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The document ceased to be valid since  August 2, 2016 according to Item 3 of the Resolution of Board of National Bank of the Republic of Kazakhstan of May 30, 2016 No. 144

THE RESOLUTION OF BOARD OF THE AGENCY OF THE REPUBLIC OF KAZAKHSTAN ON REGULATION AND SUPERVISION OF THE FINANCIAL MARKET AND THE FINANCIAL ORGANIZATIONS

of March 27, 2009 No. 66

About approval of the Instruction about prudential standard rates for Islamic banks, their normative values and technique of calculations

(as amended on 17-03-2016)

According to Item 1-1 of article 42 of the Law of the Republic of Kazakhstan of August 31, 1995 "About banks and banking activity in the Republic of Kazakhstan" the Board of the Agency of the Republic of Kazakhstan on regulation and supervision of the financial market and the financial organizations (further - the Agency) DECIDES:

1. Approve the enclosed Instruction about prudential standard rates for Islamic banks, their normative values and technique of calculations.

2. This resolution becomes effective after fourteen calendar days from the date of its state registration in the Ministry of Justice of the Republic of Kazakhstan.

3. To department of strategy and analysis (Abdrakhmanov N. A.):

1) together with Legal department (Sarsenov N. V.) to take measures to state registration of this resolution in the Ministry of Justice of the Republic of Kazakhstan;

2) in ten-day time from the date of state registration of this resolution in the Ministry of Justice of the Republic of Kazakhstan to bring it to the attention of the interested divisions of the Agency and Consolidation of legal entities "The association of financiers of Kazakhstan".

4. To service of the Chairman of the Agency (Kenzhe A. A.) take measures for publication of this resolution in mass media of the Republic of Kazakhstan.

5. To impose control of execution of this resolution on the vice-chairman of the Agency Kozhakhmetov K. B.

Chairman

E.Bakhmutova

Approved by the Resolution of Board of the Agency of the Republic of Kazakhstan on regulation and supervision of the financial market and the financial organizations of March 27, 2009 No. 66

The instruction about prudential standard rates for Islamic banks, their normative values and technique of calculations

This Instruction about prudential standard rates for Islamic banks, their normative values and technique of calculations (further - the Instruction) establishes prudential standard rates for Islamic banks (further - banks), their normative values and technique of calculations. Normative values are expressed by number with three signs after comma.

Are part of prudential standard rates:

minimum size of the authorized capital of bank;

coefficient of sufficiency of equity;

the maximum extent of risk on one borrower;

liquidity rate;

limits of open foreign exchange position;

coefficient of the maximum amount of investments of bank into fixed assets and other non-financial assets;

capitalization of banks to obligations to nonresidents of the Republic of Kazakhstan;

coefficient on placement of part of means of bank in internal assets.

Normative values and technique of calculations of prudential standard rates for banks and their affiliated organizations calculated on the basis of consolidated financial statements are established by authorized body on regulation, control and supervision of the financial market and the financial organizations (further - authorized body).

1. Minimum size of authorized and own capitals of bank

1. The minimum size of authorized and own capitals for again created bank is established in the amount of 10 000 000 000 (ten billion) tenges, except for the case provided by part two of this Item of the Instruction.

The minimum size of authorized and own capitals for again created bank which is the affiliated organization of the nonresident bank of the Republic of Kazakhstan having the minimum long-term credit rating on the international scale in foreign currency is not lower "And" Standard & Poors rating agency or the rating of similar level of one of other rating agencies, is established in the amount of 5 000 000 000 (five billion) tenges.

1-1. The minimum size of equity for other Islamic banks is established in the amount of 10 000 000 000 (ten billion) tenges.

2. The bank redeems from shareholders own shares provided that such redemption will not lead to violation of any of prudential standard rates and other regulations, obligatory to observance, and limits set by authorized body.

2. Coefficient of sufficiency of equity

3. The equity is calculated as capital sum of the first level and the capital of the second level minus positive difference between deposit amount of physical persons and equity according to the data of the balance sheet increased by 5,5.

For the purposes of calculation of the equity specified in part one of this Item:

the deposit amount of physical persons in foreign currency is calculated for the official rate of tenge to foreign currency established by National Bank of the Republic of Kazakhstan for January 1, 2016;

the positive difference between deposit amount of physical persons and equity according to data of the balance sheet joins in the following size:

since January 1, 2016 - 0 (zero) percent;

since February 1, 2016 - 20 (twenty) percent;

since March 1, 2016 - 40 (forty) percent;

since April 1, 2016 - 60 (sixty) percent;

since May 1, 2016 - 80 (eighty) percent;

since June 1, 2016 - 100 (hundred) percent.

For the purposes of this Instruction, in addition to long-term credit rating evaluations of the Standard&Poor agency "s, authorized body are also recognized long-term credit rating evaluations of the Moody agencies" to s Investors Service and Fitch (further - other rating agencies).

