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LAW OF THE KYRGYZ REPUBLIC

of August 11, 2022 No. 93

About banks and banking activity

Accepted by Jogorku Kenesh of the Kyrgyz Republic on June 30, 2022

Section I. General provisions

Chapter 1. General provisions

Article 1. Subject of regulation of this Law

1. This Law regulates questions of implementation of banking activity, procedure for creation, reorganization and liquidation of banks, procedure for the circulation of the data which are bank secrecy.

2. Activities of non-bank financial credit institutions and other legal entities, persons under surveillance to National Bank of the Kyrgyz Republic (further - National Bank), are regulated by the laws and regulatory legal acts of National Bank if other is not provided by the constitutional Law of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic" and this Law.

Article 2. Bank law of the Kyrgyz Republic

1. The bank law of the Kyrgyz Republic - system of the regulatory legal acts of the Kyrgyz Republic regulating bank legal relationship in the Kyrgyz Republic.

2. Regulations of codes and laws of the Kyrgyz Republic are applied to bank legal relationship in the part which is not settled by the constitutional Law of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic" and this Law.

3. In case of collision between regulations of this Law and regulations of the Civil code of the Kyrgyz Republic regulations of the Civil code of the Kyrgyz Republic are effective. In collision cases between regulations of this Law and regulations of other laws of the Kyrgyz Republic for regulation of bank legal relationship regulations of this Law are effective.

4. Projects of the regulatory legal acts of the Kyrgyz Republic affecting bank legal relationship are subject to obligatory coordination with National Bank.

Article 3. Basic principles of bank legal relationship

The basic principles of bank legal relationship are:

1) legality, honesty, conscientiousness, transparency, rationality, justice, social responsibility;

2) reliability and safety of banking activity;

3) use of various forms and principles of banking and financing, including Islamic principles of banking and financing;

4) other commonly fundamental accepted principles provided by the bank law of the Kyrgyz Republic and the international bank standards.

Article 4. Islamic principles of banking and financing

1. In the Kyrgyz Republic, along with traditional banking and crediting, the Islamic principles of banking and financing are applied.

2. The Islamic principles of banking and financing - the principles and rules of banking operations and transactions according to standards of Sharia.

Standards of Sharia are understood as set of the rules of implementation of economic or other activity developed and approved by the international organizations establishing standards of conducting Islamic banking (The organization of financial accounting and audit for Islamic financial institutions, Council of Islamic financial services).

3. To the banks, non-bank financial credit institutions and other legal entities, persons under surveillance to National Bank performing the activities according to the Islamic principles of banking and financing, regulations of this Law and the bank law of the Kyrgyz Republic are applied taking into account the specifics and features provided by the regulatory legal acts of the Kyrgyz Republic regulating the Islamic principles of banking and financing.

Article 5. Banking terminology

The terms and determinations used in this Law are understood according to their commonly accepted value in the legislation of the Kyrgyz Republic and in the international banking practice if other is not determined by this Law or other bank law of the Kyrgyz Republic.

Chapter 2. Main requirements to provision of banking and payment services, disclosure of information. Rights and interests of clients

Article 6. Bases of provision of banking and payment services

1. Relations of banks, non-bank financial credit institutions and other legal entities, persons under surveillance to National Bank (person providing banking services), with clients are under construction on the basis of the principle of partnership according to this Law, on the basis of civil and other legislation of the Kyrgyz Republic. Clients are understood as the legal entities, physical persons, individual entrepreneurs using banking services.

2. Clients are free in the choice of financial credit institution and banking services. Persons providing banking services shall give upon the demand of the client to him access to constituent, allowing documents and financial statements.

Provisions of this Chapter extend to banks, the non-bank financial credit institutions and other legal entities, persons under surveillance to National Bank including performing the activities according to the Islamic principles of banking and financing taking into account the features provided by provisions of the Islamic principles of banking and financing.

Article 7. Disclosure of information on banking services

1. General terms of provision of banking services are open information and cannot be subject of trade or bank secrecy.

2. To the conclusion of any contract for rendering banking services to the client complete disclosure of information on the provided services shall be provided.

The refusal in provision of exhaustive information on conditions and cost of the provided services is not allowed.

