National Bank of the Kyrgyz Republic

Creation date: 2026-09-29

the law of the kyrgyz republic

Bishkek, No. 45 as of April 12, 2019

On Guarantee Funds in the Kyrgyz Republic

(As amended by Laws of the Kyrgyz Republic No. 86 as of August 5, 2022, No. 78 as of April 22, 2024, No. 29 as of January 27, 2025)

This Law determines the legal and economic framework for the establishment and the operation of guarantee funds in the Kyrgyz Republic.

Chapter 1. General Provisions

Article 1. Basic Definitions and Terms Used in This Law

1. The following definitions and terms are used in this Law:

1) a Guarantee Fund is a legal entity established as a joint-stock company that has undergone the accounting registration procedure with the National Bank of the Kyrgyz Republic (hereinafter referred to as the “National Bank”) and carries out guarantee activities;

2) a Customer is a legal entity or an individual engaged in individual labor or entrepreneurial activities who has received commercial financing, budgetary lending from a financial and credit organization/an international financial organization; or an individual who is a citizen of the Kyrgyz Republic and has received mortgage financing or financing under a government program/project, a portion of which is secured by a guarantee;

3) (ceased to be effective in accordance with Law of the Kyrgyz Republic No. 29 as of January 27, 2025)

4) (ceased to be effective in accordance with Law of the Kyrgyz Republic No. 29 as of January 27, 2025)

5) Customer’s Liabilities are liabilities arising from financing received from a financial and credit organization/an international financial organization and that meet the requirements of this Law;

6) a Guarantee is a commitment by a guarantee fund to a financial and credit organization/an international financial organization to bear responsibility for the fulfillment of a portion of the customer’s principal debt liabilities under financing agreements, within the limits of the amount of the provided guarantee;

7) Guarantee Activities are activities that promote greater access to financing for customers and are aimed at reducing a portion of the credit risks faced by financial and credit organizations/international financial organizations through the provision of guarantees;

8) a Guarantee Policy is a document approved by the authorized body of the guarantee fund that governs the procedure and the conditions for providing guarantees, the types of guarantee instruments, the principles for providing guarantees, the criteria and the requirements for selecting customers’ liabilities, as well as the conditions for the amortization of guarantees and the responsibility of the parties, which complies with the requirements of the regulatory legal acts of the National Bank;

9) Guarantee Instruments are a set of various forms and types of guarantees used to secure customers’ liabilities under financing agreements;

10) Financial and Credit Organizations are banks and nonbank financial and credit organizations that, based on licenses (certificates) issued to them by the National Bank of the Kyrgyz Republic are authorized to carry out banking operations, as well as “State Development Bank of the Kyrgyz Republic” OJSC and the authorized body responsible for implementing the state policy on budgetary lending, which have concluded a cooperation agreement with the guarantee fund;

10-1) International Financial Organizations are organizations established under intergovernmental (international) agreements that provide financing in the Kyrgyz Republic and have concluded a cooperation agreement with the guarantee fund;

11) Financing is the provision of a credit, financing by a financial and credit organization/an international financial organization in accordance with the Islamic principles or their equivalents, the list of which shall be determined by the National Bank for the purposes of the guarantee fund;

12) a Multiplier Coefficient is the ratio, established by the National Bank, of the potential excess of the volume of the guarantee portfolio to the amount of the guarantee fund’s equity capital;

13) a Guarantee Portfolio is the total amount of the guarantee fund’s liabilities under financing contracts and/or agreements with customers as of a specific date;

14) a Recourse Claim is the right of a guarantee fund to demand that a customer reimburse the amount paid to a financial and credit organization/an international financial organization in fulfillment of an obligation under a guarantee agreement;

15) Participants in Guarantee Funds are founders and shareholders of guarantee funds.

2. Other terms and definitions used in this Law shall be understood in accordance with their generally accepted meanings in the Law of the Kyrgyz Republic “On Banks and Banking Activities”, the legislation of the Kyrgyz Republic, and the international practice, unless otherwise specified in this Law.

(As amended by Laws of the Kyrgyz Republic No. 86 as of August 5, 2022, No. 78 as of April 22, 2024, No. 29 as of January 27, 2025)

Article 2. The Name of the Guarantee Fund

The guarantee fund should only use the name specified in the charter of the organization and should include the words “Guarantee Fund” in its name.

Article 3. Allocation of Responsibility of the Kyrgyz Republic, the National Bank, and the Guarantee Funds

Guarantee funds are not responsible for the obligations of the Kyrgyz Republic, just as the Kyrgyz Republic is not responsible for the obligations of guarantee funds, except in cases where the parties voluntarily assume such obligations.

Guarantee funds are not responsible for the obligations of the National Bank. The National Bank is not responsible for the obligations of guarantee funds.

