Board of the National Bank of the Kyrgyz Republic resolved to grant provisional permission to reorganize “Financial group Companion” MFC CJSC to “Bank Companion” CJSC
In October 07, 2015, the Board of the National Bank of the Kyrgyz Republic resolved to grant provisional permission to reorganize “Financial group Companion” MFC CJSC to “Bank Companion” CJSC. Banking licenses will be issued to “Financial group Companion” MFC CJSC after fulfilling the requirements of the Kyrgyz Republic legislation, which shall be met in establishment of a commercial bank.
Board of the National Bank of the Kyrgyz Republic resolved to issue banking licenses to “Chang An Bank” OJSC
On April 08, 2015, the Board of the National Bank resolved to grant provisional permission for issue of banking licenses to “Chang An Bank” OJSC.
In October 2015, “Chang An Bank” OJSC provided documents confirming compliance with the requirements established by the legislation of the Kyrgyz Republic, to obtain banking licenses. In this respect, the Board of the National Bank resolved to issue banking licenses to “Chang An Bank” OJSC. Banking licenses will be issued to “Chang An Bank” OJSC within the terms established by the legislation of the Kyrgyz Republic
Resolution of the Board of the National Bank of the Kyrgyz Republic № 60/1
dated October 05, 2015
In accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic № 60/1 dated October 05, 2015 the volume of obligatory reserves of commercial banks on liabilities in the national currency was decreased by 0.5 percent and established at the level of 8.5 percent of the amount of liabilities in the national currency; on liabilities in foreign currency it was increased by 0.5 percent and established at the level of 9.5 percent of the amount of liabilities in foreign currency. The resolution comes into force since October 19, 2015.
Chairman of the National Bank of the Kyrgyz Republic gave an interview to
foreign editions “Financial Times” and “Asian Review”
The Chairman of the National Bank of the Kyrgyz Republic, Tolkunbek Abdygulov, gave an interview to the representatives of foreign editions “Financial Times” and “Asian Review”, Jack Farchy and Jacopo Dettoni.
In an interview with Jack Farchy, the “Financial Times” journalist, the head of the NBKR, Tolkunbek Abdygulov, told about activity conducted by the National Bank, including measures taken by the regulator to stabilize the monetary market of the country, as well as how the economic slowdown in Russia has affected the economic development of the Kyrgyz Republic, and expectations about joining our country to the Eurasian Economic Union (EEU).
Responding to a question about the impact of the Russian economy on the economy of the Kyrgyz Republic, Tolkunbek Abdygulov said that due to the fact that small open economy is characteristic of Kyrgyzstan, the processes occurring in the world economy may anyway have a direct or indirect influence on the economic situation in our country. “With regard to the Russian Federation, one of the main trade partners of Kyrgyzstan, international trade and remittances are the main channels of impact on our economy. The downturn in economic activity in Russia resulted in a decline in the real disposable income of the population and, consequently, a decrease in aggregate demand, which naturally affected the economy of our country”, he said. The head of the NBKR noted that foreign trade turnover with Russia following the results of seven months of this year fell by 12.9 percent; decline was observed in exports and imports of products. “The economic situation is stable in our country. Economic growth within eight months amounted to 6.8 percent, inflation in annual terms made 6.2 percent in the middle of September”, T. Abdygulov.
The journalist was interested in accession of Kyrgyzstan to EEU, positive and negative effects of the integration process. Tolkunbek Abdygulov said that it was still too early to talk about concrete results, since harmonization of the legislation of the EEU member-states was still in progress, but, given the work being done to remove barriers in the financial sector, improvements in business activity should be expected. “With respect to negative factors we can mention expected impact of membership in the EEU on the domestic price level in the country. But the preliminary results of the first months did not show price shock in the domestic market of Kyrgyzstan”, the NBKR Chairman said.
Tolkunbek Abdygulov replied to the question about the impact of a sharp devaluation of the Kazakh Tenge, as well as about the NBKR interventions to support national currency.
“One-step devaluation of the Kazakh Tenge had primarily a psychological pressure on the population of Kyrgyzstan, resulting in panic and artificial rush. Afterwards, the factors being structural in character affected the local foreign exchange market. Thus, since August 20 to October 03, 2015, USD exchange rate increased by 11.2% - from 62.0710 to 69.0000 KGS per USD. In September 2015, the National Bank of the Kyrgyz Republic made 2 sales interventions in the volume of USD 35.9 million in order to smooth sharp fluctuations in the exchange rate and eliminate public rush. The volume of international reserves of the National Bank as of October 01, 2015 amounted to USD 1 843.2 million. This amount is sufficient to cover 4 months of imports”, Tolkunbek Abdygulov.
