RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of July 8, 2020 No. 2020-P-12/39-2-(NPA)

About introduction of amendments to the resolution of Board of National Bank of the Kyrgyz Republic "About the Instruction about procedure for observance of limits of open foreign exchange position by the banks performing transactions according to the Islamic principles of banking and financing" of October 14, 2009 No. 41/4

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. Make changes to the resolution of Board of National Bank of the Kyrgyz Republic "About the Instruction about procedure for observance of limits of open foreign exchange position by the banks performing transactions according to the Islamic principles of banking and financing" of October 14, 2009 No. 41/4 it (is applied).

2. This resolution becomes effective after fifteen days from the date of official publication.

3. 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.

4. To management of methodology of supervision and licensing of banks to bring this resolution to the attention of JSC KYRGYZSTAN Commercial Bank, Ekoislamikbank Ltd, JSC BAKAY BANK, JSC Ayyl Bank, JSC RSK Bank, OYuL "Union of Banks of Kyrgyzstan", the relevant structural divisions, regional managements and representative office of National Bank of the Kyrgyz Republic in Batken Province.

5. To impose control of execution of this resolution on the board member of the National Bank of the Kyrgyz Republic supervising the supervising block.

Appendix

to the Resolution of Board of National Bank of the Kyrgyz Republic of July 8, 2020 No. 2020-P-12/39-2-(NPA)

Changes in the resolution of Board of National Bank of the Kyrgyz Republic "About the Instruction about procedure for observance of limits of open foreign exchange position by the banks performing transactions according to the Islamic principles of banking and financing" of October 14, 2009 No. 41/4

1. Bring in the resolution of Board of National Bank of the Kyrgyz Republic "About the Instruction about procedure for observance of limits of open foreign exchange position by the banks performing transactions according to the Islamic principles of banking and financing" of October 14, 2009 No. 41/4 the following changes:

to add the name, preamble and Item 1 of the resolution after words of "open foreign exchange position" with the words "and open line item in precious metals";

in the Instruction "About procedure for observance of limits of the open foreign exchange position by the banks performing transactions according to the Islamic principles of banking and financing", approved by the above-stated resolution:

to add the name after words of "open foreign exchange position" with the words "and open line item in precious metals";

- state Item 1.2 in the following edition:

"1.2. The purpose of this Instruction is determination of procedure of payments of open line item and control of observance of limits of open foreign exchange position and open line item in precious metals (further - open line item) the Islamic banks and banks having "Islamic window" (further - banks), having the license of National Bank of the Kyrgyz Republic (further - National Bank) on implementation of foreign currency transactions and on the right of carrying out banking activities with precious metals.

For goal achievement and accomplishment of tasks of the Board of National Bank National Bank the separate resolution can change values of the limits of open line item set in this Instruction to limited term.";

- to add Item 1.3 after words of "currency risks" with the words "also it is risk on transactions with precious metals";

- state Item 1.4 in the following edition:

"1.4. For the purpose of this Instruction the following determinations are applied:

The currency risk is risk of receipt of losses by bank owing to change in value of requirements (assets)/obligations of bank expressed in foreign currency in case of adverse change of the currency rate while the bank has open foreign exchange position on this currency. The foreign exchange position arises when implementing currency transactions and is exponent of exposure of bank to currency risk.

Currency transactions are the transactions connected with exchange, purchase/sale (converting) of foreign currency and also other transactions as a result of which the amount of requirements (assets) or obligations expressed in foreign currency changes.

The net line item is difference between requirements (assets) and obligations of bank, both balance sheet, and off-balance, in separate foreign currency and by each type of precious metal separately (gold, silver), except for numismatical (collection) coins.

The open line item is discrepancy of requirements (assets) of bank in foreign currency / type of precious metal and obligations of bank in the same foreign currency / in the same type of precious metal, and in case of equality the line item is considered closed.

On each foreign currency and by each type of precious metal the open line item is calculated separately.

The opened line item jar can be long (in case of exceeding of requirements (assets) of bank in the corresponding currency / the corresponding type of precious metal over its obligations in the same currency / the same type of precious metal), or short (in case of excess of obligations over requirements (assets). The long position registers with the sign "+", short - with sign" -".

The total line item is the amount of all net line items of bank on all foreign currencies or types of precious metals calculated with use of the "short hand" method determined in item 2.5 of this Instruction.