Chapter 2. The Organizational and Legal Form of Guarantee Funds. Activities of Guarantee Funds

Article 4. Establishment of Guarantee Funds

1. Guarantee funds may be established by individuals and legal entities, provided that the requirements of this Law are observed.

The following may not be participants in guarantee funds:

1) individuals and legal entities residing and/or registered on the territory of offshore zones, or those that have affiliated parties who are registered in offshore zones as participants, the list of which is established by the National Bank.

The following are recognized as affiliated parties:

significant participants in a legal entity;

legal entities in which the same legal entity is a significant participant;

2) individuals and legal entities subject to international sanctions adopted by the UN Security Council, as well as individuals and legal entities registered in states subject to international sanctions adopted by the UN Security Council that prohibit legal relations with the specified persons and are binding on the Kyrgyz Republic;

3) individuals and legal entities that have failed to submit, in accordance with the established procedure, information regarding their activities, financial condition, composition of participants, and any other information and documents that allow to reliably identify and examine the participants of the legal entity, including beneficial owners; or have submitted such information that does not allow to reliably identify and examine the participants of the legal entity, including beneficial owners; as well as in cases where they have not confirmed their impeccable business reputation in accordance with the banking legislation;

4) individuals and legal entities that have not confirmed, in accordance with the procedure established by the National Bank, the legality of the source of funds used to purchase shares in the guarantee fund;

5) individuals and legal entities that are subject to prohibitions or restrictions in accordance with the legislation of the Kyrgyz Republic or the legislation of a foreign state.

2. In order to carry out their activities, the guarantee funds are required to undergo the procedure of accounting registration with the National Bank. The procedure for accounting registration and the grounds for refusing to register the guarantee funds shall be established by the regulatory legal acts of the National Bank.

3. The nominations of officials for guarantee funds shall undergo an approval procedure at the National Bank. The procedure for approving or refusing to approve the nominations of officials for guarantee funds shall be established by the regulatory legal acts of the National Bank.

4. The guarantee funds shall operate in accordance with their charter, which must include a list of provided services/transactions and comply with the requirements established by the National Bank. The main activity of the guarantee funds is to provide guarantees for the liabilities of their customer.

The activities of the guarantee funds without accounting registration with the National Bank shall be prohibited.

5. (Ceased to be effective in accordance with Law of the Kyrgyz Republic No. 86 as of August 5, 2022)

6. Legal entities that do not meet the requirements stipulated by this Law shall not be entitled to engage in guarantee activities.

(As amended by Laws of the Kyrgyz Republic No. 86 as of August 5, 2022, No. 78 as of April 22, 2024, No. 29 as of January 27, 2025)

Article 5. The Procedure for Receiving Permission to Purchase Shares of Guarantee Funds

1. Any individual or legal entity intending, either alone or jointly with other persons, to purchase in aggregate more than 10 percent of the shares in the authorized capital of the guarantee fund, including through the additional purchase of shares, shall be obliged to receive written permission from the National Bank.

2. The procedure for receiving permission shall be established by the regulatory legal acts of the National Bank.

(As amended by Law of the Kyrgyz Republic No. 86 as of August 5, 2022)

Article 6. Management Bodies of the Guarantee Fund

1. The guarantee funds shall establish the management bodies in accordance with the Law of the Kyrgyz Republic “On Joint-Stock Companies”, taking into account the particularities stipulated by this Law:

1) the general meeting of shareholders - the supreme management body of the fund;

2) the board of directors - the management body of the fund responsible for the overall management of the company between general meetings of shareholders. Members of the board of directors of the fund shall be elected by the general meeting of shareholders in accordance with the procedure stipulated by the Law of the Kyrgyz Republic “On Joint-Stock Companies” and the charter of the fund, for a term not exceeding 5 years;

3) the management board - the body responsible for managing the current activities of the fund. Members of the management board of the fund shall be elected by the board of directors of the fund in accordance with the procedure stipulated by the Law of the Kyrgyz Republic “On Joint-Stock Companies” and the charter of the fund, for a term not exceeding 5 years;

4) the audit committee - a monitoring body exercising control over the financial and economic activities of the fund. It shall be elected in accordance with the Law of the Kyrgyz Republic “On Joint-Stock Companies”.

2. The activities, the legal status, and the authority of the management bodies of the guarantee funds shall be governed by the legislation of the Kyrgyz Republic, taking into account the particularities stipulated by the regulatory legal acts of the National Bank, the charter, and the internal regulatory documents of the guarantee fund.

3. The National Bank shall establish the requirements for the operations of mandatory committees and services within the guarantee funds.

(As amended by Law of the Kyrgyz Republic No. 86 as of August 5, 2022)

Article 7. Consolidation of Guarantee Funds

1. In order to coordinate their activities, protect and represent their common interests, fulfill joint guarantees, and for other similar purposes, the guarantee funds may establish associations or unions.

