follows:

"- Two years from the date of acquisition of ownership rights - for real estate."

4. Make the following changes to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation "On Classification of Assets and Corresponding Contributions to Reserves to Cover Potential Losses and Shortfalls in Credit Unions Carrying Out Operations in Accordance with Islamic Principles of Banking and Finance" dated April 23, 2014 No. 16/3:

in the Regulation "On Classification of Assets and Corresponding Contributions to Reserves to Cover Potential Losses and Shortfalls in Credit Unions Carrying Out Operations in Accordance with Islamic Principles of Banking and Finance", approved by the aforementioned resolution:

• the fourteenth paragraph of paragraph 16 shall be worded as follows:

"- presence of an unpaid debt by a client - an individual, including an individual entrepreneur, in other financial and credit institutions for any other asset, except for assets financed under targeted state programs of the Government of the Kyrgyz Republic. Note: the feature indicated in this paragraph does not apply to overdrafts within salary projects;";

• subparagraph 2) of paragraph 23 shall be worded as follows:

"2) two years from the date of acquisition of ownership rights - for real estate."

5. Make the following addition to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the New Edition of the Regulation "On Classification of Loans in Credit Unions" dated April 12, 2006 No. 10/6:

in the Regulation "On Classification of Loans in Credit Unions", approved by the aforementioned resolution:

complete with paragraph 3.11 of the following content:

"3.11. Classification of other property in credit unions:

1. other property of credit unions, i.e., property (assets) accepted in repayment of loans or loan-like assets, immediately after recognition in the balance sheet, shall be classified at least as substandard;

2. other property is classified as losses if it has not been sold by the credit union after the following periods:

• one year - for movable property;

• two years from the date of acquisition of ownership rights - for real estate."