LAW OF THE KYRGYZ REPUBLIC

of May 7, 2008 No. 78

About protection of bank deposits (deposits)

Accepted by Jogorku Kenesh of the Kyrgyz Republic on March 7, 2008

This Law is part of the bank law of the Kyrgyz Republic and is directed to creation of precepts of law of activities of system of obligatory protection of deposits (deposits) of physical persons in banks, in microfinance companies and the housing and savings credit companies of the Kyrgyz Republic. The system of protection of deposits is directed to protection of investors of banks, microfinance companies and housing and savings credit companies in case of approach of warranty case by provision of compensations in the amount and the methods provided in this Law and also on assistance of banking system stability in general. In this Law the legal basis of forming, administration and financing of system of protection of deposits, creation and implementation of activities of the independent Agency on protection of deposits of the Kyrgyz Republic are determined.

Chapter 1. General provisions

Article 1. The relations regulated by this Law

1. This Law governs the relations on creation and functioning of system of obligatory protection of deposits (deposits), housing savings deposits (deposits) (further - deposits) investors in banks, in microfinance companies of the Kyrgyz Republic and in the housing and savings credit companies (further - system of protection of deposits), to forming and use of Deposit Protection Fund, payment of compensations for deposits in case of approach of warranty cases, and also the relations between the Agency on protection of deposits, commercial banks, microfinance companies, the housing and savings credit companies, National Bank, public authorities and other relations arising in this sphere.

2. This Law does not extend to different ways of protection of deposits of physical persons for ensuring their return.

3. Operation of this Law extends to banks, microfinance companies and the housing and savings credit companies regarding execution by the Agency on protection of deposits of function on payment of compensation for the deposit. Provisions of this Law extend to other financial credit institutions only in the cases provided by this Law.

To the banks and microfinance companies performing activities according to the Islamic principles of banking and financing, regulations of this Law 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.

4. The relations arising in connection with creation and functioning of system of protection of deposits are regulated by this Law and regulatory legal acts of the Kyrgyz Republic adopted according to it.

Article 2. The concepts used in this Law

For the purposes of this Law the following concepts are used:

Bank - the resident banks of the Kyrgyz Republic, and also the branch of foreign bank created according to the legislation of the Kyrgyz Republic and which are subject to licensing (having the license) National Bank on the right of carrying out banking activities.

Participating bank - the bank entering the register of banks according to this Law.

Agent bank - the bank which is selected by Agency on protection of deposits for payments of compensations to investors according to requirements of this Law.

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

The housing and savings credit company - the non-bank financial credit institution having the license of National Bank for the right of carrying out separate banking activities which activities are directed to accumulation of money of investors in housing savings deposits (deposits) and provision to her investors of the credits for individual construction and purchase of apartment houses (apartments) or for improvement of housing conditions, including within the state housing programmes.

The housing and savings credit participating company - the housing and savings credit company entering the register of the housing and savings credit companies according to this Law.

Microfinance company - the specialized financial credit institution created in the form of joint-stock company, which obtained the license of National Bank and performing microcredit of legal entities and physical persons and other transaction types, including attraction of term deposits from physical persons and legal entities.

The microfinancial participating company - the microfinance company entering the register of microfinance companies according to this Law.

Compensations on the deposit - the sum of money which is subject to payment to the investor according to this Law in case of approach of warranty case.

The contribution (deposit) is the amount of money received by the bank, microfinance company having the corresponding license of National Bank, from the investor, and also cash amount, placed on the settlement or deposit account by the individual entrepreneur, on the terms of recoverability (irrespective of, assume these conditions complete or partial recoverability or recoverability of the bigger amount). The contribution is also understood as the electronic money emitted by bank which holders are physical persons and individual entrepreneurs.

Housing savings deposit (deposit) - cash amount in national currency, the housing conditions of the investor of the housing and savings credit company deposited by investors of the housing and savings credit company to account of the housing and savings credit company and directed to improvement (further referred to as in this Law also with the deposit).

Deposit base - cash amount, placed in bank or microfinance company on deposit accounts of legal entities and physical persons in the form of deposits, and for the housing and savings credit company - the total amount of the deposits placed on accounts of her investors. The deposit base also joins the electronic money emitted by bank which holders are physical persons and individual entrepreneurs. 

The investor - physical person which introduced the deposit in bank, in microfinance company or in the housing and savings credit company, and the individual entrepreneur performing individual business activity without formation of legal entity who placed on bank accounts or on accounts of microfinance company the money in connection with the activities.

At the same time the investor of the housing and savings credit company deposits money to account in the housing and savings credit company for the purpose of receipt of the credit for individual construction, purchase of the apartment house (apartment) or for improvement of housing conditions.

The investor is also understood as the physical persons and individual entrepreneurs who are holders of the electronic money emitted by bank.

Fees - the money allocated for forming of Deposit Protection Fund according to the procedure and form, determined by this Law, in the form of admission, initial, calendar and extraordinary fees.

Protection of deposits (system of protection of deposits) - circle of the legal relationship regulated by this Law.

The admission fee - the money allocated by newly created banks, microfinance companies, the housing and savings credit companies for the introduction in system of protection of deposits according to this Law.

The initial contribution - the money allocated by the operating banks after the introduction of this Law in force for forming of Deposit Protection Fund in the amount, form and the terms determined by this Law.

Calendar fees - the money which is quarterly sent by participating banks, the microfinancial participating companies and the housing and savings credit participating companies to Deposit Protection Fund according to this Law.

Extraordinary fee - the money allocated by participating banks, the microfinancial participating companies and the housing and savings credit participating companies in Deposit Protection Fund in addition to calendar fees, in case of insufficiency of means for covering of obligations, according to requirements of this Law.

Newly created bank - the bank created according to the current legislation of the Kyrgyz Republic after entry into force of this Law according to part 1 of article 43 of this Law.

Newly created microfinance company - the microfinance company created according to the current legislation of the Kyrgyz Republic, attracting deposits.

The operating bank - the bank having the license of National Bank for banking operations for the date of entry into force of this Law (further - bank).

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