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LAW OF TURKMENISTAN

of March 25, 2011 No. 168-IV

About credit institutes and banking activity

(as amended on 05-06-2021)

This Law determines legal, organizational and economic basis of banking activity in Turkmenistan and is directed to effective functioning of bank system of Turkmenistan.

Chapter 1. General provisions

Article 1. Basic concepts

In this Law the following basic concepts are used:

1) the affiliate - the physical person having opportunity to influence decision making in this credit institute, or the legal entity (credit institute) which is taking the equity or having other interest in other legal entity (credit institute), and on this basis having opportunity to influence decision making in it;

2) bank - credit institute which is granted exclusive right to raise money of physical persons and legal entities, to place them on its own behalf and at own expense on the terms of recoverability, the paid nature and urgency, to open and manage bank accounts of legal entities and physical persons, and also to perform other banking activities;

3) non-bank credit institute - the credit institute having the right according to the legislation of Turkmenistan to perform separate types of banking activities which list is established by the Central bank of Turkmenistan;

4) banking activity - activities of credit institutes for banking operations and transactions;

5) interest rate - quantitative measure of the percent established by credit institutes on different types of the operations performed by them;

6) credit institute - the legal entity (bank or the non-bank credit institute) having the right based on the license granted by the Central bank of Turkmenistan to perform all or separate types of banking activities which are stipulated by the legislation Turkmenistan and which main objective is profit earning;

7) correspondence relations - the contractual relations between credit institutes established for the purpose of implementation of payment and settlement transactions at the request of each other;

8) bank system of Turkmenistan - the two-level system including the Central bank of Turkmenistan (the first level) and credit institutes, including the branches and representative offices of foreign banks registered in Turkmenistan (the second level).

Article 2. Legislation of Turkmenistan on banking activity

1. The legislation of Turkmenistan on banking activity is based on the Constitution of Turkmenistan and consists of this Law, the Law of Turkmenistan "About the Central bank of Turkmenistan" and other regulatory legal acts of Turkmenistan.

2. If the international treaty of Turkmenistan establishes other rules than containing in this Law, then rules of the international treaty are applied.

Article 3. Banking activities and other transactions of credit institutes

1. Treat banking activities:

1) attraction of money of physical persons and legal entities in deposits (deposits);

2) placement of the raised funds, including outside Turkmenistan, on its own behalf and at own expense on the terms of recoverability, the paid nature and urgency;

3) opening and maintaining bank accounts of physical persons and legal entities, including in precious metals;

4) attraction in deposits (deposits) and placement of precious metals;

5) implementation of settlement and (or) cash servicing of legal entities and physical persons, including corresponding banks;

6) implementation of money transfers according to orders of physical persons without opening of bank accounts;

7) purchase and sale of foreign currency in cash and non-cash forms;

8) issue of bank guarantees;

9) trust management of money and other property under the contract with legal entities and physical persons;

10) collection of payment and settlement documents;

11) release into the stream of commerce of bank plastic cards and (or) acquiring;

12) transactions with securities, with financial instruments, including derivatives;

13) other banking activities.

2. The procedure for carrying out the transactions specified in part one of this Article is established by acts of the Central bank of Turkmenistan and internal acts of credit institute according to the legislation of Turkmenistan.

3. Credit institutes, except the banking activities provided by part one of this Article having the right to perform the following transactions and transactions according to the legislation of Turkmenistan:

1) issue of guarantees;

2) carrying out factoring and forfaiting transactions;

3) leasing transactions;

4) purchase and sale of precious metals and (or) gemstones in cases, stipulated by the legislation Turkmenistan;

5) provision in lease to legal entities and physical persons of special rooms or the safes which are in them for document storage and values;

6) provision of services as the financial agent and the managing director of investments;

7) provision of services as the adviser or the financial consultant;

8) provision of information services;

9) other transactions and transactions which are not contradicting the legislation of Turkmenistan.

4. Commission rates of remunerations, rates for rendering banking services are established by credit institutes independently according to the legislation of Turkmenistan.

5. Credit institutes are forbidden to be engaged production, trade (except realization of anniversary, commemorative and numismatical coins), insurance activity (except risks insurance on banking activities).

Article 4. Activities of credit institute in the security market

1. The credit institute is competent to perform release, purchase, sale, accounting, storage and other transactions with securities, and also has the right to exercise trust management of them under the contract with legal entities and physical persons.

2. The credit institute has the right to perform professional activity in the security market according to the legislation of Turkmenistan.

3. The credit institute has no right to grant the loan, to issue the bank guarantee or the guarantee on the security of the shares.

Article 5. Relations of credit institute and state

1. The credit institute does not answer for obligations the state, and the state does not bear responsibility according to obligations of credit institute, except as specified, when they assumed such obligations according to the legislation of Turkmenistan.

2. Credit institutes are not dependent on public authorities in case of adoption of the decisions connected with the current banking activity by them.

Article 6. Merging (association) of credit institutes

1. Credit institutes for protection and representation of interests of the members, coordination of their activities, development of international backgrounds and the solution of other joint tasks of credit institutes can create the associations (association) which are not pursuing revenue generating purposes.

Creation and registration of associations (associations) of credit institutes are performed according to the legislation of Turkmenistan.

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