LAW OF THE KYRGYZ REPUBLIC

of October 28, 1999 No. 117

About credit unions

Accepted by General Court of Jogorku Kenesh of the Kyrgyz Republic on September 30, 1999

Chapter I. General provisions

This Law determines legal and economic basis of creation and activities of credit unions in the Kyrgyz Republic.

Article 1. Concept of credit union

The credit union is the financial credit institution created in the form of cooperative for the purpose of assistance to the participants (members) by merge of personal savings of members of credit union and their use for mutual lending, and also rendering other financial services including according to the Islamic principles of banking and financing.

Activities of credit unions are regulated by this Law and the bank law of the Kyrgyz Republic.

Features of legal regulation of activities of the credit unions performing the activities according to the Islamic principles of banking and financing are established by regulatory legal acts of National Bank of the Kyrgyz Republic.

Article 2. The main terms and concepts used in this Law

In this Law concepts of the following values are used:

the dividend on savings shares - code name of income gained by the member of credit union on savings share;

the capital - the total amount of all paid savings shares of reserves of credit union and retained earnings;

savings share (share) - cash amount, brought by the member of credit union in the capital and being at the disposal of credit union.

Article 3. Main objectives of activities of credit union

1. Main objectives of activities of credit union are:

- the requirements satisfaction of participants performed by consolidation of their means and provision of the credits by it;

- involvement of members of credit union to participation in management of its activities;

- rendering financial services.

2. Activities of credit union are based on the principles of joint activities, equality of his members, self-government, economic and economic independence.

Article 4. Activities of credit union

1. The credit union to start implementation of the activities shall obtain the license of National Bank of the Kyrgyz Republic granting the right to carrying out the following transactions:

1) attraction of money of the participants by acquisition of savings share by them;

2) provision to members of credit union of the credits on the terms of urgency, recoverability and the paid nature.

2. The National Bank of the Kyrgyz Republic keeps the register of credit unions. Data on the credit unions having the license are published in mass media.

The credit union operates on that territory which is determined in the charter of credit union.

3. Activities of the legal entity as credit union without license of National Bank of the Kyrgyz Republic are forbidden.

For implementation of activities by credit union without license there comes responsibility, stipulated by the legislation the Kyrgyz Republic.

4. The credit union can perform in addition the following banking activities provided that these transactions are specified in the license obtained according to requirements of National Bank of the Kyrgyz Republic:

1) attraction of deposits (deposits) from members of credit union in national and foreign currency;

2) implementation of retail banking services according to the agency agreement with bank - without opening of accounts to clients in credit union;

3) implementation of calculations at the request of members of credit union for the contract with bank or other authorized financial credit institution without opening of the account in credit union;

4) implementation of purchase and sale of foreign currency on its own behalf;

5) provision to members of credit union of the credits on the terms of urgency, recoverability and the paid nature in foreign currency.

5. The credit union has the right to render only those financial services (transactions) which are provided by this Article, and also to perform transactions on financial leasing.

6. The transactions specified in subitems 2 - the 5th item 4 of this Article having the right to perform only credit unions having the license for attraction of deposits.

Article 4-1. Restrictions of activities of credit union

The credit union has no right:

1) to render financial services to persons who are not credit union members except the services specified in subitems 2 and 4 of item 4 of article 4 of this Law;

2) to act as the guarantor and to issue guarantees according to obligations of the members and the third parties;

3) to emit own securities.

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