RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of September 30, 2009 No. 39/4

"About the Provision "About Requirements to the Standard Agreements Signed according to the Islamic Principles of Banking and Financing"

Having considered the project of the Provision "About Requirements to the Standard Agreements Signed according to the Islamic Principles of Banking and Financing", being guided by articles 7 and 43 of the Law of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic", the Board of National Bank of the Kyrgyz Republic decides:

1. Approve the Provision "About Requirements to the Standard Agreements Signed according to the Islamic Principles of Banking and Financing" according to appendix to this resolution.

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

3. 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.

4. 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 September 30, 2009 No. 39/4

Regulations on requirements to the standard agreements signed according to the Islamic principles of banking and financing

This Provision is obligatory for use by the commercial banks having the license of National Bank of the Kyrgyz Republic for carrying out transactions according to the Islamic principles of banking and financing, and also the banks having "Islamic window" (further - banks).

Section I. General provisions

1.1. The purpose of this provision is standardization of the standard agreements signed between bank and the client according to transactions, the corresponding Islamic principles of banking and financing.

1.2. In this Provision the determinations stated in the Law to the Kyrgyz Republic "About banks and banking activity" are used.

1.3. The standard agreements signed according to the Islamic principles of banking and financing shall conform to the following requirements:

a) obligatory compliance to standards of Sharia:

 agreements shall not provide receipt of interest income by the parties;

 the agreement cannot be signed if it contains uncertainty (ambiguity) concerning type, the number of the subject of the agreement, and also uncertainty (ambiguity) concerning agreement term;

 the conclusion of the agreements connected with gamblings, production of tobacco and alcoholic products is not allowed;

 agreements shall provide exception of speculative nature of the transaction that is forbidden by standards of Sharia;

b) freedom of the conclusion of agreements:

 the agreement shall be signed on voluntary basis. If one of the parties for any reason was forced to sign the agreement, then this agreement is invalid;

c) availability of the subject of the agreement:

 the subject of the agreement shall be available (to exist) at the time of the conclusion of the agreement;

 if the subject of the agreement is production of goods in the future, then the agreement shall provide the exact description of properties of goods and term of its production;

d) legitimacy of agreements:

 terms of the contract shall not violate the property right of third person;

 the actions following from terms of the contract shall not contradict the legislation of the Kyrgyz Republic, standards of Sharia, and also shall not disturb the public peace and moral ethical principles of agreement parties;

e) shall be without fail determined:

 subject of the agreement;

 quantity and amount of the subject of the agreement;

 rights and obligations of the Parties of the agreement.

If terms of the contract provide profit earning, the agreement shall provide procedure for profit distribution between the parties.

1.4. Banks have the right to approve in accordance with the established procedure subspecies of the standard agreements signed on separate transactions, the corresponding Islamic principles of banking and financing.

1.5. All types of the standard agreements signed by bank according to the Islamic principles of banking and financing shall be approved in accordance with the established procedure with Sharia council of the bank.

1.6. The font used in the contract with all appendices shall be identical in all text of the agreement. Font size shall be at least 12.

1.7. The client has the right ahead of schedule to extinguish the asset bearing in itself credit risk on condition of the notification on it of bank at least in 30 days prior to day of such return, including without application of penalties in case of early repayment after six months from the moment of receipt of financing. Early repayment of one participant of group of joint liability (further - GSO) is possible in the presence of written consent of members of GSO.

1.8. Agreements according to the Islamic principles of banking and financing, including in electronic form, signed by means of the digital signature which allows to certify its accessory to the agreement party, with all appendices to them and other agreements / agreements are as agreed by the parties constituted in official language and if necessary in official language (if necessary the text of the agreement can be translated into other language). This consent is filed/is stored in the file of the client/partner. Agreements are constituted at least in duplicate. One copy of the agreement remains in bank, another - is told to the client.

1.9. The bank is recommended to pay special attention to questions of interaction and assistance to the clients with limited opportunities of health including concerning:

- rules of etiquette in case of communication with the client;

- rules of escort of the client when making by the bank employee and client of necessary transactions within servicing;

- to application of available measures for the most comfortable servicing;

- communication with the client, but not with his attendant if the client did not choose different way of communication;

- minimization of stressful factors and complete (detailed, detailed) explanation of bank procedures in the course of customer service.

1.10. In case of customer service with violation of sight or hearing the bank needs to provide sound reproduction / sign language translation of the text of the agreement and other documents signed by the client at the request of the client.

The bank shall provide to the client not capable owing to the available violations independently to put down the signature, possibility of putting down of the signature in agreements (including the facsimile signature) and other documents signed by the client taking into account requirements of the legislation of the Kyrgyz Republic.

Section II. Types of the standard agreements signed according to the Islamic principles of banking and financing

Chapter 1. Agreement of mudarab

1.1. General provisions.

1.1.1. The agreement of mudarab can be signed in type:

a) agreements on limited/special mudaraba if the investor has the right to establish the list of assets or objects for investment mudariby. At the same time on each investment object the separate agreement between mudariby and the investor is signed;

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