Representatives of the NBKR took part in the 26th meeting of Council of Heads of Central (National) Banks of EurAsEC Member States. 

The following matters were discussed at the meeting: prospects for development of the banking sector of the EurAsEC member states, proposals for the harmonization of mechanisms and principles for regulation of the activities of banking participants of the retail payment services market, cross-border transfer of funds by individuals of EurAsEC member states. 

All participants expressed interest in discussing and sharing experiences in the field of protection of rights of financial services consumers of the EurAsEC member states. In the end, after the meeting, it was recommended to continue work on improving the legislative and regulatory framework of the Community and implementation of best practices to protect the rights of financial services consumers. The meeting adopted the report of the Coordinating Council on the production of banknotes, numismatic market development, issuance of commemorative and collector coins, fight against counterfeiting. 

Delegation of the Swiss State Secretariat for Economic Affairs (SECO) visited the National Bank of the KR. 

The purpose of the SECO's visit to the main bank of the country was to discuss future assistance within the World Bank project on Financial Sector Development in Kyrgyzstan. In particular, the visit covered discussion about provision of the grant to the National Bank by donors – the World Bank and SECO – whose funds will be channeled to create a new system of information and communication technologies of the NBKR and reform the legal and methodological framework to improve oversight of the banking sector and NBFIs.  

As noted by the SECO representatives, currently, this project with the World Bank is in the harmonizing process, technical issues are being solved, in particular, monitoring indicators of the project are being determined. 

The Chairman of the NBKR thanked the representatives of the Swiss State Secretariat for Economic Affairs for the assistance provided to the National Bank in the financing of several projects which would not have been possible without the support of SECO. In particular, these are the projects on the Investigation of Cross-Border Trade and Pricing Mechanisms in the Country, Public Debt Management, Development of the Government Securities Market, as well as Financial Programming/Modeling, Macroeconomic Forecasts, etc. 

REFERENCE  

The Swiss State Secretariat for Economic Affairs (SECO) is a federal government center conducting expertise of all material matters related to economic policy. The main objective is to ensure sustainable economic growth through regulation of economic policy. 

SECO Directorate for Economic Development together with the Swiss Agency for Development and Cooperation (SDC) is working with developing countries, Eastern Europe and Central Asia, as well as with the ten new EU member states, helping them move to market economy and democracy and ensure the long-term political and economic stability. 

SECO is involved in the provision of measures supporting reforms in macroeconomic policies, programs and infrastructure projects for the promotion of trade and investment. Important principles of cooperation are reliable management and the mobilization of private resources. SECO together with the World Bank Group and regional development banks make contributions to the multilateral financial assistance programs. 

Switzerland has been supporting the development of the Kyrgyz Republic since 1994. The first missions of the Swiss development organizations have begun to visit the country in 1993. An official cooperation agreement between the Government of the Kyrgyz Republic and Switzerland was signed on November 14, 1994. In 1995, Switzerland declared Kyrgyzstan a priority country for the provision of assistance in development. In 1997, the Swiss Cooperation Office in Kyrgyzstan, which coordinates projects of two government agencies in Switzerland - Swiss Agency for Development and Cooperation and the State Secretariat for Economic Affairs (SECO) - was opened in Bishkek. 

The total annual budget of the Swiss projects in Kyrgyzstan is about 13-14 million USD. Over the past 17 years, Switzerland has provided support to Kyrgyzstan in the amount of about 250 million USD. Many of the projects are implemented by local partners, international organizations, Swiss NGOs and companies. 

The Eurasian Group on Combating Money Laundering and Financing of Terrorism adopted the Report on Progress in Kyrgyzstan. 

The NBKR staff, headed by Deputy Chairman of the NBKR Zair Chokoyev, participated in the 16th Plenary Meeting of the EAG, which was attended by representatives of the FATF, IMF, World Bank, MONEYVAL, as well as by members of the financial intelligence units of Turkey, Italy, Germany, USA, Spain, Switzerland, France and Luxembourg. 

