RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of September 23, 2020 No. 2020-P-12/51-1-(NPA)

About modification of some regulatory legal acts of National Bank of the Kyrgyz Republic

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 following regulatory legal acts of National Bank of the Kyrgyz Republic (are applied):

- the resolution of Board of National Bank of the Kyrgyz Republic "About the Provision "About Realization of the Islamic Principles of Financing in the Kyrgyz Republic within Pilot Project" of October 30, 2006 No. 32/2;

- the resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Provision "About the Transactions Performed according to the Islamic Principles of Banking and Financing" of September 23, 2009 No. 38/8.

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 Management of methodology of supervision and licensing of banks.

Appendix

to the Resolution of Board of National Bank of the Kyrgyz Republic of September 23, 2020 No. 2020-P-12/51-1-(NPA)

Changes in some regulatory legal acts of National Bank of the Kyrgyz Republic

1. Bring in the resolution of Board of National Bank of the Kyrgyz Republic "About the Provision "About Realization of the Islamic Principles of Financing in the Kyrgyz Republic within Pilot Project" of October 30, 2006 No. 32/2" the following changes:

in the Provision "About Realization of the Islamic Principles of Financing in the Kyrgyz Republic within Pilot Project" approved by the above-stated resolution:

- in Chapter 2.3.1:

state Item 2 in the following edition:

"2. The transaction the commodity murabakha (таваррук) is applied by bank as the tool on attraction of money, including investments. This transaction cannot be applied as the instrument of attraction of money from clients of bank.

The transaction commodity murabakha (таваррук) can be considered as the instrument of placement of money for one of the parties of the transaction if financial credit institutions act as the parties of the transaction.

The transaction commodity murabakha (таваррук) can be applied by bank as the instrument of financing of the legal entity or the individual entrepreneur registered in the procedure established by the legislation (further - the legal entity), in case of observance of one of the following conditions:

- provision of financing using types of the transactions and agreements other than the transaction commodity murabakha (таваррук), do not allow to achieve the financing goal;

- the bargain is concluded in connection with impossibility to provide with liquidity, or to cover the deficit of liquid money, or with the purpose to avoid losses of the clients;

- the purpose of the transaction is refinancing of the credits of the legal entity because the bank received reasoned decision of the legal entity about complete transition to the services provided on the Islamic principles of financing.";

state Item 7 in the following edition:

"7. At the time of the conclusion of the transaction the seller shall have goods available, be in its property and to be concretized. It is performed by either isolation of goods, or specifying of details of the documents identifying goods (certificate number, delivery notes, etc.). In case of lack of goods on site the conclusions of the transaction the buyer needs to provide in addition data on goods in the form of the specification or samples, and also information on amount of goods and its location so that purchase of goods by the buyer was valid, but not dummy.";

add with Items 10 and 11 of the following content:

"10. The transaction the commodity murabakha (таваррук) can be applied as the tool on hedging of currency risk with observance of requirements of this Chapter, and also the following:

- bargains are concluded with exchange goods;

- the transaction commodity murabakha (таваррук) in one currency and reversing transaction commodity murabakha (таваррук) in currency, other than the first, are not connected among themselves. Non-execution of one transaction does not lead to cancellation of the second bargain concluded between the parties;

- completion dates of two transactions shall match.

11. The sharia council of the bank shall make the decision on cases of application and restrictions in application, and also conditions of application of the transaction commodity murabakha (таваррук).".

2. Bring in the resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Provision "About the Transactions Performed according to the Islamic Principles of Banking and Financing" of September 23, 2009 No. 38/8" the following changes:

in the Provision "About the Transactions Performed according to the Islamic Principles of Banking and Financing" approved by the above-stated resolution:

- in Chapter 2.3.1:

Item 2.3.1.2. state in the following edition:

"2.3.1.2. The transaction the commodity murabakha (таваррук) is applied by bank as the tool on attraction of money, including investments. This transaction cannot be applied as the instrument of attraction of money from clients of bank.

The transaction commodity murabakha (таваррук) can be considered as the instrument of placement of money for one of the parties of the transaction if financial credit institutions act as the parties of the transaction.

The transaction commodity murabakha (таваррук) can be applied by bank as the instrument of financing of the legal entity or the individual entrepreneur registered in the procedure established by the legislation (further - the legal entity), in case of observance of one of the following conditions:

- provision of financing using types of the transactions and agreements other than the transaction commodity murabakha (таваррук), do not allow to achieve the financing goal;

- the bargain is concluded in connection with impossibility to provide with liquidity, or to cover the deficit of liquid money, or with the purpose to avoid losses of the clients;

- the purpose of the transaction is refinancing of the credits of the legal entity because the bank received reasoned decision of the legal entity about complete transition to the services provided on the Islamic principles of financing.";

Item 2.3.1.7. state in the following edition:

"2.3.1.7. At the time of the conclusion of the transaction the seller shall have goods available, be in its property and to be concretized. It is performed by either isolation of goods, or specifying of details of the documents identifying goods (certificate number, delivery notes, etc.). In case of lack of goods on site the conclusions of the transaction the buyer needs to provide in addition data on goods in the form of the specification or samples, and also information on amount of goods and its location so that purchase of goods by the buyer was valid, but not dummy.";

add with Items 2.3.1.10. and 2.3.1.11. following content:

"2.3.1.10. The transaction the commodity murabakha (таваррук) can be applied as the tool on hedging of currency risk with observance of requirements of this Chapter, and also the following:

- bargains are concluded with exchange goods;

- the transaction commodity murabakha (таваррук) in one currency and reversing transaction commodity murabakha in currency, other than the first, are not connected among themselves. Non-execution of one transaction does not lead to cancellation of the second bargain concluded between the parties;

- completion dates of two transactions shall match.

2.3.1.11. The sharia council of the bank shall make the decision on cases of application and restrictions in application, and also conditions of application of the transaction commodity murabakha (таваррук).".

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