Rules for the Regulation of Housing Savings Credit Companies

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Date of creation: 2025-12-31

Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic of November 1, 2019 No. 2019-P-33/55-2-(NF KU)

RULES for the Regulation of Housing Savings Credit Companies

(In the edition of the Resolutions of the Board of the NB KR of December 23, 2020 No. 2020-P-33/73-13, December 28, 2020 No. 2020-P-33/75-5, September 28, 2021 No. 2021-P-33/53-10, December 21, 2022 No. 2022-P-12/81-7, June 14, 2023 No. 2023-P-12/38-4, August 30, 2023 No. 2023-P-12/55-1, December 8, 2023 No. 2023-P-12/76-1, December 20, 2023 No. 2023-P-12/80-4, January 22, 2025 No. 2025-P-12/2-3-(NF KU), June 27, 2025 No. 2025-P-12/31-1-(NPA), October 23, 2025 No. 2025-P-12/55-3-(NPA))

Chapter 1. General Requirements

1. These Rules for the Regulation of Housing Savings Credit Companies (hereinafter - Rules) are developed in accordance with the legislation of the Kyrgyz Republic for the purpose of introducing and regulating the system of long-term contractual housing savings, implemented through non-bank financial and credit organizations licensed and regulated by the National Bank of the Kyrgyz Republic (hereinafter - National Bank).

2. Housing Savings Credit System (hereinafter - HSCS) is a housing financing system based on attracting funds from citizens of the Kyrgyz Republic into housing savings deposits (deposits) and providing them with long-term targeted loans in accordance with the terms of the loan agreement.

3. Housing Savings Credit Company (hereinafter - HSCC) is a non-bank financial and credit organization having a license for the right to conduct certain banking operations, the activities of which are aimed at accumulating depositors' funds in housing savings deposits (deposits) and providing its depositors with loans for individual construction, purchase of residential houses or apartments, or for improving housing conditions within the framework of state housing programs.

4. The National Bank carries out supervision and regulation of the activities of HSCCs in accordance with the Constitutional Law of the Kyrgyz Republic "On the National Bank of the Kyrgyz Republic", the Law of the Kyrgyz Republic "On Banks and Banking Activity", the legislation of the Kyrgyz Republic in the field of counteraction to the financing of terrorist activities and legalization (money laundering) of criminal proceeds, the legislation of the Kyrgyz Republic in the field of regulation of the activities of housing savings credit companies, as well as in accordance with the normative legal acts of the National Bank.

(In the edition of the Resolution of the Board of the NB KR of December 21, 2022 No. 2022-P-12/81-7)

5. Basic concepts used in these Rules:

HSCC Agent - a legal or physical person (consultant) providing agency services to the HSCC based on a corresponding agreement (contract).

Housing Savings Deposit (Deposit) - an amount of funds in the national currency deposited by depositors of the housing savings credit company into the account of the housing savings credit company and directed towards improving the housing conditions of the depositor of the housing savings credit company.

Loan - long-term financing provided by the HSCC to a participant in accordance with the terms of the loan agreement on the conditions of term, cost, repayability, targeted use, and collateral, and used for individual construction, purchase of residential houses or apartments, as well as for improving housing conditions.

General Agreement - an agreement between the HSCC and the participant containing the main terms of the housing savings deposit (deposit) contract and the subsequent provision of a loan.

Housing Savings Deposit (Deposit) Contract - a contract between the HSCC and the participant, under which the participant accumulates a fixed amount of their own funds in an account in the HSCC to obtain a loan in accordance with the General Agreement.

Contractual Amount - this is the amount of the housing savings deposit (deposit), the reward accrued to it by the HSCC, and the loan amount is determined in accordance with the General Agreement.

Loan Agreement - a contract between the HSCC and the participant for obtaining a loan in accordance with the General Agreement, these Rules, and the internal documents of the HSCC.

Accumulation Period - the period of time during which the participant accumulates a housing savings deposit (deposit).

