RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of December 23, 2009 No. 50/7

About approval of the Provision "About the Minimum Requirements on Credit Risk Management in Credit Unions"

According to article 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 the Minimum Requirements on Credit Risk Management in Credit Unions" it (is applied).

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

3. After official publication to send to Legal department this resolution to the Ministry of Justice of the Kyrgyz Republic for entering into the State register of regulatory legal acts of the Kyrgyz Republic.

4. To management of supervision of non-bank organizations to bring this resolution to the attention of structural divisions of National Bank of the Kyrgyz Republic, regional managements, the Batken representative office of National Bank of the Kyrgyz Republic and credit unions of the Kyrgyz Republic.

5. To impose control of execution of this resolution on the Board member of National Bank of the Kyrgyz Republic Alybayeva S. K.

Approved by the Resolution of Board of National Bank of the Kyrgyz Republic of December 23, 2009 No. 50/7

Regulations on the minimum requirements on credit risk management in credit unions

1. General provisions

1.1. Ceased to be valid according to the Resolution of Board of National Bank of the Kyrgyz Republic of 31.05.2017 No. 21/9

1.2. The purpose of this provision is determination of the minimum requirements to forming in credit unions of adequate management system credit risk.

1.3. The credit risk is risk of non-execution by borrowers of the obligations according to terms and terms of the contract, and also partners on financial contracts.

The credit risk is connected as with delay of payment because of the borrower owing to its insolvency, and with quality of pledge, the borrower's type on pattern of ownership, industry accessory, availability and warranty types and reliability of guarantors, assessment of accomplishment of earlier these obligations on the credits, the prospects of further development of the borrower, etc.

The credit risk is present at all types of activity of credit union where the positive result depends on accomplishment by the participating borrower of credit union (further the borrower), or partners of the obligations to credit union provided by agreements and/or agreements.

The purpose of credit risk management consists in determination of degree of exposure of credit union to credit risk, identification of the reasons of its origin and determination of internal and external upward tendencies of risk based on which it is possible to predict credit risk, and acceptance of necessary measures for its minimization to acceptable level.

2. Credit risk management

2.1. The board of credit union shall provide availability of effective management system with credit risk which shall include accurately certain credit structure with establishment of the rights and obligations on all aspects of management and monitoring of credit risk, and also the corresponding tools allowing to determine, estimate and control credit risk.

2.2. Determination of credit risk is the process performed on permanent basis which shall be oriented to identification of risks.

2.3. Measurement of credit risk shall be taken taking into account external and internal conditions of this credit union. The instruments of risk measurement used by credit union shall reflect complexity and risk levels, accepted by credit union. The credit union needs to estimate periodically the instruments of risk measurement used by it.

2.3. Control of credit risk. The credit union shall establish and state in politicians, rules and procedures the limits determining the rights and responsibility of staff of credit union. Control restrictions shall be regulated, i.e. the credit union shall have opportunity to make changes to the specified limits in the procedure established in politicians.

2.4. Reports on monitoring of credit risk shall be periodical, exact, timely and shall be represented to responsible persons of credit union for acceptance of the necessary adjusting measures.

2.5. Credit operations of credit union are performed according to its domestic credit policy approved by General meeting of members of credit union. Shall hold general meeting of members of credit union periodically the overview of adequacy of credit policy.

The board of credit union bears responsibility for execution of credit policy for what it shall develop and implement in activities of credit union of policy and procedure for identification, measurement, monitoring and control of credit risk.

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