2. The guarantee funds are prohibited to use associations or unions to set commission fees, contributions, or for any other purposes aimed at restricting competition, monopolizing the market, or impairing customers’ access to credit resources.

(As amended by Law of the Kyrgyz Republic No. 86 as of August 5, 2022)

Article 8. Branches and Representative Offices of Guarantee Funds

1. A branch of the guarantee fund is its separate subdivision, which is not a legal entity, located outside the location of the guarantee fund, that carries out all and/or part of its operations in accordance with the regulation approved by the guarantee fund and operates within the scope of the authority granted to it by the guarantee fund.

The branch has the same authorized capital and balance sheet as the guarantee fund, as well as a name that is completely identical to that of the guarantee fund, with the addition of the word “branch”.

2. The representative office of the guarantee fund is its separate subdivision, which is not a legal entity, that protects and represents the interests of the guarantee fund and enters into transactions and performs other legal acts on its behalf, except for the issuance of guarantees.

3. The actions of branches and/or representative offices of guarantee funds shall be deemed to be the actions of the guarantee funds themselves, and the guarantee fund that has established them shall bear full responsibility for the actions of branches and/or representative offices.

4. The procedure for establishing branches and representative offices of guarantee funds shall be governed by the Civil Code of the Kyrgyz Republic and the regulatory legal acts of the National Bank.

Article 9. Independence of Guarantee Funds in the Kyrgyz Republic

1. The guarantee funds shall independently organize and carry out their activities within the scope of authority granted to them by this Law and other regulatory legal acts of the Kyrgyz Republic.

2. Government authorities and local self-government bodies, as well as their officials, shall be prohibited to interfere in any form in matters related to the activities of guarantee funds, except in cases provided for by the legislation of the Kyrgyz Republic.

3. The amount of compensation for services shall be determined independently by the guarantee funds in accordance with the contract and/or the agreement, taking into account the particularities stipulated by the regulatory legal acts of the National Bank.

(As amended by Law of the Kyrgyz Republic No. 86 as of August 5, 2022)

Chapter 3. The Capital of the Guarantee Fund

Article 10. The Equity Capital of the Guarantee Fund

The procedure for calculating and the requirements for the equity capital of the guarantee fund shall be established by the National Bank.

Article 11. The Authorized Capital of the Guarantee Fund

1. The minimum amount of the authorized capital of the guarantee fund shall be established by the National Bank.

2. The participation share of each individual and legal entity in the authorized capital of the guarantee fund is not limited.

3. The authorized capital of the guarantee fund shall be formed in a monetary form. The authorized capital consists solely of such authorized capital for which the guarantee fund has no liabilities to return the funds contributed by the participants of the guarantee fund.

4. The funds contributed by the participants of the guarantee fund to the authorized capital of the guarantee fund may be received by them only through the sale of the shares they own.

5. The National Bank shall be entitled to impose restrictions on or prohibit the payment of dividends by the guarantee fund. The procedure and the grounds for imposing restrictions on or prohibiting the payment of dividends shall be established by the National Bank.

6. The authorized capital of the guarantee fund may be formed from the funds of the local budget, voluntary contributions, and other sources in accordance with the legislation of the Kyrgyz Republic.

7. The procedure for forming the authorized capital shall be determined by the regulatory legal acts of the National Bank.

Chapter 4. General Terms and Conditions and the Procedure for Providing Guarantees

Article 12. Provision of Guarantees

The guarantee shall be provided for a portion of the customer’s liabilities to a financial and credit organization/an international financial organization in accordance with the guarantee policy.

(As amended by Laws of the Kyrgyz Republic No. 86 as of August 5, 2022, No. 29 as of January 27, 2025)

Article 13. Basic Terms and Conditions for the Provision of Guarantees

1. The liability of the guarantee fund under concluded guarantee contracts and/or agreements shall not exceed 50 percent of the customer’s principal liabilities (the principal amount of financing) to a financial and credit organization/an international financial organization.

2. The maximum amount of the guarantee for a single person or a group of related persons shall be determined in accordance with the regulatory legal acts of the National Bank.

3. The terms and conditions and the mechanism for providing guarantees shall be determined by the relevant authorized body of the guarantee fund, stipulated by the charter of the fund.

4. The guarantees shall be provided only in the national currency of the Kyrgyz Republic, except in cases stipulated by the regulatory legal acts of the National Bank.

5. The multiplier coefficient shall be set by the National Bank.

(As amended by Laws of the Kyrgyz Republic No. 86 as of August 5, 2022, No. 29 as of January 27, 2025)

Article 14. Responsibility of the Guarantee Fund

1. The responsibility of the guarantee fund for non-fulfillment or improper fulfillment of the liability by the customer, a portion of which is secured by a guarantee, shall be determined by the guarantee policy, the cooperation agreement with financial and credit organizations/international financial organizations, and in accordance with the regulatory legal acts of the National Bank.