In Moscow, the Kyrgyz delegation presented information on the status of implementation of the Group’s Report on the Review of the FATF international cooperation based on the results of the study of the national system of the Kyrgyz Republic. The Report on Progress in Kyrgyzstan was prepared in the period from January to April 2012. Oversight statistics of the compliance of CML/FT requirements by the Kyrgyz Republic for 2011 and Q1 2012 was also announced. Participants of the meeting noted the progress of Kyrgyzstan in many FATF recommendations. Our country received additional recommendations for further improvement of national AML\CFT legislation in accordance with the new FATF recommendations. 

The members of the EAG Plenary Meeting adopted the report of the Kyrgyz Republic. It was decided to consider the transition of Kyrgyzstan to enhanced monitoring. The next report of the KR will be heard at the 17th EAG Plenary Meeting in October 2012 

The National Bank of Kyrgyzstan will continue to implement the FATF recommendations. In particular, during the supervision and regulation of banks and non-bank financial institutions on compliance with legislation of the KR in CML/FT. 

REFERENCE 

EAG is the Eurasian Group on combating money laundering and financing of terrorism. It is a regional group by the FATF type. The EAG consists of nine countries: Belarus, India, China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Turkmenistan and Uzbekistan. The EAG is an associate member of the FATF. 

The observer status is granted to 14 states and 18 international and regional organizations. 

The activities of the EAG are aimed at assisting regional states in establishing an appropriate AML/CFT legal and institutional framework compliant with FATF standards. 

Within this framework, the EAG conducts mutual evaluation of national AML/CFT systems of its states based on the FATF methodology, studies typologies of money laundering and terrorist financing, and implements the programs of technical assistance to member states of the Group, including training of personnel. 

AML/CFT - Anti-Money Laundering and Counter-Terrorism Financing 

Deputy Chairman of the NBKR Zair Chokoyev attended the informational meeting on the Strategy of Microfinance Development of in Kyrgyzstan for 2011-2015. 

The goal of the event, attended by representatives of the Government of the KR, National Bank, business associations and the financial sector, was to discuss the issues of realization of Strategy of Microfinance Development of in Kyrgyzstan for 2011-2015. 

Deputy Chairman of the NBKR noted that, despite the fact that the majority of MFI clients make payments in good faith, there are problems in the microfinance sector. It is high debt ratio along with unreasonably high interest rates, collateral issues, etc. 

Zair Chokoyev, the Deputy Chairman of the NBKR, noted that “the government created the conditions for the emergence of this market, and it developed within the legal framework without anybody’s financial assistance. But now it reached the stage in its development when it is necessary to introduce some restrictions in order to reduce the risk. First of all, we have to raise capital requirements for microfinance companies. Second, we have to tighten requirements for the documents provided during the registration period. Third, we should exercise supervision over all companies whether they observe the law and whether the rights of consumers are protected.” He also added that the mere limitation of interest rates by the National Bank will not solve the problem, but on the contrary, can lead to an increase in illegal money-lending. 

“Such experience was not successful around the world. We can limit the interest rates on loans, but a black market will emerge the next day, where there will be everything which is prohibited. Of course, it is necessary to ensure that interest rates were not unreasonably high. And here it must be said about the need to improve financial literacy of the population. Borrowers often do not understand to what conditions they are agreeing. On our side, we will require the lenders to fully disclose information about the cost of the loan, including the calculation of the effective interest rate,” the Deputy concluded.  

REFERENCE 

The Strategy of Microfinance Development of in Kyrgyzstan for 2011-2015 was initiated by the NBKR and business associations, and then approved by the joint decision of the Government and the National Bank on 28 February 2012  

The main purpose of the Strategy is to provide the whole economically active population of Kyrgyzstan with an opportunity to access high quality financial services. It is assumed to be implemented both by the development of the microfinance services market, and by increasing financial literacy and improving the mechanisms for the protection of consumer rights. The Strategy also includes such important areas as improving the investment climate and expanding the list of services of microfinance institutions. 

Representatives of international donor organizations and managers of large NBFIs discussed the need to reduce the risk in NBFI activities at a meeting with the management of the NBKR. 