Participant - a participant of the HSCS who deposits money into an account in the HSCC for the purpose of obtaining a loan for individual construction, purchase of residential houses (apartments), or for improving housing conditions.

Interim Loan - a loan provided by the HSCC to a participant for the purposes of individual construction, purchase of residential houses or apartments, as well as for improving housing conditions, provided that the minimum required amount of accumulated funds is accumulated in advance (before the full accumulation period specified in the housing savings deposit (deposit) contract), as well as provided that the requirements of paragraph 82 of these Rules are met. In this case, the interest rate on the interim loan before the end of the minimum required accumulation period specified in the housing savings deposit (deposit) contract may be different and is determined in the General Agreement.

Assessment Indicator - a calculated value determined by the HSCC for each General Agreement for forming the queue of payment of contractual amounts in the HSCS, within which the compliance of the accumulated funds under the housing savings deposit (deposit) contract, the provision of necessary collateral by the participant, and the confirmation of the participant's solvency for loan repayment are considered.

Bank-Agent of the HSCC - a bank selected by the HSCC to carry out settlement and cash operations for depositors in accordance with the requirements of these Rules.

Minimum Required Amount of Accumulated Funds - this is the amount of the housing savings deposit (deposit), the reward accrued to it by the HSCC in accordance with the terms of the General Agreement, necessary to obtain a loan in accordance with the General Agreement.

(In the edition of the Resolution of the Board of the NB KR of September 28, 2021 No. 2021-P-33/53-10)

Chapter 2. Requirements for HSCC Activities

6. The HSCC must ensure an internal control system that allows the HSCC to constantly monitor, identify, and assess risks that may adversely affect the achievement of the HSCC's activity goals.

7. The determination of minimum requirements for the formation of an adequate risk management system in the HSCC and requirements for the organization of internal control, providing for the application by the HSCC of risk control methods that ensure effective identification, assessment, and limitation of HSCC risks taking into account the type and volume of operations carried out, is carried out in accordance with the Methodological Recommendations on the Organization of an Internal Control and Internal Audit System in Non-Bank Financial and Credit Organizations Licensed and Regulated by the National Bank.

8. The HSCC has the right to place temporarily free funds in:

1. state treasury bills and other highly liquid securities issued by the Cabinet of Ministers of the Kyrgyz Republic and the National Bank;

2. deposits in banks licensed by the National Bank.

In this case, the placement of free funds in one commercial bank should not exceed 20% of the total amount of attracted housing savings deposits (deposits).

(In the edition of the Resolution of the Board of the NB KR of December 21, 2022 No. 2022-P-12/81-7)

9. To select commercial banks for the placement of temporarily free funds, HSCCs must adhere to the following criteria:

• the commercial bank has a corresponding license of the National Bank for the right to conduct banking operations;

• compliance with economic standards and requirements established in the normative legal acts of the National Bank in accordance with the banking legislation of the Kyrgyz Republic, as well as the requirements of the Law of the Kyrgyz Republic "On Counteraction to the Financing of Terrorist Activities and Legalization (Money Laundering) of Criminal Proceeds" during the reporting year;

• absence of application of impact measures provided for by the laws of the Kyrgyz Republic "On Banks and Banking Activity" and "On Counteraction to the Financing of Terrorist Activities and Legalization (Money Laundering) of Criminal Proceeds" during the last 12 months preceding the selection. Impact measures do not include prescriptions presented to commercial banks during the implementation of supervisory activities, except for prescriptions presented by decision of the Supervisory Committee of the National Bank;

• presence of a branch network, savings and mobile cash offices for providing banking services in all regions of the Kyrgyz Republic;

• presence of annual profit for the last three years;

• presence of an unqualified external auditor's opinion confirming the compliance of accounting and reporting with established standards of accounting and financial reporting for the two years preceding the selection;

• absence of debt on taxes and other mandatory payments to the state budget of the Kyrgyz Republic, as well as on insurance deposits for state social insurance;