3. Persons providing banking services shall be convinced of complete understanding by the client of conditions of the provided services, the related risks and responsibility.

4. Changes of general terms of provision of banking and payment services, except for information on interest rates and the currency exchange rate, shall be published in mass media or on the official websites at least in ten working days prior to their introduction in force, and also to take place constantly at information stands. Information on interest rate realignments and the currency exchange rate is published without delay.

5. Persons providing banking services open information on the provided services according to the requirements determined by National Bank.

Article 8. Requirements to agreements

1. The contracts signed with clients shall correspond to bank and other law of the Kyrgyz Republic. The contracts signed with clients according to the Islamic principles of banking and financing shall correspond as well to standards of Sharia.

2. Texts of agreements shall be printed with font of the identical size, are stated extremely clearly and availablly to perception and understanding by clients. In coordination with the client the text of the agreement is constituted in the official or official language. If necessary the text of the agreement can be translated into other language.

Article 9. Safety and recoverability of deposits

1. Persons providing banking services shall ensure safety of the money which is on bank accounts and to return them on the first demand of the investors, except as specified, provided by this Law, codes and the laws of the Kyrgyz Republic.

2. Persons providing the banking services having no right to set any restrictions for investors, which are not provided by the bank law of the Kyrgyz Republic.

3. The operating procedure with bank accounts and deposits is established by National Bank.

Article 10. Responsible crediting

1. Persons providing banking services shall perform credit activities (investment of funds) with respect for the principles of responsible crediting: conscientiousness, transparency, reliability, partnership in relation to borrowers, accounting of their economic interests and financial opportunities.

Borrowers shall make the weighed and crucial decisions in case of the appeal to services in crediting.

2. Persons providing banking services shall provide accomplishment of the following requirements when rendering services in crediting of borrowers:

1) the effective interest rate on the credit shall not exceed value of the declared (published) effective interest rate on date of issue of the credit;

2) to the conclusion of the credit agreement complete disclosure shall be provided to clients (potential borrowers) of exhaustive information on loan granting conditions, including information on all-in cost of credit product. The National Bank has the right to establish other requirements to disclosure of information;

3) shall be explained to the borrower, the guarantor/guarantor, the pledger under the signature of consequence of non-execution or improper execution of undertaken obligations under the relevant agreements;

4) to the conclusion of the credit agreement real solvency of the borrower according to requirements of National Bank shall be carefully studied. Concerning the borrower - physical person including his personality, employment figures, the income of family members, amounts of expenses, the number of dependents and other indicators shall be carefully studied;

5) inclusion in conditions of the credit agreement of the additional charges, commission and other payments, in addition to established by the legislation of the Kyrgyz Republic is forbidden; and also other accompanying services on paid basis, regardless of the arrangement with the borrower;

6) the credit agreement shall provide the client's right to refuse on a grant basis receipt of the credit during the period after the conclusion of the agreement and until receipt of money by the client or implementation of payment in payment for property on leasing;

7) the credit agreement shall provide the client's right to early repayment of the credit (leasing) without any commissions, penalties and other payments at any time;

8) in case of the address exhaustive information on the size of the actual debt on the credit, and also the changed payment schedule no later than the next working day shall be provided to borrowers;

9) the persons providing banking services, having no right to change or supplement unilaterally conditions of the credit agreement if it worsens the rights and/or increases the borrower's obligations;

10) the maximum amount of accrued penalty (penalty fee, penalties) on overdue credit debt cannot exceed the value established by National Bank;

11) the real mortgage estate in the form of premises is implemented only through the public biddings if in the course of the address of collection regarding pledge the agreement of the parties does not provide different way of realization;

12) other requirements, stipulated by the legislation Kyrgyz Republic.

3. The National Bank has the right to set the minimum limit of mortgage providing on the credits and other transactions, the maximum ratio of the amount of payments on the credit to the income of the borrower and other requirements to crediting of physical persons.

Article 11. Commission fee, rates and interest rates

1. The sizes of interest rate, commission fee and rates for rendering banking services are established by persons providing banking services, independently according to requirements of the bank law of the Kyrgyz Republic.

The bank performing transactions and transactions according to the Islamic principles of the banking and financing having the right to establish independently conditions of making of transactions and transactions according to requirements of the bank law of the Kyrgyz Republic.

