RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of March 28, 2007 No. 16/5

About the Provision "About Determination of Dominant Position in the Market of Banking Services"

Having considered the project of the Provision "About determination of dominant position in the market of banking services, being guided by item 4 of article 7 of the Law of the Kyrgyz Republic "About banks and banking activity in the Kyrgyz Republic", the Board of National Bank of the Kyrgyz Republic decides:

1. Approve the Provision "About Determination of Dominant Position in the Market of Banking Services" it (is applied).

2. To management of methodology of supervision and licensing together with Legal department to carry out in accordance with the established procedure state registration of this resolution in the Ministry of Justice of the Kyrgyz Republic.

3. This resolution becomes effective from the moment of official publication after state registration in the Ministry of Justice of the Kyrgyz Republic.

4. After publication of the registered regulation to Legal department to inform the Ministry of Justice of the Kyrgyz Republic on publication source (the name of the edition, its number and date).

5. To impose control of execution of this resolution on the vice-chairman of National Bank of the Kyrgyz Republic Bokontayev K. K.

Approved by the Resolution of Board of National Bank of the Kyrgyz Republic of March 28, 2007 No. 16/5

Regulations on determination of dominant position in the market of banking services

I. General provisions

1.1. Ceased to be valid according to the Resolution of Board of National Bank of the Kyrgyz Republic of 08.06.2017 No. 2017-P-14/23-16

1.2. This Provision determines the actions applied by National Bank of the Kyrgyz Republic (further - National Bank) in the field of anti-monopoly regulation, development of the competition and consumer protection in the market of banking, microfinancial and payment services (further - banking services) and the transactions in the Kyrgyz Republic rendered by commercial banks, non-bank financial credit institutions, operators of payment systems both payment institutes and other legal entities, persons under surveillance to National Bank (further - persons providing banking services).

1.3. For the purpose of this provision the concepts specified in Policy and the basic principles of anti-monopoly regulation, development of the competition and consumer protection in the market of the banking services of the Kyrgyz Republic rendered by the commercial banks, non-bank financial credit institutions, operators of payment systems and payment institutes, other legal entities licensed and regulated by National Bank of the Kyrgyz Republic are used. 

II. Signs of dominant position in the market of banking services

2.1. The analysis of factors is made for establishment of availability of dominant position of person providing banking services in the market of banking services and also on any kind of banking services, including:

a) determination of share of person providing banking services in the market of banking services on types of service for the purpose of identification of person providing banking services with the greatest share and extents of its influence on the market in general and/or on separate types of service;

b) availability of competitors and potential competitors;

c) the existing practice of price fixation (rates) in the market of banking services;

d) availability of obstacles for market penetration (determination of barriers of occurrence on the market);

e) the analysis of possible actions of competitors in response to anti-competitive behavior of the person providing banking services, holding dominant position;

e) accounting of temporary aspect of domination;

e-1) affiliation availability;

g) other aspects which can have significant effect on the market of banking services.

2.2. Characteristic signs of dominant position of person providing banking services in the market of banking services (on any kind of banking services) are:

a) the share of person providing banking services in the market of banking services exceeds 35% or the extreme value (the maximum share in the market) established by Board of National Bank;

b) use of person, the providing banking services of dominant position for creation of the conditions limiting the competition in the markets of similar banking services;

c) availability of opportunity to control the prices of certain products and services for the purpose of elimination of competitors, rivals and/or price increase;

d) absence/restriction of possibility of entrance for the market of other person, the providing banking services (availability of the directive decisions limiting possibility of entrance on this market; high costs for receipt of the right to work at certain market, expenses on overcoming "costs for switching" of buyers (for example, advertizing expenses), etc.).

2.3. The dominant position of person providing banking services in the market of banking services is antitrust violation if it is reached in the way:

a) unmotivated refusal to sign the contract with consumers of banking services;

b) compulsions of the consumer to the conclusion of the agreement on the unprofitable, unacceptable for the consumer, or not relating to the subject of the agreement conditions;

c) establishments of unreasonably high (low) rates for the provided services;

d) creations of obstacles of access to the market of banking services to other person providing banking services;

e) rendering negative impact on competitive environment in the market of banking services by the actions contradicting the antitrust law.

2.4. The dominant position of person providing banking services can be result of both external, and internal factors, including:

- state policy, including the differentiated system of taxes, provision of subsidies and other privileges;

- merges, accessions, and also liquidation;

- activities of person providing banking services on elimination of competitors from the market by non-competitive methods;

- obvious and secret agreements between person providing banking services.

2.5. Excess of person providing the value limiting banking services (the maximum share in the market) established by National Bank concerning share in the market of banking services is not antitrust violation. At the same time person providing banking services shall not abuse the dominant position in the market of banking services.

Abuse of dominant position actions of persons providing banking services which have are or can have the result essential restriction of the competition and/or infringement of interests of other persons providing bank rival services in the market of banking services.

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