RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of September 25, 2013 No. 35/14

About approval of the Regulations on the minimum requirements on credit risk management in the microfinancial organizations which are not attracting deposits (deposits)

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 Regulations on the minimum requirements on credit risk management in the microfinancial organizations which are not attracting deposits (deposits) it (is applied).

2. Declare invalid the resolution of Board of National Bank of the Kyrgyz Republic No. 45/8 of November 28, 2012 "About requirements to the microfinancial organizations".

3. To legal Management:

- publish this resolution on the official site of National Bank of the Kyrgyz Republic;

- 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.

4. To management of methodology of supervision and licensing to bring this resolution to the attention of the microfinancial organizations which are not attracting deposits, and Associations of the microfinancial organizations.

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

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

Approved by the Resolution of Board of National Bank of the Kyrgyz Republic of September 25, 2013 No. 35/14

Regulations on the minimum requirements on credit risk management in the microfinancial organizations which are not attracting deposits (deposits)

1. General provisions

1. This Provision extends to microfinance companies, not attracting deposits (deposits), the microcredit companies and the mikrocreditny agencies including performing the transactions by the Islamic principles of banking and financing and having "Islamic window" taking into account special terminology (further - IFI).

2. The purpose of this provision is determination of the minimum requirements to system of the organization of credit risk management, following from all transactions and transactions, including to the credit agreement and contracts by the Islamic principles of banking and financing for Islamic IFIs, to procedure for its conclusion and to forming in IFI of adequate management system credit risk.

3. IFI shall perform the activities according to the laws of the Kyrgyz Republic "About the microfinancial organizations in the Kyrgyz Republic", "About banks and banking activity" and other legislation of the Kyrgyz Republic, and also the Charter of IFI, based on the license/certificate of National Bank of the Kyrgyz Republic (further - National Bank).

4. Transactions of microcredit are performed within the restrictions set by the legislation of the Kyrgyz Republic on the conditions stipulated with the borrower at the expense of own and borrowed funds raised from legal entities, founders (shareholders), financial credit institutions and/or international financial institutions.

5. For the purposes of this provision the following basic concepts are applied:

- The payment schedule - the annex to the credit agreement determining terms and the amounts of return of the microcredit and interest payment;

- Group of joint liability (further - GSO) - voluntary consolidation of participants - physical persons (at least 3 persons) which jointly are charged for accomplishment of obligations of each member of group and bear responsibility for complete return of the received borrowing facilities solidary, under any circumstances, according to the legislation of the Kyrgyz Republic;

- The group credits - the credits of GSO under joint liability of members of GSO;

- The borrower - physical person or legal entity, GSO which obtained the credit in IFI for particular purposes on the terms of the paid nature, urgency, recoverability;

- The client - physical person or legal entity, GSO which addressed for services or using services of IFI;

- Conflict of interest - situation in case of which personal interest of the employee of IFI can influence process decision making on issuance of credit and, thus, bring damage to interests of IFI;

- Credit risk - risk of non-execution by borrowers of the obligations on return of assets of IFI according to terms and terms of the contract;

- The microcredit / mikrofinansirovaniye by the Islamic principles of banking and financing (further - the credit) - the money provided to physical person, GSO or the legal entity according to the Charter of IFI and article 2 of the Law of the Kyrgyz Republic "About the microfinancial organizations in the Kyrgyz Republic". The loan amount cannot exceed the maximum permissible size established by National Bank. Also for the purpose of this provision the credits are understood as the assets and off-balance obligations bearing in themselves credit risk;

- Supervisory body - the governing body of IFI performing the common directorship of IFI (Council of directors / the Supervisory board or other authorized person according to constituent documents of IFI);

- Executive body - the governing body of IFI performing joint or individual current management of IFI (Правление/Председатель/Директор/Управляющий or other authorized person according to constituent documents of IFI);

- The problem credits - the credits on which the borrower does not satisfy the term of the contract with IFI or owing to any circumstances (for example, approach of force majeur circumstances or financial straits) accomplishment of obligations to IFI and loan repayment is threatened;

- Force majeur circumstances - the circumstances which are including, but not limiting such events as natural disasters (floods, earthquakes, the fires and other natural or technogenic catastrophes), epidemics, introduction of emergency state, mass riots, marauding, military operations, etc.

- The cooling-off period is period of time after signing of the credit agreement during which IFI does not list money to the borrower. During this period the borrower has the right to refuse receipt of the credit.

5-1. Ceased to be valid according to the Resolution of Board of National Bank of the Kyrgyz Republic of 21.12.2022 No. 2022-P-12/81-7-(NFKU)

5-1. The terms and determinations used regarding the Islamic principles of banking and financing correspond to terms and the definitions given in the legislation of the Kyrgyz Republic and regulatory legal acts of National Bank regulating activities of IFI, performing activities for the Islamic principles of banking and financing.

2. Main requirements to the organization of credit risk management

6. Realization of main objective of IFI - provision of available services to the population, assistance in overcoming poverty, increase in the employment level, assistance to development of entrepreneurship and social mobilization of the population of the Kyrgyz Republic - is possible by means of issue of the microcredits:

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