• absence of unpaid overdue debts to the National Bank, its subsidiaries, as well as to other creditors and counterparties;

• acceptable (compared to the average tariffs of the banking system of the Kyrgyz Republic) tariffs for bank services (opening and maintaining accounts, issuing and servicing plastic cards, conducting internal and interbank payments, etc.);

• the bank's share of assets must be at least 1 (one) percent of the assets of the banking system as of the last reporting date preceding the selection;

• absence of bans or restrictions on attracting deposits from individuals, opening settlement accounts for individuals and legal entities, and lending as of the last reporting date preceding the selection;

• the bank is not in special regimes.

HSCCs must request all necessary reliable information from banks corresponding to the criteria of this paragraph, along with supporting documents.

(In the edition of the Resolution of the Board of the NB KR of December 21, 2022 No. 2022-P-12/81-7)

10. In addition to carrying out the main activity of accumulating housing savings deposits (deposits) and issuing loans, the HSCC also has the right to:

1. in case of non-repayment of debt on obligations of the HSCC, seize and realize property pledged by the participant (pledgor) to satisfy the participant's obligations to the HSCC;

2. provide consulting and information services related to the main activity of the HSCC;

3. provide the participant with information about the status of his account(s), operations, as well as any informational materials regarding it;

4. check the targeted use of the loan issued to the participant;

5. unilaterally terminate the housing savings deposit (deposit) contract with written notification to the participant one calendar month in advance in case there are no funds in the account for a period specified by the contract or if no operations were carried out on the account by the participant. In this case, the remaining funds in the account are issued to the participant upon his written instruction through the cash desk of the bank-agent no later than five days or transferred to another account;

6. not guarantee the issuance of interim loans before the payment term under the housing savings deposit (deposit) contract.

11. The HSCC must keep records of participants and ensure the safety of their housing savings deposits (deposits) accumulated in accounts for obtaining loans. The HSCC provides written account statements to the participant upon request.

12. The HSCC must have an internal document on the procedure for returning housing savings deposits (deposits) to the participant.

The HSCC must develop the general principles of the housing savings credit system and standard terms of the General Agreement of the housing savings credit system, which must reflect:

• principles of operation;

• rights and obligations of participants and the HSCC;

• general rules for accepting and accumulating housing savings deposits (deposits) and providing loans;

• rules for changing terms and adjusting parameters;

• methodology for calculating rewards for housing savings deposits (deposits);

• methodology for calculating the assessment indicator for forming the queue of payment of contractual amounts in the HSCS;

• interest rates for the housing savings deposit and loan and their terms;

• contractual amount;

• terms for providing interim loans and interest rates on them;

• and other terms.

13. Upon expiration of the accumulation period and in case the participant has not accumulated the minimum required amount of accumulated funds, the participant has the right to receive the housing savings deposit (deposit), the reward accrued to it by the HSCC. In addition, the HSCC participant has the right to extend the housing savings deposit (deposit) contract to accumulate funds in the HSCC account.

14. Accumulated funds (housing savings deposits (deposits)) indicated in participants' accounts must be insured in accordance with the legislation of the Kyrgyz Republic.

15. Payment of the contractual amount to the participant is made within the timeframes specified in the General Agreement.

16. The HSCC may acquire and dispose of property if this is necessary to ensure its main activity, in accordance with the legislation of the Kyrgyz Republic.

17. The plans of the HSCC for the use of acquired real estate must be reflected in the decision of the authorized management body of the HSCC. Requirements for HSCC operations/deals with real estate are carried out in accordance with the Regulation "On Certain Operations/Deals of Commercial Banks and Microfinance Companies of the Kyrgyz Republic with Real Estate" dated August 29, 2012 No. 36/2.

18. The HSCC has no right to provide any information about housing savings deposits (deposits), transactions of its participants, and information constituting bank secrecy to any third party, except in cases provided for by the legislation of the Kyrgyz Republic.