Jacopo Dettoni, a journalist of the “Asian Review” was interested in general guidelines of the current monetary policy conducted by the NBKR under conditions of the Kyrgyz Som devaluation and the overall weakening of the foreign trade and investments.
Tolkunbek Abdygulov explained to the journalist that development and implementation of the monetary policy of the National Bank aims to keep inflation within 5-7 percent in the medium term. “With regard to the exchange rate of the Kyrgyz Som, a floating exchange rate regime has been operating in the Kyrgyz Republic since introduction of the national currency in 1993. Within selected exchange rate regime, the National Bank conducts interventions only in order to smooth sharp fluctuations in buying and selling of foreign currency. Because the Kyrgyz Som exchange rate dynamics has a significant impact on inflation and the main macroeconomic indicators, the National Bank constantly monitors the situation in the domestic market of the country and in the foreign financial markets. Under the current conditions, taking a decision on the policy rate, we, on the one hand, try to make financial instruments in the national currency attractive, to reduce pressure on the exchange rate, and, on the other hand, take into account the need to ensure that our monetary policy does not limit the potential economic growth”, the head of the NBKR said.
During the conversation with the head of regulator, the journalist raised the issue of reduction in remittances of migrants from Kyrgyzstan working in Russia, and the impact they have on the local monetary market.
Tolkunbek Abdygulov informed that inflow of remittances from Russia is currently really decreasing, net volume thereof within 8 months of this year in United Stated dollars fell by 27.3%. Meanwhile, remittances in Russian rubles (since a large part of translations comes from Russia, their portion makes 95%, and usually in Russian rubles) increased by 18.1%.
“Despite a decline in inflow of foreign currency remittances, the total amount of money in the economy of the country in January-September of the current year increased by 8 %, or by KGS 3.8 billion, up to KGS 129.5 billion. A decline in remittances from Russia may affect the supply in the domestic foreign exchange market. For the period from January to July 2015 net inflow of remittances amounted to USD 765.7 million, having decreased by 25% compared with the same period in 2014. The bulk of remittances are made in Russian rubles. The nominal volume of remittances net inflow in Russian rubles grew by 11.6%, in the US dollar re-calculation the volume declined mainly due to devaluation of the Russian ruble against the UD dollar”, Tolkunbek Abdygulov said.
Resolution of the Oversight Committee of the
National Bank of the Kyrgyz Republic dated March 26, 2015
In accordance with the Resolution of the Oversight Committee of the National Bank of the Kyrgyz Republic dated March 26, 2015, certificates of accounting registration the following microcredit companies were withdrawn for failure to comply with the requirements of the National Bank of the Kyrgyz Republic imposed on the amount of the authorized capital by the National Bank of the Kyrgyz Republic on April 01, 2015. Due to the fact that withdrawn certificates have not been delivered by some microcredit companies, certificates of accounting registration of the following microcredit companies shall be deemed invalid:
1) “DATIK” MCC LLC certificate of accounting registration № 19 dated May 17, 2004;
2) “Gavan-Credit” MCC LLC certificate of accounting registration № 56 dated September 05, 2006;
3) “AMANAT-KAZYNA” MCC LLC certificate of accounting registration № 104 dated December 25, 2007;
4) “BRATKO” MCC LLC (certificate of accounting registration № 137 dated June 03, 2008;
5) “Most Business Capital” MCC LLC certificate of accounting registration № 163 dated October 16, 2008;
6) “BERK CAPITAL” MCC LLC certificate of accounting registration № 249 dated November 10, 2009;
7) “Capital” MCC LLC certificate of accounting registration № 288 dated May 07, 2010;
8) “ALPHA FINANCE CAPITAL” MCC LLC certificate of accounting registration № 338 dated February 02, 2011;
9) “Vostok Finance” MCC LLC certificate of accounting registration № 344 dated February 22, 2011;
10) “Soyuz-CREDIT” MCC LLC certificate of accounting registration № 451 dated April 23, 2012.
Suspended validity of the certificate
of accounting registration issued to “Birik” MCC LLC
In accordance with the Resolution of the Oversight Committee of the National Bank of the Kyrgyz Republic № 46/2 dated October 01, 2015, validity of the certificate of accounting registration № 232 issued to “Birik” MCC LLC on October 01, 2015 was suspended for violation of the requirements of p. 3, Art. 37 of the Law “On Micro-finance organizations in the Kyrgyz Republic”, p. 3.11 of the Regulations “On minimum requirements to external audit of microfinance organizations in the Kyrgyz Republic”, as well as for systematic failure to comply with the instructions of the National Bank of the Kyrgyz Republic.
