RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of June 15, 2017 No. 2017-P-12/25-6

About approval of the Instruction "About requirements to transactions of the microfinance companies attracting deposits with the affiliated and tied with microfinance company faces"

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 Instruction "About requirements to transactions of the microfinance companies attracting deposits with the affiliated and tied with microfinance company faces" it (is applied).

2. Declare invalid the resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Instruction "About requirements to transactions of the microfinance companies attracting deposits with insiders and affiliates" of July 4, 2012 No. 28/8.

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 entering into 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 microfinance companies, regional managements and representative office of National Bank of the Kyrgyz Republic in Batken Province.

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

Appendix

to the Resolution of Board of National Bank of the Kyrgyz Republic of June 15, 2017 No. 2017-P-12/25-6

The instruction about requirements to transactions of the microfinance companies attracting deposits with the affiliated and tied with microfinance company and the housing and savings credit company faces

Chapter 1. General provisions

1. This Instruction is developed for the purpose of establishment of requirements to activities of the microfinance companies attracting deposits (further - IFC), including performing activities according to the Islamic principles of banking and financing, the IFC having Islamic window and to activities of the housing and savings credit companies (further - ZhSKK), when implementing transactions and transactions with the affiliated and tied with IFC, ZhSKK faces.

2. IFC, ZhSKK shall keep the register affiliated and connected according to IFC, ZhSKK of persons, easy access to which shall be provided for employees of National Bank of the Kyrgyz Republic (further - National Bank). The register affiliated and connected with IFC, ZhSKK of persons, at least, shall contain data on surname, name, middle name of the official of IFC, ZhSKK of the position held by it in IFC, ZhSKK of surname, name and middle name of the related person who is the close relative, degree of his relationship with the official (parents, the spouse (a), etc.). Maintaining the register in electronic form is allowed provided that in IFC, ZhSKK is installed the security system ensuring safety of information.

3. The relations affiliated with IFC, ZhSKK of person can be traced on communications of the companies and persons, the relations between which are based on ownership of threshold equity participation of IFC, ZhSKK, regardless of the number of affiliates.

4. The principle of impartiality means that IFC, ZhSKK has no right to issue the credits to affiliated and connected persons, and also considerable participants if conditions of provision of such credits are more favorable, than on the credits issued in similar conditions to other persons - clients of IFC, ZhSKK (legal entities or physical person) which do not have with IFC, ZhSKK of common interests.

5. The total debt of one borrower and the related persons is total debt of one borrower on:

- to the credits (regardless of repayment period);

- to factoring;

- to finance lease;

- to investments in the form of debt obligations;

- to the added interest receivable;

- to any other type of direct or indirect issue of means to borrowers which are credit substitutes;

- to the amount of the off-balance obligations (obligations on issuance of credits) issued to this borrower;

- to any risk of IFC, ZhSKK concerning the third party which certainly is guaranteed by this borrower;

- to earlier written off credits, including percent.

In the credit folder of each borrower data on earlier written off credits and percent of this borrower and the related persons who shall contain the following information shall be filed: name of the borrower and the related persons, the amount of the written off credit and percent, date of write-off and the reason for which this debt was written off. If such data are absent, then in the credit folder there shall be conclusion of the authorized person of IFC, ZhSKK that earlier cancelled debt of this borrower and the related persons is not available.

6. When calculating the standard rate of the maximum extent of risk on one borrower the debt of various borrowers shall be summed up and be considered as the connected single total debt if financial difficulties of one borrower can lead to problems of payment and at other persons.

7. For the purpose of this Instruction the concept "borrower" is meant as person/group of persons which IFC, ZhSKK issued the credits or means specified in Item 6 to this Instruction which are credit substitutes. The debt of various borrowers shall be summed up if:

- one borrower controls another;

- the credit is issued to both the legal entity, and the participant/founder of this legal entity;

- they have, at least, one controlling person or the considerable participant, except as specified, when the controlling face or the considerable participant are state bodies of the Kyrgyz Republic;

- between several borrowers there is considerable financial interdependence. Considerable financial interdependence, including the agreement on mutual cooperation, takes place, as a rule, if 50 or more percent of annual gross earnings / expense or other receipts or payments of one borrower arose from transactions with other borrower;

- the same source is used for loan repayment, including situation when borrowers use borrowing facilities for participation in the general company or general activities or when both use the same secondary source of payment (pledge);

- one of borrowers guaranteed obligations of another (guarantee cross-country) or when the same third party is guarantor of both borrowers;

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