of October 23, 2013 No. 39/9
About approval of the Provision "About the Minimum Requirements to Standard Agreements of the Microfinancial Organizations and the Credit Unions Concluded according to the Islamic Principles of Banking and Financing"
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 Provision "About the Minimum Requirements to Standard Agreements of the Microfinancial Organizations and the Credit Unions Concluded according to the Islamic Principles of Banking and Financing" it (is applied).
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 and credit unions.
5. 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 October 23, 2013 No. 39/9
This Provision extends to the microfinancial organizations, including the microfinancial organizations having "Islamic window", and the credit unions having the license (certificates) of National Bank of the Kyrgyz Republic for carrying out transactions according to the Islamic principles of banking and financing (further - FKO).
1. The purpose of this provision is standardization of the standard agreements signed between FKO and the client according to transactions, the corresponding Islamic principles of banking and financing.
2. In this Provision the determinations stated in the Laws to the Kyrgyz Republic "About credit unions", "About the microfinancial organizations in the Kyrgyz Republic" and in regulatory legal acts of National Bank of the Kyrgyz Republic are used.
3. The standard agreements signed according to Islamic the principles of banking and financing shall conform to the following requirements:
a) compliance to standards of Sharia:
b) freedom of the conclusion of agreements:
d) legitimacy of agreements:
e) in the agreement, at least, it shall be specified:
- name of the parties;
- subject of the agreement;
- duration of the agreement;
- the main conditions of provision of financing, including with indication of purpose, the amount, remuneration, procedure and repayment period, providing type;
- the rights and the borrower's obligations, including in case of non-execution or improper execution of the agreement obligations assumed by it;
- rights and obligations of FKO;
- the client's right to early repayment of debt at any time, without any penalties, on condition of the notification on this FKO at least in thirty days prior to day of such return;
- if the subject of the agreement is production of goods in the future, then the agreement shall provide the exact description of properties of goods and term of its production;
e) terms of the contract shall not violate the property right of third person;
g) the actions following from terms of the contract shall not contradict the legislation of the Kyrgyz Republic and standards of Sharia.
h) agreements shall not provide receipt of interest income by the parties;
i) the agreement cannot be signed if it contains uncertainty (ambiguity) concerning type, the number of the subject of the agreement, and also uncertainty (ambiguity) concerning agreement term;
j) the conclusion of the agreements connected with gamblings, production and sale of the meat products containing pork, weapon and ammunition, and also other types of business activity, forbidden by Sharia Council of FKO, and also the legislation of the Kyrgyz Republic is not allowed;
k) agreements shall provide exception of speculative nature of the transaction that is forbidden by standards of Sharia;
l) if terms of the contract provide profit earning, the agreement shall provide procedure for profit distribution between the parties.
4. FKO at discretion can bring the additional terms which are not contradicting this Provision and standards of Sharia in the standard agreement signed according to the Islamic principles of banking and financing.
5. FKO has the right to approve in accordance with the established procedure types of the standard agreements signed on separate transactions, the corresponding Islamic principles of banking and financing.
6. All types of the standard agreements signed by FKO according to the Islamic principles of banking and financing shall be approved in accordance with the established procedure with the FKO Sharia council.
7. In case of early repayment by the client of financing and on condition of the notification on this FKO at least in thirty days prior to day of such repayment, FKO has no right to collect penalties from the client.
8. The font used in the contract with all appendices shall be identical in all text of the agreement. Font size shall be at least 12.
9. Will bear responsibility according to the legislation of the Kyrgyz Republic for violation of this provision of FKO.
10. The agreement of mudarab can be signed in type:
a) agreements on limited/special mudaraba if the investor has the right to establish the list of assets or objects for investment mudariby. At the same time on each investment object the separate agreement between mudariby and the investor is signed;
b) agreements on unrestricted/general mudaraba if mudarib has the right to use the provided means at discretion.
11. Act as agreement parties of mudarab mudarib and the investor. FKO can act both as the investor, and as mudarib. IFIs which are not attracting deposits create financing sources (the raised funds) according to the legislation of the Kyrgyz Republic.
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