19. The HSCC has no right to carry out the purchase and subsequent sale of debt obligations, including the credit portfolio (factoring) to another legal entity without the corresponding license of the National Bank.

20. HSCC agents provide agency services in providing participants (potential participants) with information about the HSCS and products offered by the HSCC, consulting on the terms of the housing savings deposit (deposit) and/or loan agreement, the procedure for its conclusion and execution, as well as on the completion (primary filling) by the client/participant of the application for joining the HSCC, attached documents, and their forwarding to the HSCC.

Legal entities acting as agents of the HSCC, in addition to the agency services provided by consultants, provide agency services in accepting payments on behalf of the HSCC.

The HSCC participant has the right to receive information about HSCC agents by submitting a corresponding written request to the HSCC.

Agents having the right to provide agency services in accepting payments on behalf of the HSCC can only be financial and credit organizations, payment system operators having a license from the National Bank.

HSCC agents do not bear responsibility for the obligations of the HSCC, and the HSCC does not bear responsibility for the obligations of the HSCC agents.

Chapter 3. Credit Policy of the HSCC

21. Credit operations of the HSCC are carried out in accordance with its internal credit policy, approved by the Board of Directors of the HSCC.

22. The credit policy defines the strategy, criteria, parameters, and procedures that HSCC employees must follow in activities related to the provision, documentation, monitoring, and management of risks.

23. The credit policy of the HSCC must be based on the principles of responsible lending: honesty, transparency, reliability, partnership towards participants, taking into account their economic interests and financial capabilities.

24. The credit policy must reflect all main provisions regarding the issuance of loans, at least:

1. general provisions, including:

• composition of potential participants;

• types of loans;

• quantitative lending limits;

• loan terms;

• criteria for assessing the solvency of participants;

• interest rates and methods for their establishment;

• requirements for the participant's financial information;

• geographical restrictions;

• loan concentration (by groups of participants, geographical criteria, and other factors);

• restrictions on loans issued to affiliated and/or related persons of the HSCC;

• criteria for assessing the value and acceptability of collateral, including assessment of risks associated with the fact that the subject of collateral is the participant/pledgor's only housing at the time of loan documentation;

• control over compliance with the procedure for preparing loan issuance;

• ratio of the credit portfolio to assets;

• share of each type of loan in the credit portfolio;

• and others;

2. procedure for documenting the loan, including:

• document forms;

• procedure for issuing loans;

• procedure for loan approval;

• term for considering a loan application and issuing a loan;

• requirements for client solvency analysis;

• requirements for collateral and documentation (types of collateral, loan-to-value ratio, assessment of market value and its location);

• control over the correct documentation of the loan agreement;

3. requirements for credit portfolio management, including:

• procedure for managing the credit portfolio;

• maintenance of an adequate participant credit file;

• control over the execution of loan agreements;

• frequency of monitoring collateral and targeted use of the loan;

• terms for extending or renewing overdue loans;

• process of independent assessment of the credit portfolio;

• classification and formation of a reserve for covering potential losses and losses (RPPU);

• requirements for information systems (reporting);

• procedure for working with other property;

4. separation of powers for issuing loans with indication of the maximum amount and type of loan. The right to issue loans and take off-balance sheet obligations of the HSCC must be divided among several levels of officials who bear responsibility in accordance with the legislation of the Kyrgyz Republic for violations committed in lending;

5. obligations for the transfer of rights and provision of information between structural divisions participating in the lending process;

6. procedure for identifying, analyzing, and resolving situations related to "problem" loans;

7. principles of responsible lending, containing requirements for the development and implementation of an assessment and reporting system aimed at preventing over-indebtedness (when a participant has parallel obligations, including in more than one financial and credit organization, as a result of which the participant's debt burden may exceed the participant's ability to service its obligations).

