of September 23, 2009 No. 38/8
"About approval of the Provision "About the Transactions Performed according to the Islamic Principles of Banking and Financing"
Having considered the project of the Provision "About the Transactions Performed according to the Islamic Principles of Banking and Financing", being guided by the Laws of the Kyrgyz Republic "About National Bank 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 the Transactions Performed according to the Islamic Principles of Banking and Financing" according to appendix to this resolution.
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.
Alapayev M. O.
Approved by the Resolution of Board of National Bank of the Kyrgyz Republic of September 23, 2009 No. 38/8
1.1. Ceased to be valid according to the Resolution of Board of National Bank of the Kyrgyz Republic of 31.05.2017 No. 21/10
1.2. The purpose of this provision is establishment of procedure by commercial banks, including the banks having "Islamic window" (further - banks) the separate transaction types corresponding to the Islamic principles of banking and financing.
1.3. The bank performing transactions according to the Islamic principles of financing shall invest means only in the business permitted by Sharia.
1.4. In bank Sharia council shall be created. All politicians and standard agreements of bank shall be approved by Sharia council.
1.5. The bank when implementing transactions by the Islamic principles of banking and financing shall observe requirements for identification of the personality and transactions for the purpose of counteraction to financing of terrorist activities and to legalization (washing) of the criminal income, according to the procedure, established by the legislation of the Kyrgyz Republic.
2.1.1. The agreement of mudarab is agreement under which one investing party - provides the capital (money), and other party (mudarib) - accepts this capital and manages it for the purpose of profit earning which is in proportion distributed between the parties in accordance with the terms of the agreement. The debt/obligation of mudarib or other party to the investor cannot be used as the capital in the agreement of mudarab.
If during the course of performance agreements are received losses, the investor incurs losses in the amount of the provided capital sum, and mudarib in that case does not earn reward for the work. This rule for apportionment of losses is effective if losses arose not because of mudarib.
If losses during the course of performance of the agreement resulted from guilty or wrongful acts of mudarib, these losses shall become covered at the expense of mudarib. At the same time the investor has the right to receive from mudarib the amount transferred earlier under the agreement due to providing and if it will be not enough, at the expense of other property of mudarib.
2.1.2. Agreements of mudarab are divided into the following types:
The agreement of limited (special) mudarab - the agreement of mudarab under the terms of which the investor establishes asset types or projects for investment mudariby.
The agreement of unrestricted (general) mudarab - the agreement of mudarab under the terms of which mudarib has the right to use means at discretion in any of types of the activities.
The agreement of open mudarab - the agreement of mudarab under the terms of which the investor has the right ahead of schedule (on the first demand of) to receive the money provided to them at mudarib. In this case the bank (if it acts as mudarib) pays to the investor profit for the last complete period (month, year).
The parties can approve gradual withdrawal of the capital the investor.
2.1.3. The agreement of mudarab is applied by bank in two cases:
- as the tool on attraction of financial resources;
- as the instrument of financing.
2.1.4. The agreement of mudarab shall be signed in writing.
2.1.5. Bank, acting as the investor, shall carry out business plan assessment, determine objects for investment, carry out assessment of activities of the client and advise him in subsequent in course of execution of the agreement.
2.1.6. In case of issue of money under the agreement of limited (special) mudarab the bank shall include in the agreement of condition, forbidding mudariba inappropriate use of money, including issue of loans to the third parties and provision of gifts, and donations on the charitable purposes at the expense of means of financing.
2.1.7. For the purpose of proper execution of agreement obligations of mudarab bank, acting as the investor, shall receive providing from the client in the form of pledge, the guarantee, guarantee, deposit and other types of providing, stipulated by the legislation or the contract for the amount equal to the amount provided by bank under the agreement.
2.1.8. Shall be provided in the agreement of mudarab at least:
1) specifying by sight agreements;
2) depending on agreement type - specifying on investment object, regulations on impossibility of early withdrawal of deposited amount, possibility of mixture of the means received from the investor with means of the third parties;
3) the size of the provided amount;
4) method of providing obligations;
5) rights and obligations of the Parties;
6) responsibility of the parties for non-execution or improper execution of the obligation about indemnification, arisen during the course of performance agreements as a result of guilty or wrongful acts;
7) procedure for profit distribution and losses between the parties;
8) conditions of execution by agreement parties independently or with involvement of qualified persons;
9) accounting of use of the received money, allowing upon termination of the agreement or separate stage to determine the got profit which is subject to distribution between the parties;
10) procedure for termination of the contract.
2.1.9. The profit of agreement parties is determined according to the procedure, provided by the agreement, in share from the got profit. The procedure and terms of profit distribution from transactions under the agreement of mudarab are established in accordance with the terms of the agreement.
2.1.10. The agreement of mudarab cannot be terminated unilaterally if:
- mudarib started agreement performance and already uses means during business activity;
- agreement term did not expire.
2.2.1. The agreement of ball / musharaka - the partnership agreement between two or more parties by means of which each partner grants certain amount of money or with the consent of all partners - tangible assets that grants to each partner the right to process case, using company assets on the terms of profit distribution according to the agreement of ball / musharaka, and each partner incurs losses according to the contribution to the general capital of the company.
2.2.2. The agreement of ball / musharaka is classified by two main categories:
1) consolidation of participants without formation of legal entity;
2) consolidation of participants with formation of legal entity, including, partner partnerships and or the legal entities created according to the legislation of the Kyrgyz Republic.
If other does not follow from the subject of the agreement, the agreement of ball / musharaka is applied both to associations of participants without formation of legal entity, and to associations with formation of legal entity.
The decreasing musharaka is form of partnership on the basis of the agreement of ball / musharaka in which one of partners promises to redeem gradually share of other partner until the property right to share does not pass completely to it.
The buying partner is allowed to give the obligation to take shares only. This obligation shall be independent of the partnership agreement. Besides, the sale and purchase agreement shall be independent of the partnership agreement. It is not allowed that one agreement was signed on condition of the conclusion of other agreement.
2.2.3. In the agreement the decreasing musharaka general rules of the agreement of ball / musharaka are applied, and the decreasing musharaka is not allowed to include in the agreement any provision which grants to any party the right to withdraw the share from the capital of the company.
The agreement of ball / musharaka consists in writing. If based on the agreement the legal entity is created, it is subject to registration according to the procedure, established by the legislation of the Kyrgyz Republic. In the formation document of partnership or the charter of the legal entity it is necessary to formulate the partnership purpose accurately.
2.2.4. The bank is allowed to sign partnership agreements if the financial resources or property provided by the parties for the purpose of implementation of partner activities proceed from admissible sources. During creation of the legal entity based on partnership all necessary confirmations about observance of rules and the principles of Sharia in case of accomplishment of transactions in the course of partner activities, including, implementation of management in case of observance of rules of Sharia shall be received.
2.2.5. When amending the partnership agreement if profit distribution shares are reviewed, then each partner shall incur losses according to the contributed share in the capital.
2.2.6. If tangible assets (goods) are brought in the capital of the legal entity founded on the basis of the partnership agreement of ball / musharaka, monetary value of such assets shall be determined on the basis of independent assessment.
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