2. Information on the size of interest rate, commission fee and rates for rendering banking services shall be open and available to clients and cannot be subject of trade or bank secrecy.

3. When specifying in advertizing, the publication and distribution of information on the cost of banking services it is necessary to specify without fail nominal and effective interest rates on the issued credits and information on commission fee.

4. Nominal and effective interest rates in comparable calculation shall be specified in agreements.

5. Along with information on the size nominal and effective interest rate, to the conclusion of the credit agreement, persons providing banking services shall provide to the client information on true interest cost in absolute value, showing separately the main credit amount, percent, commission fee and other payments connected with the conclusion and agreement performance.

Interest payments are charged at the nominal rate on the decreasing remaining balance of the main credit amount. Determination and method of calculation of effective interest rate are established by National Bank.

6. Use of the credit products distorting the cost of services and providing indexing of payments on the credit in binding to the currency other than currency of the credit agreement is not allowed.

7. The size of interest rates for term deposits and the credits cannot be changed by bank unilaterally if it worsens the rights and/or increases the client's obligations.

Article 12. Consideration of addresses. Disputes

1. Persons providing banking services shall have the documents regulating procedure for consideration of addresses of clients according to requirements of the bank law. Addresses of clients shall be considered no later than thirty calendar days with provision of the answer in writing in time.

2. Documents by results of the considered addresses of clients shall be stored in accordance with the established procedure at least three years.

3. The disputes arising in the course of agreement performance if they were not resolved by agreement of the parties, are permitted according to the procedure, stipulated by the legislation the Kyrgyz Republic, including within pre-judicial dispute settlement.

Article 13. Responsibility of persons providing banking services

For violation of requirements of this Chapter to persons providing banking services, National Bank has the right to apply the corrective actions provided by this Law and the legislation of the Kyrgyz Republic.

Section II. Banks

Chapter 3. Legal status of bank. Main requirements to organization of banks

Article 14. Bank

1. Bank is the legal entity created in form of business of the joint-stock company (closed or opened) and competent to perform banking activity based on the corresponding license granted by National Bank according to this Law and regulatory legal acts of National Bank.

If this Law does not establish other, banks are implied also as branches of foreign banks.

The National Bank has the right to establish separate standard rates and requirements to activities of branches of foreign banks.

2. The bank is acquired by the status of the legal entity from the date of its state registration according to the legislation of the Kyrgyz Republic. For state registration of bank as the legal entity permission of National Bank about organization of bank is represented.

3. The bank has the trade name, the capital and governing bodies according to requirements of this Law.

4. The bank has the right to perform banking activity based on the license granted by National Bank.

5. The Islamic bank or bank having "Islamic window" performs the activities according to the Islamic principles of banking and financing based on the corresponding license of National Bank.

6. Intervention in legal activities of banks, differently as on the bases provided by this Law and the laws of the Kyrgyz Republic is forbidden to state bodies, their officials.

7. The bank does not answer for obligations the state. The state does not answer for obligations bank, except as specified, when the state itself assumed such obligations or other is provided by the legislation of the Kyrgyz Republic.

8. The bank does not answer for obligations National Bank. The National Bank does not answer for obligations bank.

Article 15. Trade name of bank

1. The bank has the official trade name - complete and (or) reduced. The trade name of bank is specified in the charter of bank. The trade name of bank shall contain specifying on form of business, type of activity (bank) and common noun according to the legislation of the Kyrgyz Republic.

2. The bank is forbidden to use in the trade name or symbolics of the word "mamlekettik", "gosudarstvenny", Kyrgyzstan, "Kyrgyz", "Kyrgyz", Uluttuk, "National", Borborduk, "Central", "Kyrgyz Banky", "Bank of Kyrgyzstan", abbreviations of NBKR, TsBKR, KRUB, KRBB, in the complete or reduced type, in any language and in any combination.

3. Use as trade name of the designations identical or similar to extent of their mixture with trade name of the banks which are earlier created or created in the territory of the Kyrgyz Republic is not allowed.

4. Use of other trade name by bank, except as official is forbidden. The changed trade name of bank is subject to publication by bank in mass media within ten working days from the date of the state re-registration.

5. To other legal entities "bank" and any other derivatives of the word from it is forbidden to use in the names the word.