The subject of discussion was the negative trends in the development of the microfinance market in Kyrgyzstan and the measures taken by the National Bank in order to achieve stability in this sector and protect the interests of both lenders and borrowers. In particular, participants of the meeting discussed the suspension of the activities of MFIs, whose interest rates are substantially higher than the market average, as well as changes and additions to the regulations of the NBKR. 

Speech of the NBKR management has caused heated discussion among representatives of donor organizations. All the opinions of the participants of the meeting were heard and no question was left unanswered. 

The NBKR Chairman thanked present participants for their assistance in the establishment and development of MFIs in our country, urging them, as well as other microfinance market participants, to hold a constructive dialogue with the National Bank. All proposals to reduce the risk in the activities of MFIs will be reviewed and, where possible, taken into account. 

Licenses/certificates are issued to the following NBFIs and foreign exchange offices: 

o Bogat-71 Pawnshop Additional Liability Company PE (the license No. 4965 as of 04/06/2012 for conducting exchange operations with foreign currency in cash), the registration No. 2992. Registered address: Bus Stop Complex, Madina Market, Sh. Baatyr Street, Bishkek. 

o Private Entrepreneur Aleksandr Anatolievich Mamontov (the license No. 4966 as of 04/06/2012 for conducting exchange operations with foreign currency in cash), the registration No. 2993. Registered address: Zoloto Store, 147 Chui Ave., Bishkek. 

o Private Entrepreneur Marlis Djoldoshaliyevich Raynisov (the license No. 4967 as of 04/06/2012 for conducting exchange operations with foreign currency in cash), the registration No. 2994. Registered address: 146 Abdrakhmanov Street, Bishkek. 

o Private Entrepreneur Sergey Nikolayevich Pechurin (the license No. 4968 as of 04/06/2012 for conducting exchange operations with foreign currency in cash), the registration No. 2995. Registered address: Argo exchange office, 18 Kojomberdiyev Street, Kara-Balta, Chui region. 

o Private Entrepreneur Akylbek Matisayev Kurbanaliyevich (the license No. 4969 as of 04/06/2012 for conducting exchange operations with foreign currency in cash). Registered address: Central Market, Samarkandek Village, Batken District, Batken Region. 

o Private Entrepreneur Kenesh Boronbayevich Kozubayev (the license No. 4970 as of 04/06/2012 for conducting exchange operations with foreign currency in cash). Registered address: Aybek Bazary LLC, Asanaliyev Street, Kyzyl-Kiya, Batken Region (near Central Gate). 

o Private Entrepreneur Sherali Amankulovich Shamshiyev (the license No. 4971 as of 04/06/2012 for conducting exchange operations with foreign currency in cash). Registered address: Aybek Bazary LLC, Kyzyl-Kiya, Batken Region (near Central Gate). 

o Private Entrepreneur Abdivait Abdykerimovich Musabekov (the license No. 4972 as of 04/06/2012 for conducting exchange operations with foreign currency in cash), the registration No. 2996. Registered address: 146 Abdrakhmanov Street, Bishkek. 

o Private Entrepreneur Nuraly Tokenovich Toktonazarov (the license No. 4973 as of 05/06/2012 for conducting exchange operations with foreign currency in cash), the registration No. 2997. Registered address: 2-10/11 Deng Xiaoping Street, Bishkek. 

o Private Entrepreneur Altynbek Albyspayevich Sarsenbayev (the license No. 4974 as of 06/06/2012 for conducting exchange operations with foreign currency in cash), the registration No. 2998. Registered address: 524 “A” Lenin Street, Chaldovar Village, Chui Region. 

o Private Entrepreneur Orgul Shirazdanovna Sautova (the license No. 4975 as of 06/06/2012 for conducting exchange operations with foreign currency in cash), the registration No. 2999. Registered address: 526 Lenin Street, Chaldovar Village, Panfilov District, Chui Region. 

o Private Entrepreneur Kolbay uulu Salamat (the license No. 4976 as of 08/06/2012 for conducting exchange operations with foreign currency in cash), the registration No. 3000. Registered address: 144 Abdrakhmanov Street, Bishkek. 

o Private Entrepreneur Erlan Medetbekovich Jamankulov (the license No. 4977 as of 08/06/2012 for conducting exchange operations with foreign currency in cash), the registration No. 3001. Registered address: RealStroy Shopping Center, 8 Kulatov Street, Bishkek. 