For the purposes of this Instruction the following organizations treat international financial institutions:

Asian Development Bank (Asian Development Bank);

African development bank (African Development Bank);

Development bank of the European Council (Council of Europe Development Bank);

Eurasian Development Bank;

European Bank for Reconstruction and Development (European Bank for Reconstruction and Development);

European Investment Bank (European Investment Bank);

Islamic development bank (Islamic Development Bank);

Islamic corporation on private sector development (ICD);

Inter-American Development Bank (Inter-American Development Bank);

International Development Association;

International Finance Corporation (International Finance Corporation);

International Bank for Reconstruction and Development (International Bank for Reconstruction and Development);

International Monetary Fund;

International Centre for Settlement of Investment Disputes;

Multilateral agency of guarantee of investments;

Scandinavian investment bank (Nordic Investment Bank).

4. The capital of the first level is calculated as the amount of fixed capital and the added capital:

1) fixed capital is calculated as the amount:

the paid common shares corresponding to criteria of the financial instruments of fixed capital provided by appendix 1-1 to this Instruction;

since January 1, 2018 the paid common shares issued by subsidiary banks belonging to minority shareholders (third parties);

supplementary paid-in capital;

retained net profit of last years;

retained net profit of the current year;

the cumulative opened reserve determined as the amount of remaining balance on the balance sheet accounts 3510 "Reserve capital" as of January 1, 2014 and 3400 "Dynamic reserves" of the Standard chart of accounts of financial accounting in banks of the second level, the mortgage organizations and Development Bank of Kazakhstan joint-stock company approved by the resolution of Board of National Bank of the Republic of Kazakhstan of January 31, 2011 No. 3, registered in the Register of state registration of regulatory legal acts at No. 6793;

reserves on revaluation of fixed assets and the cost of financial assets, available for sale;

minus the following regulatory adjustments:

own redeemed common shares;

intangible assets, including goodwill;

losses of last years;

losses of the current year;

deferred tax asset minus deferred tax liabilities, except for parts of the deferred tax assets recognized concerning deductible temporary differences;

reserves on other revaluation;

the sales returns connected with transactions on securitization of assets. The deferred revenue in connection with the expectation of the complete or partial income in the future received from securitization conditions belongs to such income;

the income or losses from change of fair value of the financial liability, in connection with change of credit risk according to such obligation;

the regulatory adjustments which are deductible from the added capital, but in connection with its insufficient level subtracted from fixed capital;

the investments specified in Item 4-1 of this Instruction;

2) the added capital joins the termless agreements corresponding to the criteria established in appendix 1-1 to this Instruction as a result of which at the same time there is financial asset at one person and the financial liability or other financial instrument confirming the right to share of the assets of the legal entity which remained later deductions of all its obligations at other person (further - termless financial instruments) and also the paid preferred shares corresponding to the criteria established in appendix 1-1 to this Instruction.

The size of the added capital decreases by the amount of the following regulatory adjustments:

investments of bank into own termless financial instruments by direct or indirect method;

own redeemed preferred shares of bank;

the investments specified in Item 4-1 of this Instruction;

the regulatory adjustments which are deductible from the capital of the second level, but in connection with its insufficient level subtracted from the added capital.

If the amount of the added capital of bank is insufficient for implementation of deduction, then the rest is subtracted from fixed capital of bank.

Investments of bank represent investments of bank in the share (shares in the authorized capital), termless financial instruments, and also subordinated debt of the legal entity.

4-1. The deduction of stock investment (share in the authorized capital), termless financial instruments, subordinated debt (further - financial instruments) banks from the capital of the first level is performed in the following procedure:

1) from fixed capital:

from January 1, 2015 to December 31, 2015:

the amount of the investments constituting less than 10 (ten) percent from issued shares of insurance company, in total exceeding 10 (ten) percent from fixed capital of bank;

the amount of the investments constituting 10 (ten) and more percent from issued shares of insurance company, in total exceeding 15 (fifteen) percent from fixed capital of bank;

since January 1, 2016:

investments of bank into financial instruments of legal entities which financial reporting are not consolidated in case of creation of the financial reporting of bank according to IFRS, according to the following conditions:

if investments of bank into financial instruments of the financial organizations in which the bank has less than 10 (ten) percent of issued shares (shares in the authorized capital) in total exceed 10 (ten) percent from fixed capital of bank after application of the regulatory adjustments specified in item 4 of this Instruction, the excess amount increased by share of investments into common shares in the total amount of investments is deductible from fixed capital;

if investments of bank into common shares of the financial organization in which the bank has 10 (ten) and more percent from issued shares (shares in the authorized capital) and also part of the deferred tax assets recognized concerning deductible temporary differences in total exceed 15 (fifteen) percent from fixed capital of bank after application of the regulatory adjustments specified in item 4 of this Instruction, the amount of excess is deductible from fixed capital.