25. Within the normative requirements established by the legislation of the Kyrgyz Republic and normative legal acts of the National Bank, the HSCC independently determines the circle of participants of the HSCS, types of loans, forms the credit portfolio, and sets interest rates.

26. Loans are issued to the HSCS participant in the national currency, as well as upon compliance with the conditions specified in paragraph 54 of these Rules, which must be reflected in the General Agreement:

1. achievement of the accumulated funds amount accepted under the housing savings deposit (deposit) contract;

2. provision by the participant of the necessary collateral for the loan;

3. confirmation of the participant's solvency for loan repayment.

Interim loans are issued to the HSCS participant in the national currency, as well as upon compliance with the conditions specified in paragraph 82 of these Rules, which must be reflected in the General Agreement:

1. upon achievement of the accumulated funds amount accepted under the housing savings deposit (deposit) contract;

2. upon provision by the participant of the necessary collateral for the loan;

3. upon confirmation of the participant's solvency for loan repayment.

27. The presence of a clear and detailed credit policy of the HSCC contributes to proper work with loans, ensures the stability and profitability of the HSCC's work.

28. The Board of the HSCC is responsible for the execution of the credit policy and credit strategy of the HSCC, for which it is obliged to ensure the development and implementation in the HSCC's activities of policies and procedures for identifying, measuring, monitoring, and controlling credit risk.

29. The Board of Directors of the HSCC is obliged to review the credit policy for its adequacy, limit systems, instruments, and procedures for credit risk management, and the internal audit system for credit risk management. The Board of Directors of the HSCC is also obliged to review the credit policy as necessary in the event of changes in the HSCC's risk profile and normative legal acts of the National Bank, but no less than once a year.

30. All issues related to the issuance of loans must be resolved only by the Credit Committee or persons to whom the Credit Committee delegates this right in accordance with internal documents, except for issues relating to the competence of the Board of Directors of the HSCC.

31. The issuance of loans to affiliated and/or related persons of the HSCC must be approved by the Board of Directors of the HSCC. The Board of Directors of the HSCC bears responsibility for approving decisions on the issuance of loans to affiliated and/or related persons of the HSCC.

32. In addition, the credit policy must specify the powers of the Credit Committee and/or the Board of the HSCC for writing off and restructuring loans with indication of restrictions. Decisions of the Credit Committee of the HSCC on writing off and restructuring loans must be brought to the attention of the Board of Directors of the HSCC no less than once a quarter. Decisions on writing off loans carrying significant credit risk are made by the Board of Directors of the HSCC.

33. The HSCC must ensure periodic training of employees on lending and monitoring, issues of analysis and assessment of the participant's solvency taking into account the methodology implemented in the HSCC for assessing the solvency of participants, work with problem loans, as well as on other lending issues, including communication with clients, and on other requirements of the legislation of the Kyrgyz Republic and principles of responsible lending.

34. (Lost force in accordance with the Resolution of the Board of the NB KR of December 28, 2020 No. 2020-P-33/75-5)

Chapter 4. Requirements for the Loan Agreement and Procedure for Its Conclusion

35. The loan agreement concluded between the HSCC and the participant, with all its attachments, and other agreements/contracts are drawn up in the state language and, if necessary, in the official language. The number of original copies of the loan contracts must be no less than the number of parties to the contract. The HSCC must ensure the safety of all original documents to the loan agreement in accordance with the legislation of the Kyrgyz Republic.

(In the edition of the Resolution of the Board of the NB KR of December 8, 2023 No. 2023-P-12/76-1)

36. The text of the loan agreement must be accessible for perception and understanding by the participant. The rights and obligations of the client arising from the terms of the loan agreement must be reflected in a separate section of the loan agreement. Throughout the text of the loan agreement and in all its attachments, the font must be the same, and its size must be no less than 12 (no less than 16 - for a client with visual impairment upon request).

When serving a client with visual or hearing impairment, the HSCC must, at the client's request, ensure audio playback/sign language interpretation of the text of the loan agreement and other...

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