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RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of June 8, 2017 No. 2017-P-12/23-2-(NPA)

About approval of the Provision "About Procedure for Investment with Foreign Bank with Money of the Branch as the Capital"

For the purpose of reduction of regulatory legal acts of National Bank according to the Law of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic, banks and banking activity" and according to articles 7 and 43 of the Law of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic" the Board of National Bank of the Kyrgyz Republic decides:

1. Approve the Provision "About Procedure for Investment with Foreign Bank with Money of the Branch as the Capital" it (is applied).

2. Declare invalid the resolution of Board of National Bank "About approval of the Provision "About Procedure for Investment with Nonresident Bank with the Capital of the Branch" of June 10, 2015 No. 31/1.

3. This resolution becomes effective on June 22, 2017.

4. To legal management:

- publish this resolution on the official site of National Bank of the Kyrgyz Republic;

- after official publication to 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.

5. To management of methodology of supervision and licensing to bring this resolution to the attention of structural divisions of National Bank of the Kyrgyz Republic, regional managements, representative offices of National Bank in Batken Province, commercial banks of the Kyrgyz Republic and branch of foreign bank.

6. Within 30 days from the date of entry into force of this resolution to Management of external supervision to bring the Agreement signed between National Bank of the Kyrgyz Republic and National Bank of Pakistan about placement of money as the connected deposit in National Bank into compliance with the requirements established by the Provision "About Procedure for Investment with Foreign Bank with Money of the Branch as the Capital" approved by this resolution.

7. To impose control of execution of this resolution on the board member of National Bank of the Kyrgyz Republic T.Dzh. Dzhusupova.

Chairman of the board of National Bank of the Kyrgyz Republic

T. Abdygulov

Appendix

to the Resolution of Board of National Bank of the Kyrgyz Republic of June 8, 2017 No. 2017-P-12/23-2-(NPA)

Regulations on procedure for investment with foreign bank with money of the branch as the capital

1. This Provision determines procedure of the procedure for investment with money of the branches opened and registered in the territory of the Kyrgyz Republic by foreign banks.

2. For receipt of permission to opening of branch in the territory of the Kyrgyz Republic the foreign bank shall provide to National Bank of the Kyrgyz Republic (further - National Bank) documents according to the legislation of the Kyrgyz Republic.

3. The foreign bank allocates the branch opened for them in the territory of the Kyrgyz Republic with irrevocable and termless money in the amount of, conforming to requirements of National Bank to the minimum size of the authorized capital of banks which is - the capital of branch of foreign bank and basis for calculation of economic standard rates.

Economic standard rates and procedure for their calculation are established according to regulatory legal acts of National Bank and this Provision.

4. Money with which the foreign bank allocates the branch in the territory of the Kyrgyz Republic shall be placed as the clear of debts connected deposit in National Bank.

For the purposes of this provision the connected deposit is the money in national currency of the Kyrgyz Republic placed in National Bank by foreign bank on which interests are not paid.

5. The foreign bank expressing desire to open branch of the bank in the territory of the Kyrgyz Republic shall sign the contract with National Bank on placement of money as the connected deposit in National Bank. Along with the conditions established by the legislation the agreement shall include following provisions:

- the size of the amount of the connected domestic currency deposit of the Kyrgyz Republic established by regulatory legal acts of National Bank;

- specifying on the fact that this connected deposit is the capital for branch of foreign bank serves as ensuring obligation fulfillment of branch of foreign bank before creditors of branch, and also the fact that the deposit cannot be encumbered with any obligations;

- specifying of the size of the money allocated for acquisition of the state treasurer bills of exchange and government treasury bonds of the Kyrgyz Republic at the expense of the connected deposit in National Bank.

6. The branch of foreign bank has the right to use the money placed as the connected deposit only for acquisition of the state treasurer bills of exchange and government treasury bonds of the Kyrgyz Republic. The size of the connected deposit which can be used for acquisition of the state treasurer bills of exchange and government treasury bonds of the Kyrgyz Republic is determined by coordination between National Bank and foreign bank and is reflected in the contract between National Bank and foreign bank on placement of money as the connected deposit in National Bank.

Acquired at the expense of the money placed as the connected deposit in National Bank, the state treasurer bills of exchange and the government treasury bonds of the Kyrgyz Republic join in basis for calculation of obligatory economic standard rates, except for the economic standard rate on liquidity.

Calculation of the standard rate of liquidity joins the placed part of the connected deposit.

The branch of foreign bank is forbidden to sign the repo agreements on the state treasurer bills of exchange and the government treasury bonds of the Kyrgyz Republic acquired at the expense of the money placed as the connected deposit in National Bank.

7. In case of violations of requirements of this provision by foreign bank the National Bank has the right to apply to branch of the foreign bank registered in the territory of the Kyrgyz Republic, the corrective actions provided by the bank law of the Kyrgyz Republic up to revocation of license.

8. This money placed as the connected deposit cannot be withdrawn before decision making about closing of branch of foreign bank and approval of its liquidation balance sheet confirming absence of debt before creditors of branch of foreign bank and serves as ensuring obligation fulfillment of branch of foreign bank before creditors of branch of foreign bank.

 

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