Since January 1, 2018 the amount of the investments constituting 10 (ten) and more percent from issued shares (shares in the authorized capital) the legal entity, and the deferred tax assets recognized concerning deductible temporary differences does not exceed 15 (fifteen) percent from fixed capital of bank, after application of the regulatory adjustments specified in item 4 of this Instruction.

2) from the added capital:

if investments of bank into financial instruments of the financial organizations in which the bank has less than 10 (ten) percent of issued shares (shares in the authorized capital) in total exceed 10 (ten) percent from fixed capital of bank after application of the regulatory adjustments specified in item 4 of this Instruction, the excess amount increased by share of investments into termless financial instruments in the total amount of investments is deductible from the added capital;

investments of bank into termless financial instruments of the financial organizations in which the bank has 10 (ten) and more percent from issued shares (shares in the authorized capital) are deductible from the added capital;

If the amount of the added capital is insufficient for implementation of deduction, then the amount is subtracted from fixed capital of bank.

3) from the capital of the second level:

if investments of bank into financial instruments of the financial organizations in which the bank has less than 10 (ten) percent of issued shares (shares in the authorized capital) in total exceed 10 (ten) percent from fixed capital of bank after application of the regulatory adjustments specified in item 4 of this Instruction, the excess amount increased by share of investments into subordinated debt in the total amount of investments is deductible from the capital of the second level;

investments of bank into subordinated debt of the financial organizations, in which the bank has 10 (ten) and more percent from issued shares (shares in the authorized capital), of the legal entity, is deductible from the capital of the second level.

If the capital sum of the second level is insufficient for implementation of deduction, then the amount is subtracted from the capital of the first level of bank.

Investments, not deductible at the rate of equity, are weighed on degree of credit risk according to appendix 1 to this Instruction.

5. The capital of the second level is calculated as the amount:

subordinated debt minus the redeemed own subordinated debt of bank;

minus the investments specified in Item 4-1 of the Instruction.

The size of the subordinated debt attracted till the January 1, 2015 which is not corresponding to the criteria established in appendix 1-1 to the Instruction joins in calculation of the capital of the second level according to the following conditions:

in national currency:

since January 1, 2015 - in the amount of 100 (hundred) percent of the amount of subordinated debt in national currency;

since January 1, 2016 - in the amount of 100 (hundred) percent of the amount of subordinated debt in national currency;

since January 1, 2017 - in the amount of 80 (eighty) percent of the amount of subordinated debt in national currency;

since January 1, 2018 - in the amount of 50 (fifty) percent of the amount of subordinated debt in national currency;

since January 1, 2019 - in the amount of 20 (twenty) percent of the amount of subordinated debt in national currency;

since January 1, 2020 the amount of subordinated debt in national currency is excluded from calculation of the capital of the second level;

in foreign currency:

since January 1, 2015 - in the amount of 80 (eighty) percent of the amount of subordinated debt in foreign currency;

since January 1, 2016 - in the amount of 60 (sixty) percent of the amount of subordinated debt in foreign currency;

since January 1, 2017 - in the amount of 40 (forty) percent of the amount of subordinated debt in foreign currency;

since January 1, 2018 - in the amount of 20 (twenty) percent of the amount of subordinated debt in foreign currency;

since January 1, 2019 the amount of subordinated debt in foreign currency is excluded from calculation of the capital of the second level.

The size of subordinated debt with repayment period as of the January 1, 2015 constituting less than 5 (five) years continues to join in calculation of the capital of the second level in the amount of, included as of December 31, 2014, and annually as of January 1 decreases by 20 (twenty) percent from the amount of subordinated debt.

6. Sufficiency of equity of bank is characterized by the following coefficients:

1) coefficient of sufficiency of fixed capital (k 1):

relation of fixed capital to the amount:

assets, contingent and possible obligations weighed on degree of credit risk;

assets, conditional and possible requirements and obligations calculated taking into account market risk;

operational risk;

2) capital adequacy ratio of the first level (k1-2):

relation of the capital of the first level to the amount:

assets, contingent and possible obligations weighed on degree of credit risk;

assets, conditional and possible requirements and obligations calculated taking into account market risk;

operational risk;

3) coefficient of sufficiency of equity (k 2):

equity relation to the amount:

assets, contingent and possible obligations weighed on degree of credit risk;

assets, conditional and possible requirements and obligations calculated taking into account market risk;

operational risk.

The assets, contingent and possible obligations weighed on the risk degrees taken into consideration of coefficients of k 1, k1-2 and k2 join less the reserves created according to IFRS.

Values of coefficients of sufficiency of equity are established by appendix 1-2 to this Instruction.

In addition to values of coefficients of sufficiency of equity the following values of buffers of equity are established:

the requirement to the conservation buffer is fulfilled on permanent basis and constitutes:

since January 1, 2015 – 1 (one) percent;

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