of May 30, 2014 No. 24/9
About approval of "The instruction about procedure for observance of limits of open foreign exchange positions by credit unions"
1. Approve "The instruction about procedure for observance of limits of open foreign exchange positions by credit unions" it (is applied).
2. 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 credit unions, specialized financial credit institute JSC Finance Company of Credit Unions, the relevant structural divisions of National Bank of the Kyrgyz Republic, regional managements and Representative office of National Bank of the Kyrgyz Republic in Batken Province.
5. To impose control of execution of this resolution on the vice-chairman of National Bank of the Kyrgyz Republic Chokoyev Z. L.
to the Resolution of Board of National Bank of the Kyrgyz Republic of May 30, 2014 No. 24/9
1. This Instruction is developed for the purpose of prevention of currency risks in activities of the credit unions including performing transactions according to the Islamic principles of banking and financing taking into account requirements of standards of Sharia and the special terminology applied by them in case of banking operations (further - KS) as a result of implementation of transactions on attraction of deposits (deposits) from members of KS in foreign currency, provisions to members of KS of the credits on the terms of urgency, recoverability and the paid nature in foreign currency in the presence at KS of the license granted by National Bank on implementation of additional services (transactions) in foreign currency.
2. KS in case of development of domestic policy and procedures for control of observance of limits of open foreign exchange positions shall be guided by requirements of this Instruction.
KS performing transactions according to the Islamic principles of banking and financing in addition shall be guided by the standards of Sharia approved by the Organization of financial accounting and audit for Islamic financial institutions (AAOIFI).
3. For the purpose of this Instruction the following determinations are applied:
The currency risk is risk of receipt of KS of losses owing to change in value of requirements (assets)/obligations of KS expressed in foreign currency in case of adverse change of the currency rate while KS has open foreign exchange position on this currency. The foreign exchange position arises when implementing currency transactions and is exponent of exposure of KS to currency risk.
Currency transactions are transactions of KS on issuance of credits to the participants in foreign currency and to acceptance of deposits (deposits) from the participants in foreign currency, and also other transactions as a result of which requirements (assets) or obligations expressed in foreign currency change.
The net foreign exchange position is difference between requirements (assets) and obligations of KS in each separate foreign currency.
In case of discrepancy of requirements (assets) and obligations of KS in the corresponding currencies the foreign exchange position is considered open, and in case of equality - closed.
Open foreign exchange position KS can be long (in case of excess of requirements (assets) of KS in the corresponding currency over its obligations in the same currency), or short (in case of excess of obligations over requirements (assets)). The long foreign exchange position registers with the sign "+", short - with sign" -".
The official rate - the official rate of foreign currencies in relation to the Kyrgyz som determined by National Bank according to the Rules of determination by National Bank of the Kyrgyz Republic of the official rates of foreign currencies in relation to the Kyrgyz som approved by the resolution of Board of National Bank of the Kyrgyz Republic of March 28, 2013 No. 10/15.
The total foreign exchange position is the sum of all net foreign exchange positions KS on each foreign currency calculated for the "short hand" method according to the procedure, determined in Item 9 of this Instruction.
Limits of open foreign exchange positions are the restrictions set by National Bank expressed in percentage terms open foreign exchange positions (on each foreign currency and total) to the total capital of KC. The total size of the capital of KS as of 1 number of month under report is taken into consideration. Open foreign exchange positions are calculated in the Kyrgyz som on the official rate established by National Bank. Limits of open foreign exchange positions are calculated as a percentage with rounding to two decimal signs after comma.
Date of the conclusion of the transaction is date of achievement by agreement parties on the main terms of transaction (currency types, the exchange rate, the amounts of means, value date, etc.).
Value date is date in which there is transfer of funds for accounts of participants of the transaction.
4. As of the end of each operational day of KS shall calculate the following indicators:
net foreign exchange positions on each foreign currency;
total foreign exchange position.
5. Net foreign exchange positions are calculated separately on each foreign currency as net spot line item in foreign currency. This size is calculated as difference between balance sheet assets and book commitments, including the added percentage income / expenses in this foreign currency. At the same time assets and liabilities join in calculation for net book value.
6. Off-balance obligations do not join in calculation of foreign exchange position.
7. Currency transactions join in calculation of foreign exchange position from the date of the conclusion of the transaction and its reflection in balance, including the transactions containing future value date which is not date of the conclusion of the transaction.
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