National Bank informs the commercial banks on the Draft law of the National Bank Board “On amendments and additions introduced to some resolutions of the National Bank Board” posted on the official website for discussion
The National Bank informs the commercial banks that the draft laws of the National Bank Board “On amendments and additions introduced to some resolutions of the National Bank Board”, in particular, the Resolution of the National Bank Board, is posted on the official website for discussion:
“On approval of the Regulations on economic standards and requirements, binding for commercial banks and financial institutions licensed by the National Bank of the Kyrgyz Republic” № 18/1 dated July 21, 2004;
“On approval of the new version of the Instruction for determination of capital adequacy standards for commercial banks of the Kyrgyz Republic” № 18/1 dated July 21, 2004;
“On approval of the Instruction for determination of capital adequacy standards for banks implementing operations in accordance with the Islamic principles of banking and financing” № 51/4 dated December 28, 2009;
“On approval of the new version of the Regulations “On classification of assets and related allocations to potential losses and damages provision” № 18/3 dated July 21, 2004;
“On some regulatory legal acts of the National Bank of the Kyrgyz Republic” № 51/6 dated December 28, 2009;
“On some regulatory legal acts of the National Bank of the Kyrgyz Republic” № 26/5 dated August 25, 2005;
“On periodic regulatory report of banks implementing operations in accordance with the Islamic principles of banking and financing” № 20/4 dated March 30, 2011) (hereinafter referred to as the “draft RLA”).
Draft RLA developed by the National Bank in order to maintain stability of commercial banks operating in the Kyrgyz Republic and contains standards and requirements for commercial banks to be set temporarily. The deadline for submission of reports on liquidity standards (K3.1, K3.2 and K3.3), constituting part of the Periodic regulatory banking report (PRBO), including commercial banks implementing operations in accordance with the Islamic principles of banking and financing, shall be January 1, 2016. Upon entry into force of the draft RLA and until January 1, 2016, the commercial banks shall submit reports to the National Bank on satisfying aforementioned standards in the manner and time frame stipulated by the draft RLA, separately (not as a part of PRBO).
Supervision Methodology and Licensing Department requests to review and to forward proposals to the draft RLA to e-mail gegizova@nbkr.kg at least on November 5, 2015.
Chairman of the National Bank of the Kyrgyz Republic, Tolkunbek Abdygulov, replied to the questions of the citizens during online conference, organized by “Tazabek” economic information agency
Tolkunbek Abdygulov primarily focused on the issues of economy, foreign exchange market and lending to the population. In particular, the issues related to the measures taken by the National Bank to reduce dollarisation of the national economy, stabilization of exchange rate, addressing the problems of borrowers, who have loans in foreign currency, etc., have been raised. Replying to the questions of the population, T. Abdygulov touched currently topical issue of foreign exchange transactions, including measures taken by the National Bank in relation to the significant market players, i.e. exchange offices. In addition, citizens, who turned to the Chairman of the National Bank, were concerned about the effects of the national currency weakening, the possibility of interest rates drop for loans provided by the NBFIs and commercial banks, the status of the NBKR independence when interacting with Government, conditions for development of a new investment project of the National Bank - gold small bars and other issues.
Replying to the question about the need for the NBKR to conduct foreign exchange interventions to stabilize the exchange rate of the Kyrgyz Som, Tolkunbek Abdygulov emphasized that free foreign exchange market has been existing in Kyrgyzstan since 1993. “Due to external shocks, including devaluation of the national currencies in the neighboring states, expectations of changes in the discount rate of the US FRS and volatility of prices for oil, foreign exchange market participants in our country can pursue goals to increase and preserve their assets. Their actions resulted in a short-term imbalance between demand and supply of foreign currency. Additionally, it is necessary to take into account that Kyrgyzstan is import-dependent country, and the bulk of the demand for foreign currency is on the part of import. Simply put, the currency is spent to purchase gasoline, gas, food, medicine, warm (electricity, coal), etc., since we do not manufacture these goods or their output is not sufficient. Pressure on the exchange rate is increasing in the context of increased demand for foreign currency mainly from imports. The National Bank diminishes this pressure and stabilizes the situation by providing the market with necessary assistance in the form of currency interventions”, Tolkunbek Abdygulov summarized.
Closure of the exchange offices was another issue of concern for many citizens, who turned to the head of the National Bank during the online conference. Tolkunbek Abdygulov said that unreliable information submitted by the exchange offices to the National Bank, as well as constant violations of the legislation of the Kyrgyz Republic by the exchange offices were the main reasons for development of the draft law on their closure. “Inspections of the exchange offices carried out by the National Bank during 2014-2015 show that accounting and reflection of the ongoing operations in the internal registers and cash register machines require strengthened internal control. Almost every inspection of exchange offices reveals violations of cash discipline and failure to send messages to the State Financial Intelligence Service of the Kyrgyz Republic, which is regarded as a violation of the law. The analysis revealed that according to the official data the turnovers of the exchange offices make approximately KGS 100 billion per annum, and given the fact that the exchange offices provide unreliable data, this amount can be much higher”, Chairman said.
