RESOLUTION BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of December 29, 2004 No. 36/13

About approval of the Instruction "About procedure for observance of limits of open foreign exchange position and open line item in precious metals commercial banks in the territory of the Kyrgyz Republic"

Having considered the draft of the Instruction "About procedure for observance of limits of open foreign exchange position by commercial banks in the territory of the Kyrgyz Republic", being guided by Articles 7, 43 Laws of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic", the Board of National Bank of the Kyrgyz Republic decides:

1. Approve the Instruction "About procedure for observance of limits of open foreign exchange position and open line item in precious metals by commercial banks in the territory of the Kyrgyz Republic" it (is applied).

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

3. Enact this resolution from the moment of state registration in the Ministry of Justice of the Kyrgyz Republic and the subsequent official publication.

4. From the moment of enforcement of this resolution to declare invalid the resolution of Board of NBKR No. 18/5 of July 21, 2004. "About approval of the Instruction "About procedure for maintaining limits of open foreign exchange position of commercial banks in the territory of the Kyrgyz Republic", registered in the Ministry of Justice of the Kyrgyz Republic for No. 88-04 of August 3, 2004.

5. To management of methodology of supervision and licensing of National Bank of the Kyrgyz Republic to bring this resolution to the attention of commercial banks, JSC Settlement and Savings Company.

6. After publication of the registered regulatory legal act to inform the Ministry of Justice of the Kyrgyz Republic on publication source (the name of the edition, its number and date).

7. To impose control of execution of this resolution on Omurzakova G. M., the vice-chairman of National Bank of the Kyrgyz Republic.

Approved by the Resolution of Board of National Bank of the Kyrgyz Republic of December 29, 2004 No. 36/13

The instruction "About procedure for observance of limits of open foreign exchange position and open line item in precious metals commercial banks in the territory of the Kyrgyz Republic"

This Instruction establishes procedure of payments of open line item and control of observance of limits of open line item of foreign exchange position and open line item in precious metals (further - open line item) the commercial banks operating in the territory of the Kyrgyz Republic. For goal achievement and accomplishment of tasks of National Bank of the Kyrgyz Republic (further - National Bank) the Board of National Bank the separate resolution can change values of the limits of open line item set in this Instruction to limited term.

This procedure for observance of limits of open line item extends to all commercial banks and to National bank of development of the Kyrgyz Republic (further - banks).

In case of development of domestic policy and control procedures of risks the bank shall be guided by requirements of this Instruction.

I. Determinations

1. For the purpose of this Instruction the following determinations are applied:

1.1. The currency risk is risk of receipt of losses by bank owing to change in value of requirements (assets)/obligations of bank expressed in foreign currency in case of adverse change of the currency rate while the bank has open foreign exchange position on this currency. The foreign exchange position arises when implementing currency transactions and is exponent of exposure of bank to currency risk.

1.2. Currency transactions are the transactions connected with exchange, purchase/sale (converting) of foreign currency and also other transactions as a result of which requirements (assets) or obligations expressed in foreign currency change.

1.3. The net line item is difference between requirements (assets) and obligations of bank, both balance sheet, and off-balance, on each foreign currency separately and by each type of precious metal separately (gold, silver, platinum), except for numismatical (collection) coins.

1.4. The open line item is discrepancy of requirements (assets) of bank in foreign currency / type of precious metal and obligations of bank in the same foreign currency / in the same type of precious metal, and in case of equality - the line item is considered closed.

On each foreign currency and by each type of precious metal the open line item is calculated separately.

1.5. The opened line item jar can be long (in case of excess of requirements (assets) of bank in the corresponding currency / the corresponding type of precious metal over its obligations in the same currency / the same type of precious metal), or short (in case of excess of obligations over requirements (assets)). The long foreign exchange position registers with the sign "+", short - with sign" -".

1.6. The total line item is the amount of all net line items of bank on all foreign currencies or by all types of precious metals, the "short hand' calculated with use of method, determined in item 2.5 of this Instruction.

1.7. Limits of open line items are the restrictions set by National Bank expressed in percentage terms open foreign exchange positions (on each foreign currency / by each type of precious metal and total) to the net total capital of bank. Limits of open foreign exchange positions are calculated as a percentage with rounding to two decimal signs after comma.

1.8. The net total capital of bank - this size, is calculated according to requirements of the Instruction for determination of standards of sufficiency (adequacy) of the capital of commercial banks of the Kyrgyz Republic. For the purpose of this Instruction when calculating limits of open line items value of the net total capital of bank as of the 1st day of every month is used.

1.9. Date of the conclusion of the transaction is date of achievement by agreement parties on the main terms of transaction (currency types, the exchange rate, the amounts of means, value date, type, mass of precious metal, etc.).

1.10. Value date is date in which there is transfer of funds for accounts of participants of the transaction.

II. Procedure of payments of open line items

2.1. As of the end of each working day the bank shall calculate the following indicators:

- net foreign exchange positions on each foreign currency;

- total foreign exchange position;

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