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RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of June 30, 2010 No. 52/4

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

(as amended on 17-05-2017)

According to articles 7 and 43 of the Law of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic" Board of National Bank of the Kyrgyz Republic

DECIDES:

1. Approve the Provision "About the Minimum Requirements on Credit Risk Management in the Commercial Banks and Other Financial Credit Institutions Licensed by National Bank of the Kyrgyz Republic" it (is applied).

2. Make changes and additions to the resolution of Board of National Bank of the Kyrgyz Republic of July 21, 2004 No. 18/3 "About approval of new edition of the Provision "About Classification of Assets and the Corresponding Allocations to Reserve on Covering of Potential Losses and Losses", registered in the Ministry of Justice of the Kyrgyz Republic on August 23, 2004, registration number 95-04 (is attached).

3. Declare invalid the resolution of Board of National Bank of the Kyrgyz Republic No. 12/7 of April 25, 2005 "About approval of the Regulations on crediting in the commercial banks and other financial credit institutes licensed by National Bank of the Kyrgyz Republic", registered in the Ministry of Justice of the Kyrgyz Republic on June 3, 2005, registration number 69-05.

4. This resolution becomes effective after one month after official publication.

5. After official publication to send to Legal department this resolution to the Ministry of Justice of the Kyrgyz Republic for inclusion in the State register of regulatory legal acts of the Kyrgyz Republic.

6. To management of methodology of supervision and licensing to bring this resolution to the attention of commercial banks, Finance Company on support and development of credit unions and microfinance companies, the attracting term deposits.

7. To impose control of execution of this resolution on the board member of National Bank of the Kyrgyz Republic of Alybayeva S. K. 

Acting Chairman of the board of National Bank of the Kyrgyz Republic

Z.Chokoyev

Approved by the Resolution of Board of National Bank of the Kyrgyz Republic of June 30, 2010 No. 52/4

Changes and amendments in the resolution of Board of National Bank of the Kyrgyz Republic of July 21, 2004 No. 18/3 "About approval of new edition of the Provision "About Classification of Assets and the Corresponding Allocations to Reserve on Covering of Potential Losses and Losses", registered in the Ministry of Justice of the Kyrgyz Republic on August 23, 2004, registration number 95-04

Make the following changes and additions to the Provision "About Classification of Assets and the Corresponding Allocations to Reserve on Covering of Potential Losses and Losses", the Board of National Bank of the Kyrgyz Republic approved by the resolution of July 21, 2004 No. 18/3 "About approval of new edition of the Provision "About Classification of Assets and the Corresponding Allocations to Reserve on Covering of Potential Losses and Losses", registered in the Ministry of Justice of the Kyrgyz Republic on August 23, 2004, registration number 95-04:

- in Item 1.1 of Section 1 to exclude words "the Settlement and Savings Company, the Kyrgyz Agricultural Finance Corporation";

- Item 1.7 of Section 1 after the paragraph "-leasing;" to add with the paragraph "-the debt obligations acquired by means of factoring;";

- in Item 1.7 of Section 1 the paragraph "-leasing;" to state in the following edition:

"-the assets received as a result of leasing;";

- add Section 2 with Item 2.3-1 of the following content:

"2.3-1. Factoring is understood as financing under concession of monetary claim when one party (financial agent) transfers or shall transfer to other party (client) money on account of monetary claim of the client (creditor) to the third party (debtor) following from provision by the client of goods, accomplishment by it of works or rendering services to the third party, and the client yields or shall yield to the financial agent this monetary claim.";

- add Section 3 with Item 3.6-1 of the following content:

"3.6-1. When carrying out classification of the assets of banking group provided to the same borrower or group of the connected borrowers it is necessary to consider the classification of these assets which is carried out by each of members of banking group and to classify these assets by the worst of categories of the classification which is carried out by each member of banking group on these assets.";

- in all text of Item 12.1 of the Section 12 after the word "credit" in various case and numerical forms to add with words ", the debt obligations acquired by means of factoring" in the corresponding cases and numbers.

Approved by the Resolution of Board of National Bank of the Kyrgyz Republic of June 30, 2010 No. 52/4

Regulations on the minimum requirements on credit risk management in the commercial banks and other financial credit institutions licensed by National Bank of the Kyrgyz Republic

1. General provisions

1. This Provision extends to all commercial banks, National bank of development of the Kyrgyz Republic, JSC Finance Company of Credit Unions specialized financial credit institution and microfinance companies attracting term deposits (further - banks).

2. The purpose of this provision is determination of the minimum requirements to forming in banks of adequate management system credit risk.

2-1. This Provision extends to other assets bearing in themselves credit risk.

3. The credit risk is risk of non-execution by clients of the obligations according to terms and terms of the contract.

The credit risk is present at all types of activity of bank where the positive result depends on accomplishment by the borrower, the client of the obligations to bank provided by agreements and/or agreements.

The purpose of credit risk management consists in determination of degree of exposure of bank to credit risk, identification of the reasons of its origin and determination of internal and external upward tendencies of risk based on which it is possible to predict credit risk, and acceptance of necessary measures for its minimization to acceptable level.

3-1. Refinancing is the conclusion of the relevant new agreement for complete or partial repayment of the operating asset.

4. For the purpose of this provision the credits are understood as assets and off-balance obligations, including factoring, leasing and other assets bearing in themselves credit risk. The cross-border credits - the credits issued to residents/nonresidents for activities financing only outside the Kyrgyz Republic, at the same time the concept of the resident/nonresident corresponds to concept of the Law of the Kyrgyz Republic "About foreign currency transactions".

Contractual financing presents itself credit product in the form of short-term financing (up to one year) working capital for obligation fulfillment of the client under the contract with partners.

5. Provisions of this regulation, and also other regulations of National Bank of the Kyrgyz Republic (further in the text National Bank) shall be completely used in the internal documents of bank regulating its credit policy.

2. Credit policy of bank

6. Credit operations of bank are performed according to its domestic credit policy approved by the Board of directors of bank.

7. Credit policy determines strategy, criteria, parameters and procedures by which bank employees in activities for provision, registration of the credits, monitoring and risk management shall be guided.

Credit policy of bank shall be based on the principles of responsible crediting: conscientiousness, transparency, reliability, partnership in relation to borrowers, accounting of their economic interests and financial opportunities.

8. All basic provisions concerning issuance of credits shall be reflected in credit policy:

8.1. General provisions, including:

- list of potential borrowers;

- types of loan depending on the purposes of crediting and other conditions;

- quantitative limits of crediting;

- crediting terms;

- criteria for evaluation of creditworthness of borrowers;

- interest rates and methods of their establishment;

- requirements to financial information of the borrower;

- geographical restrictions;

- issue currency;

- concentration of the credits (on groups of borrowers, geographical sign, on industry, currency and other factors);

- restrictions on the credits issued by the face tied with bank and to affiliates;

- criteria for evaluation of cost and the acceptability of pledge, including on risks assessment, connected with the fact that the subject of pledge is the single housing of the borrower/pledger at the time of registration of the credit;

- control of observance of the procedure of preparation of issuance of credits;

- requirements for issue of guaranty letters by bank (1) (appendix 2);

- ratio of credit portfolio to assets;

- specific weight of each type of loan in credit portfolio;

- and others.

8.2. Procedure for registration of the credit, including:

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