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RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of April 29, 2020 No. 2020-P-12/25-7-(NPA)

About Provisional rules of classification of assets and implementation of the corresponding allocations to reserve on covering of potential losses and losses by commercial banks

For the purpose of preserving banking system stability and mobilization of resources of banks for maintenance of economic activity according to articles 20 and 68 of the Law of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic, banks and banking activity" the Board of National Bank of the Kyrgyz Republic decides:

1. Approve Provisional rules of classification of assets and implementation of the corresponding allocations to reserve on covering of potential losses and losses by commercial banks (are applied).

2. To commercial banks provide to National Bank information on the assets classified according to this resolution the last working day of every month.

3. Requirements of the Provision "About Classification of Assets and the Corresponding Allocations to Reserve on Covering of Potential Losses and Losses" approved by the resolution of Board of National Bank of the Kyrgyz Republic of July 21, 2004 No. 18/3 are applied to commercial banks in the part which is not contradicting this resolution.

4. Bring in the resolution of Board of National Bank of the Kyrgyz Republic "About provisional rules of regulation of activities of financial credit institutions in connection with COVID-19 pandemic" of March 18, 2020 No. 2020-P-12/13-1-(BS) the following changes:

in Items 2 and 5 of the word "bank or" to exclude.

5. This resolution becomes effective from the date of its publication and is effective before adoption of the relevant decision of Board of National Bank.

6. To legal management:

- publish this resolution on the official website 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.

7. To management of methodology of supervision and licensing of banks to bring this resolution to the attention of OYuL "Union of Banks of Kyrgyzstan", commercial banks, all structural divisions, regional managements, representative offices of National Bank in Batken Province.

8. To impose control of execution of this resolution on the board member of the National Bank of the Kyrgyz Republic supervising Management of methodology of supervision and licensing of banks.

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 April 29, 2020 No. 2020-P-12/25-7-(NPA)

Provisional rules of classification of assets and implementation of the corresponding allocations to reserve on covering of potential losses and losses by commercial banks

Chapter 1. General provisions

1. These Provisional rules of classification of assets and implementation of the corresponding allocations to reserve on covering of potential losses and losses by commercial banks (further - Provisional rules) determine temporary procedure for classification of assets by commercial banks which quality worsened or worsens in view of the spread of koronavirusny infection and the related rationing arrangements taken by state bodies.

These Provisional rules do not extend to again issued credits of commercial banks, except for the credits issued according to target state programs of the Government of the Kyrgyz Republic or programs for the purpose of renewal/activization of activities of physical persons and legal entities.

Chapter 2. General instructions for classification of assets

2. In case of availability at the borrower (physical person or legal entity) of several credits in one bank or in banking group the bank has the right not to apply the worst category of classification to all credits if the worst category is appropriated to the credit of the borrower which financial condition worsened or worsens in view of spread of koronavirusny infection and the related restrictions.

In this case the bank can apply category of classification to each credit separately according to characteristic signs of category.

3. Again issued credits according to target state programs of the Government of the Kyrgyz Republic or programs for the purpose of renewal/activization of activities of physical persons and legal entities originally are recognized as "normal" or "satisfactory" assets, according to the characteristic signs established by the Provision "About Classification of Assets and the Corresponding Allocations to Reserve on Covering of Potential Losses and Losses" (further - the Provision "About Classification of Assets and the Corresponding Allocations to Reserve on Covering of Potential Losses and Losses") approved by the resolution of Board of National Bank of the Kyrgyz Republic of July 21, 2004 No. 18/3.

The subsequent classification of these assets is performed according to requirements of these Provisional rules.

Chapter 3. Not classified assets

4. The bank can classify the part of asset provided with guarantee of JSC Garantiyny fond as "normal" asset if the asset is expressed in national currency and in this bank the deposit of JSC Garantiyny fond is placed.

5. Characteristic signs in case of which manifestation the asset can be considered "asset under observation" are:

1) incomplete providing the asset for the rest having all characteristics inherent in "satisfactory" assets, or providing within contractual financing (for example, right to claim under the financed contract, receivables, etc.);

2) prosrochennost of returns/payments on the main amount and/or percent, for the term of no more than 60 days;

3) impossibility for bank to carry out monitoring of pledge because of insufficient documentation, or because of the absence of the experts in its assessment, except as specified, connected with the restrictions introduced in connection with spread of koronavirusny infection (in the presence of the reasonable conclusion of bank);

4) the planned reduction of liquidity of pledge (reduction of prices, fall of currency rate);

5) change of market conditions which can influence return of asset;

6) restructuring of the classified assets which fall under Item 7.6 conditions. Provisions "About Classification of Assets and the Corresponding Allocations to Reserve on Covering of Potential Losses and Losses";

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