Limits of open line items are the restrictions set by National Bank expressed in percentage terms open line items (on each foreign currency / by each type of precious metal and total) to the net total capital of bank. Limits of open line items are calculated as a percentage with rounding to two decimal signs after comma.

The net total capital of bank is calculated according to requirements of regulatory legal acts of National Bank.

For the purpose of this Instruction when calculating limits of open line items value of the net total capital of bank as of the 1st day of every month is used.

Date of the conclusion of the transaction is date of achievement by agreement parties on the main terms of transaction (currency types, the exchange rate, the amounts of means, value date, type, mass of precious metal, etc.).

Value date is date in which there is transfer of funds for accounts of participants of the transaction.";

- to state the name of the Section II in the following edition:

"II. Procedure of payments of open line items";

- add Item 2.1 with paragraphs the fourth and fifth the following content:

"-net line items by each type of precious metals;

- total line item in precious metals.";

- state Item 2.2 and 2.3 in the following edition:

"2.2. Net line items are calculated separately on each foreign currency and type of precious metal as the amount of the following indicators:

- net spot line item in foreign currency / type of precious metal on the transactions performed by bank according to the Islamic principles of banking and financing. This size is calculated as difference between balance sheet assets and book commitments, including incomplete spot contracts with value date to 2 (two) days. Calculation is made on net book value of assets and liabilities;

- the irrevocable guarantees issued or confirmed with bank, letters of credit and similar it the financial instruments nominated in foreign currency / type of precious metal, except for guarantees, letters of credit and similar by it financial instruments, provided in the same currency / the same type of precious metal. For the purpose of this Instruction financial instruments are implied as bill guarantees (aval), travel checks and other obligations of bank assumed in the international practice. Credit lines do not belong to financial instruments.

At the same time the specified guarantees, letters of credit and similar it financial instruments join in calculation of net line item from the moment of submission by the beneficiary (beneficiary) of the requirement about payment of sum of money for the obligation or obtaining by bank of documentary confirmed information testimonial of high probability of submission of demand of payment on the specified obligations. For example, the letter of the beneficiary on non-execution (execution delay) by the principal of the obligations is the basis for inclusion of guarantee in calculation of net line item;

- other balance and off-balance sheet assets / obligations in foreign currency / type of precious metal which are placed/attracted according to the Islamic principles of banking and financing and bearing in themselves currency risk and risks on transactions with precious metals.

2.3. Currency transactions and transactions with precious metals join in calculation of net line item in date of the conclusion of the transaction (including the transactions containing future value date which is not date of the conclusion of the transaction), except for transactions which are based on contracts of mudarab and ball / мушарака.

Transactions in foreign currency which are based on agreements of mudarab and ball / мушарака join in calculation of net line item in date of obtaining/provision by bank of foreign currency amount. Profit or loss, received as a result of these transactions, join in calculation of net line item at the time of their actual origin.";

- add Item 2.4 with the paragraph the second the following content:

"When calculating net line items in precious metals:

- precious metals in non-cash form in quantitative expression are calculated on the evening fixing established by the London association of the market of precious metals in the day preceding day of carrying out accounting, calculated through cross-rate of official US dollar exchange rate to the som established by National Bank on reporting date;

- precious metals in physical shape in quantitative expression are calculated on the accounting rate established in accounting policy of bank.";

- state Item 2.5 in the following edition:

"2.5. The total line item is calculated with use of the "short hand" method, that is calculation is perfromed by summing separately of all long net positions and separately all short net positions on each currency / to each type of precious metal. Then the received sizes are compared with each other (in absolute value), and the greatest of two sizes is used when calculating total limit of line item.";

- to state the name of the Section III in the following edition:

"III. Limits of open line item";

- add the Section III with subitem 3.1.3 of the following content:

"3.1.3. For the purpose of regulation of transactions of purchase and sale with precious metals the National Bank sets for banks total limit of open line item in precious metals:

a) as of the end of operational day the size of open long/short position by each type of precious metal shall not exceed 15% of the net total capital of bank;

b) as of the end of operational day the line item total size in precious metals in total shall not exceed 20% of the net total capital of bank.";

- in Item 3.2 and 3.3 of the word of "foreign exchange positions" to replace with the word of "line items";

- state Item 3.4 in the following edition:

