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RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of July 4, 2012 No. 28/7

About approval of the Operating procedure of the commercial banks and other financial credit institutions licensed and regulated by National Bank of the Kyrgyz Republic with mortgage property

(as amended on 15-09-2021)

According to 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 operating procedure of the commercial banks and other financial credit institutions licensed and regulated by National Bank of the Kyrgyz Republic with mortgage property" (is applied).

2. To legal Management:

- publish this resolution on the official site of National Bank of the Kyrgyz Republic and in the "Regulations of National Bank of the Kyrgyz Republic" magazine;

- after official publication to send 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.

3. This resolution becomes effective after 15 days after official publication.

4. To management of methodology of supervision and licensing to bring this resolution to the attention of commercial banks, Associations of the microfinancial organizations, National union of credit unions and cooperatives of Kyrgyzstan, Association of credit unions and cooperatives of Kyrgyzstan and OSOO "Finance Company on Support and Development of Credit Unions in the Kyrgyz Republic".

5. To impose control of execution of this resolution on the vice-chairman of National Bank of the Kyrgyz Republic Chokoyev Z. L.

 

Chairman

Z.Asankozhoyeva

Approved by the Resolution of Board of National Bank of the Kyrgyz Republic of July 4, 2012, No. 28/7

Operating procedure of the commercial banks and other financial credit institutions licensed and regulated by National Bank of the Kyrgyz Republic with mortgage property

1. General provisions

1. Ceased to be valid according to the Resolution of Board of National Bank of the Kyrgyz Republic of 17.05.2017 No. 19/11

2. The purpose of this Procedure is accomplishment of the minimum requirements by commercial banks, National bank of development of the Kyrgyz Republic and other financial credit institutions (further - banks/FKO) for strengthening of credit discipline and real ensuring return of the issued credits.

3. Implementation of credit activities of bank/FKO providing profitability, requires development of certain policy of bank in the field of the mortgage providing which is secondary source of repayment of the credits. The mortgage policy shall be part of general credit policy of bank/FKO.

4. The basic concepts applied hereunder are determined in the Law of the Kyrgyz Republic "About pledge", the Standard of the basic concepts and valuation principles approved by the order of the Government of the Kyrgyz Republic of April 3, 2006 No. 217.

At the same time within this Procedure:

Pledge is method of ensuring execution of the cash or expressed in cash obligation on the security of the property right or other corporeal right to property;

Fair value - settlement sum of money for which exchange of property for date of assessment between ready to purchase the buyer would take place and ready to sell the seller in the commercial transaction after due marketing during which each of the parties was effective competently, prudently and without coercion.

Salvage value is asset cost which can be really received in case of asset realization in short terms, without due marketing and advertizing.

Precious metals - gold, silver, platinum and metals of platinum group (palladium, iridium, rhodium, ruthenium, osmium) in any kind and condition: in raw materials, alloys, semifinished products, industrial products, chemical compounds, products, scrap and waste.

Coverage ratio pledge - the relation of mortgage property value (taking into account mortgage coefficient) to credit amount.

Mortgage coefficient - the coefficient of lowering of market value of the pledge subject accepted in loan security considering possible costs of bank for the address of collection and realization of property, and also its forecast cost. 

2. Requirements to pledge objects

5. When implementing the transactions connected with crediting, issue of guarantees and letters of credit, one of methods of ensuring obligation fulfillment of borrowers before bank/FKO is pledge. In addition to pledge, obligation fulfillment can be provided with the guarantee, guarantee and different ways, stipulated by the legislation the Kyrgyz Republic.

6. The subject of pledge shall meet the requirements of the legislation of the Kyrgyz Republic.

7. Banks/FKO shall have without fail the internal regulating documents regulating the basic principles of work with different types of mortgage providing on the credit and also disclosing the main risks connected with the corresponding types of providing on the credit.

Bank/FKO is forbidden to be accepted as mortgage providing:

- the goods in turnover which are outside the Kyrgyz Republic as the single mortgage providing;

- documentary, not documentary securities, including simple and the drafts issued by nonresident issuers of the Kyrgyz Republic and which are in ownership at physical persons and/or kept in the depositaries which do not have high rating, except for the high-rating, highly liquid securities included in the listings of stock exchanges, including the international, and being traded on the stock markets securities of developed countries, and also order securities being part of the double warehouse certificate;

- the assets registered and/or which are in offshore zones which list is determined by authorized state body of the Kyrgyz Republic in the sphere of counteraction to financing of terrorist activities and to legalization (washing) of the criminal income.

8. If credit policy provides acceptance of mortgage property in the providing the credits which is outside the Kyrgyz Republic, in this case the Board of directors of bank/FKO bears responsibility for return of the credits to compliance with the legislation of the Kyrgyz Republic.

9. In case of acceptance as proof of the property which is (registered) outside the Kyrgyz Republic, bank/FKO in case of risk assessment connected with mortgage providing is based on information on the market of personal and real estate on the place of its stay taking into account influence of country risk.

10. Bank/FKO shall analyse market situation of personal and real estate and determine criteria of quality by which that is accepted, or other property as a deposit. Criteria of quality depending on type of pledged property can be various and at least consider the following:

stability of fair price;

durability of storage;

liquidity (sales opportunity during the short-term period);

opportunity to identify goods and safety of consumer properties;

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