6. Have the right to use in trade name of bank the word "Islamic" only the banks performing the activities according to the Islamic principles of banking and financing based on the corresponding license.

7. The National Bank has the right to refuse coordination of trade name of bank in case of discrepancy to the requirements established by National Bank.

Article 16. Organization of bank

1. The bank is established according to the civil legislation of the Kyrgyz Republic, taking into account the features provided by this Law.

2. The physical persons and/or legal entities conforming to the qualifying standards established by this Law can be founders of bank.

3. Cannot be founders of bank:

1) the physical persons and legal entities living and/or registered in the territory of offshore zones or having as members of the affiliates registered in offshore zones which list is established by National Bank.

Affiliates are recognized:

- considerable members of the legal entity;

- legal entities in whom the same legal entity is considerable participant;

2) physical persons and legal entities concerning which there are international sanctions accepted by the UN Security Council and also the physical persons and legal entities registered in the states concerning which there are international sanctions accepted by the UN Security Council, forbidding legal relationship with specified persons and obligatory for the Kyrgyz Republic;

3) physical persons and legal entities which in accordance with the established procedure did not provide data on the activities, financial condition, the list of participants and any other data and documents allowing them to identify and study authentically members of the legal entity, including beneficial owners, or provided such data which do not allow to identify and study authentically members of the legal entity, including beneficial owners and also if they did not confirm the faultless goodwill;

4) physical persons and legal entities which in the procedure established by National Bank did not confirm legality of source of origin of the funds allocated for share acquisition of bank;

5) the legal entities financed from republican or local budgets, except for the Cabinet of Ministers of the Kyrgyz Republic;

6) physical persons and legal entities concerning which there are prohibitions or restrictions according to the legislation of the Kyrgyz Republic or the legislation of foreign state.

4. The transactions connected with share acquisition of banks by the legal entities or physical persons specified in part 3 of this Article are the void transactions.

5. Founders - the legal entities who are not engaged in banking and/or financial activities cannot exercise immediate or indirect possession or control of twenty and more percent of voting shares of any type or control over bank. Types and criteria of the financial activities and activities connected with banking and/or financial activities are determined by National Bank.

6. Requirements of this Law for acquisition of threshold equity participation of bank are applied to founders of bank.

7. The restrictions set for founders of bank extend to shareholders of bank, and also persons owning threshold equity participation of bank.

The restrictions specified in Items 3 and 4 of part 3 of this Article do not extend to the shareholders of bank holding bank shares on the amount less than one thousand minimum settlement indicators.

8. The requirements provided in part 3 of this Article extend to founders, shareholders, members of other persons, persons under surveillance to National Bank if other is not provided by the special laws and/or regulatory legal acts of National Bank regulating their activities.

Article 17. Constituent documents of bank

1. Constituent documents of bank in the period of organization and before accomplishment by founders of the obligations are the foundation agreement and the charter, and in subsequent - the charter.

2. The charter of bank, in addition to data, stipulated by the legislation, shall contain surely the following:

1) data on the decision of constituent or general meeting on approval of the charter;

2) the complete and reduced trade name of bank in the state and official languages;

3) legal address (location) of bank;

4) regulations on governing bodies of bank;

5) procedure for decision making by governing bodies of bank;

6) the regulations on fulfillment of requirements of the legislation of the Kyrgyz Republic if open branch or representative office of foreign bank.

3. Changes and amendments in the charter of bank connected with change of trade name, governing bodies, the authorized capital and also other changes influencing bank management are subject to obligatory coordination with National Bank.

4. The written consent of National Bank to the made changes and additions in the charter of bank, except for changes concerning the size and capital structure of bank, is issued no later than one month from the date of receipt of the corresponding petition with documents of bank and in the absence of the bases for refusal in coordination. Coordination of changes concerning the capital of bank is made within 3 months.

5. The procedure and reconciliation procedures of changes and amendments in the charter of bank are established by National Bank.

6. In coordination of changes and amendments in the charter it can be refused the following cases:

1) in case of discrepancy of the submitted documents to qualifying standards or submission of doubtful documents and information;

2) if the decision of general shareholder meeting is made in violation of the law of the Kyrgyz Republic;

3) if the size of the authorized capital becomes less than the established minimum size;

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