"3.4. The size of open line items during the operational day is controlled by bank independently, proceeding from own assessment of admissible level of currency risk and risks on transactions with precious metals. At the same time the bank shall keep the extent of risks during the day according to the domestic policy of risk management approved by the Board of directors.";

- in Item 3.5 of the word of "foreign exchange positions" to replace with the word of "line items";

- state Item 3.6 in the following edition:

"3.6. If the size of the net total capital of bank is negative or is equal to zero, the bank shall give net line items on each currency / to each type of precious metal to zero value (the closed line item) to the terms established by National Bank.";

-  Add the instruction with Item 3.7 of the following content:

"3.7. The precious metals which are at bank on safe custody and as pledge are not obligations of bank, and in precious metals do not join in calculation of open line item.";

- in Item 4.1:

"currency" to exclude the word;

after the words "according to appendices 1 and 2" to add with figures "3, 4";

- state Item 4.2 in the following edition:

"4.2. The bank taking into account these all branches, subsidiary banks and exchange points shall submit the following reports on open line items:

- the daily report on the open foreign exchange positions (OFEP) on the transactions performed according to the Islamic principles of financing (Appendix 1);

- summary daily report on the open foreign exchange positions (OFEP) (Appendix 2);

- the daily report on open line items in precious metals (OPDM) on the transactions performed according to the Islamic principles of financing (Appendix 3);

- the summary daily report on open line items in precious metals (OPDM) (Appendix 4).";

-  to state the name of the Section V in the following edition:

"V. Corrective actions for violation by banks of the set limits of open line item";

- state Item 5.1 in the following edition:

"5.1. In case of violation by bank of the set limits of open line item the National Bank applies corrective actions in the form of recovery of penalty in the amount of 5% of the violation amount, but no more than 10% of the standard rate of the minimum size of the authorized capital of bank.";

- in Item 5.2:

exclude the word "sanctions";

after the words "apply others" to add with the words "corrective actions";

after the word "normative" to add with the word "legal";

to replace words of "penalties" with the word of "penalty";

- state Item 5.3 in the following edition:

"5.3. Any attempts of bank to somehow avoid reflection in the reporting of real line item will be considered by National Bank as:

- attempts to mislead National Bank;

- unhealthy and unsafe banking practice;

- manipulation with net line item for the purpose of misstatement of its actual size, that is carrying out doubtful transactions, origin and which making do not give in to accurate identification and/or if these transactions influence the financial reporting of bank and its economic standard rates;

- provision of the doubtful financial and regulating reporting by bank. Similar transactions are not taken into account when calculating limits of open line items.";

- the offer first of Item 5.5 to state in the following edition:

"Corrective actions in the form of recovery of penalty, as a rule, are not applied to bank if the limit of open line item was broken in the conditions of the arisen force majeur circumstances.";

- in Items 5.6 and 5.7:

"cash" to exclude words;

to replace words of "foreign exchange position" with the word "line items";

-  Add the instruction with Item 6.3 of the following content:

"6.3. The organization of internal control for transactions with precious metals is performed according to the regulations established in the Provision "About Transactions of the Commercial Banks with Precious Metals Performed according to the Islamic Principles of Banking and Financing.";

-  Add the instruction   with appendices 3 and 4 of the following content:

"Appendix 3

The daily report on open line items in precious metals (OPDM) on the transactions performed according to the Islamic principles of financing as of ___. ___. 20 __.

ChSK as of "01" _______________ years: _______________ one thousand som

Type of precious metal	Accounting rate	Size OPDM (one thousand som)	Including:		Size OPDM (% to ChSK)	Aberration of limit (%)	Remaining balance on incomplete spot transactions
			balance	забаланс			sale	purchase
Gold
Silver
Total OPDM:

 

Appendix 4

The summary daily report on open line items in precious metals (OPDM) as of ___. ___. 20 __.

ChSK as of "01" ______________ years: _______________ one thousand som

Type of precious metal	Accounting rate	Size OPDM (one thousand som)	Including:		Size OPDM (% to ChSK)	Aberration of limit (%)	Remaining balance on incomplete spot transactions
			balance	забаланс			sale	purchase
Gold
Silver
Total OPDM:

Disclaimer! This text was translated by AI translator and is not a valid juridical document. No warranty. No claim. More info