Dozens of questions asked by the citizens during the online conference were dedicated to loans obtaining and repayment. Moreover, there were questions about assistance on the part of the National Bank to the borrowers who had loans in foreign currency and due to increase in the USD exchange rate were unable to meet obligations to the financial institutions. “You must, first of all, recall the source of lending for financial institutions. Banks are financial intermediaries. They take money from one part of the population for a while, providing deposit services and give them to another part of the citizens in the form of loans. A large portion of banks’ funds, which they lend to borrowers, are deposits. If borrowers do not repay funds to the Bank, the Bank owes these funds to those who entrusted it with their money, by placing deposits. Our country is characterized by very liberal foreign exchange policy; consequently you can buy, sell and export foreign currency without any restrictions. This policy covers savings of the population, which, in turn, results in high dollarization. Currently, 63% of total deposits are placed in the US dollars, and 47% are in the Kyrgyz Soms. The National Bank has already recommended commercial banks to change the loan currency at the requests of their customers. And the National Bank softened requirements for such loans”, Tolkunbek Abdygulov said.
Excluding Kyrgyz Soms from the internal settlements was another hot topic announced by the NBKR Chairman at the initiative of citizens. T. Abdygulov explained: “Kyrgyz Som is the only legal tender in the territory of the Kyrgyz Republic, which legal entities and natural persons are obliged to accept, without limitations. It is necessary to exclude the use of foreign currency when making settlements in the territory of our country, including those in transactions with real estate and vehicles. The work of all public bodies, including Government, shall be improved in order to strengthen the Kyrgyz Som and reduce unreasonably overestimated demand for foreign currency, in particular, for the US dollars. The National Bank, in turn, is gradually and consistently conducting operations aimed at strengthening the national currency. The appropriate law has already been developed, currently, it is necessary to strengthen administrative responsibility in various organizations, companies, and enterprises for settlements made in foreign currency”, he said.
Online conference lasted for about two hours. On the website of “Tazabek” agency and on the telephone the head of the National Bank received more than 60 questions affecting many areas of the regulator activity. In closing the conference, the head of the NBKR informed the population of the Kyrgyz Republic to address any questions related to the regulator directly to the National Bank, and reminded that the Public Information Service and the Consumer Rights Protection and Financial Literacy Division operate in the NBKR, which receive and process dozens of appeals from citizens every day.
National Bank of the Kyrgyz Republic was accepted to Advisory council on foreign exchange policy of the EEU member-states
11th meeting of the Advisory council on foreign exchange policy in the central (national) banks of the member-states of the Customs and Eurasian Economic Unions was held in Dilijan (Republic of Armenia) on September 25, 2015.
Heads of central banks of Belarus, Kazakhstan and Russia signed a Supplement to the Regulations on Advisory council on foreign exchange policy in the central (national) banks of the member-states of the Customs Union and Common Economic Space dated November 23, 2012 on membership of the National Bank of the Kyrgyz Republic in the Board of the Central Bank of the Republic of Armenia.
At the meeting, the heads of central banks discussed the current economic situation, exchange rate, monetary policy implementation in the EEU member-states. Moreover, issues on possible measure-taking were raised to prevent risks realization in the areas of macroeconomic and financial stability in the economies of the EEU member-states created by the situations in the global financial markets, including measures to prevent capital outflow and reduce dollarization of the national economies.
The heads of central banks discussed the harmonization of legislation in the EEU states in the financial sector, as well as activities on cooperation in the sphere of payment systems.
Licenses/certificates have been issued to the following NBFIs and exchange offices:
1. “Nur-Uson” LLC (license № 5379 dated October 08, 2015 for carrying out foreign exchange operations in cash). Address: w/n, Navoi Street, Osh city (landmark: “Kelechek” market).
2. “Khan-Tengri Company” LLC (license № 5378 dated October 08, 2015 for carrying out foreign exchange operations in cash). Address: container №18, pass 0, “Turatali” market, w/n, Lenin Street, Kara-Suu town.
3. “Aiara” LLC (license № 5377 dated October 07, 2015 for carrying out foreign exchange operations in cash). Registration number of exchange office № 3356. Address: 22/1 bldg., Beishenaliev Street, Bishkek city.
Additionally, we inform you that register on registration of exchange office “Forex kg” LLC (license № 5354 dated October 08, 2015 for carrying out foreign exchange operations in cash) was amended due to change of its address. New address: № 136/2, Moskovskaya Street, Bishkek city.