o Private Entrepreneur Vera Aleksandrovna Nesterova (the license No. 4978 as of 08/06/2012 for conducting exchange operations with foreign currency in cash), the registration No. 3002. Registered address: 102 “a” Bokonbayev Street, Bishkek. 

o Private Entrepreneur Sergey Alekseevich Nesterov (the license No. 4979 as of 08/06/2012 for conducting exchange operations with foreign currency in cash), the registration Nos. 3002 and 3003. Registered address: U Sergeya exchange office, Kiyevskaya-Kuliyev Street, Bishkek. 

o Private Entrepreneur Aigul Najimidinovna Aliyeva (the license No. 4980 as of 08/06/2012 for conducting exchange operations with foreign currency in cash). Registered address: 136 Frunze Street, Balykchi, Issuk-Kul Region. 

o Bereke-Invest Microloan Company LLC (certificate of registration No. 459 as of 06/06/2012 for small lending to individuals and legal entities). Registered address: 155 v E. Matiyev Street, Chayek Village, Jumgalsky District, Naryn Region. 

o Effect Finance Microloan Company LLC (certificate of registration No. 460 as of 07/06/2012 for small lending to individuals and legal entities). Registered address: 62 Tunguch Microdistrict, Bishkek. 

Revoked certificates/licenses of the following NBFIs: 

1. The certificate of registration of the Aliyuyu Microloan Company LLC No. 79 as of 13/04/2007 for small lending to individuals and legal entities has been revoked since 04/06/2012 according to the decision of the Founder as of 01/06/2012 and the statement of the MLC as of 01/06/2012. Registered address: 28/5 Torgoyev Street, Karakol, Issyk-Kul region. 

2. The certificate of registration of the Bektan Capital LTD Microloan Company LLC No. 184 as of 12/12/2008 for small lending to individuals and legal entities has been revoked since 04/06/2012 according to the minutes of the General Meeting of the Founders No. 1 as of 31/05/2012 and the statement of the MLC as of 04/06/2012. Registered address: 56 Bayserkeyev Street, Jetioguz Village, Jeti-Oguz district, Issyk-Kul region. 

3. The certificate of registration of the Sandugash Microloan Company LLC No. 269 as of 09/02/2010 for small lending to individuals and legal entities has been revoked since 04/06/2012 according to the decision of the Founder No. 1 as of 04/06/2012 and the statement of the MLC as of 04/06/2012. Registered address: 8/2 Torgoyev Street, Karakol, Issyk-Kul region. 

4. The certificate of registration of the Akchaiym Microloan Company LLC No. 374 as of 10/06/2010 for small lending to individuals and legal entities has been revoked since 04/06/2012 according to the decision of the Founder as of 04/06/2012 and the statement of the MLC as of 04/06/2012. Registered address: 57 Torgoyev Street, Karakol, Issyk-Kul region. 

5. The certificate of registration of the Tulekaby-Ata Microcredit Agency No. 144 as of 14/09/2007 for small lending to individuals and legal entities has been revoked since 04/06/2012 according to the minutes of the General Meeting of the Founders No. 2 as of 20/05/2012 and the statement of the MCA as of 01/06/2012. Registered address: 1 Imanaliyev Street, Djonbulak Village, Jeti-Oguz District, Issyk-Kul region. 

6. The license of the Biz El Credit Union No. 538 as of 24/06/2009 for attraction of monetary funds from its participants by means of acquisition by them of the saving share; loans to Credit Union participants on terms of maturity, recovery and serviceability, has been revoked since 04/06/2012 on the basis of the minutes of the Statutory Meeting of the Biz El CU as of 31/05/2012. Legal address: Central Street, Eriktuu Village, Jaiylsky District, Chui region; 

7. The license of PE O.V. Sukonkina No. 4744 as 08/08/2011 for conducting exchange operations with foreign currency in cash according to the statement of PE O.V. Sukonkina as of 05/06/2012 has been revoked since 06/06/2012. Registered address: Elita Store, Lenin Street, Kant, Chui region. 

Interbank Payments 

Elcart System Indicators.