2. The guarantee fund shall not ensure the fulfillment of the customer’s financing liabilities in terms of paying interest, forfeits, fines, penalties, or commissions.

3. The obligation of the guarantee fund to fulfill the customer’s liabilities shall arise if the customer fails to repay the financing by the due date.

The obligation of the guarantee fund specified in the first paragraph of this part shall arise after the financial and credit organization/the international financial organization submits the relevant package of documents stipulated by the guarantee policy, confirming that the financial and credit organization/the international financial organization has implemented the necessary debt collection measures stipulated by the guarantee policy.

4. After submitting the complete package of documents confirming that the financial and credit organization/the international financial organization has taken the necessary debt collection measures, the list of which is determined by the guarantee policy, the guarantee fund shall fulfill the guarantee requirements in accordance with the procedure and the terms set forth in the cooperation agreement concluded with the financial and credit organization/the international financial organization.

5. From the moment the guarantee fund fulfills the requirements stipulated in this article, the guarantee fund acquires, in a recourse procedure, the right of claim against the customer for reimbursement of the amount paid by the guarantee fund to a financial and credit organization/an international financial organization under a financing agreement, in the amount of the fulfilled liabilities in accordance with the civil legislation of the Kyrgyz Republic.

6. The funds received by the guarantee fund upon the satisfaction of recourse claims against a customer-debtor shall remain at the disposal of the guarantee fund and shall be used for the development of the guarantee fund.

(As amended by Laws of the Kyrgyz Republic No. 86 as of August 5, 2022, No. 29 as of January 27, 2025)

Chapter 5. Regulation and Supervision of the Activities of Guarantee Funds

Article 15. The Authorized Body Responsible for Regulating and Supervising the Activities of Guarantee Funds

1. The National Bank is the authorized body responsible for regulating and supervising the activities of guarantee funds.

2. The National Bank adopts regulatory legal acts governing the registration of guarantee funds and the regulation and the supervision of the activities of guarantee funds.

See:

Resolution No. 2019-P-33/47-2-(NFKU) of the National Bank of the Kyrgyz Republic Board as of September 9, 2019, “On the Approval of the Regulation “On the Establishment and the Registration of Guarantee Funds in the Kyrgyz Republic””

3. The National Bank shall be entitled to establish economic ratios, including the multiplier coefficient, which are binding on the guarantee funds; to monitor the activities of the guarantee funds; and to apply enforcement measures stipulated by the regulatory legal acts of the National Bank.

4. The types and the amounts of economic ratios, requirements, and restrictions, as well as the methods for calculating them, shall be determined by the National Bank.

5. The National Bank inspects the activities of guarantee funds in accordance with the requirements and the conditions established by the regulatory legal acts of the National Bank.

6. The guarantee funds, the participants in the guarantee funds, the officials and other employees of the guarantee fund shall be obliged to submit reports, documents, and any other information in a timely manner upon request of the National Bank.

7. Any information received by guarantee funds in the course of their interaction with the customers when issuing guarantees, or otherwise in connection with the relationship between the guarantee fund and the customer, or created by the guarantee fund, constitutes information related to banking secrecy and shall be regulated by the legislation of the Kyrgyz Republic.

(As amended by Law of the Kyrgyz Republic No. 86 as of August 5, 2022)

Article 16. Supervision of the Activities of Guarantee Funds

The National Bank shall regulate and supervise the activities of guarantee funds by exercising external supervision and conducting on-site inspections.

Article 17. Accounting and Reporting of Guarantee Funds

1. The guarantee fund shall be obliged to maintain accounting and reporting in accordance with the legislation of the Kyrgyz Republic on accounting, the international financial reporting standards, and the accounting policy of the guarantee fund.

2. The accounting policy of the guarantee fund should include general accounting principles, methods, and rules for organizing accounting. If a financial group is subject to supervision, the guarantee fund should develop a general (consolidated) accounting policy for the group, taking into account the requirements of the National Bank. The National Bank shall be entitled to specify cases in which the requirements for consolidated supervision and reporting do not apply.

3. The guarantee fund shall be obliged to ensure the storage of documents used in accounting and in the preparation of reporting.

4. The list of basic documents subject to storage and the periods for their storage shall be established by the legislation of the Kyrgyz Republic in the field of archives.

Article 18. Internal Control System

The requirements for the guarantee fund regarding the organization and the operation of the internal control system shall be established by the National Bank.

Article 19. Audit of Guarantee Funds

1. The activities of the guarantee fund shall be subject to an annual external audit.

2. The requirements for conducting an external audit and for the auditing organization shall be established by the National Bank.

Article 20. Reserves Created by the Guarantee Fund

1. To ensure timely coverage of losses associated with carrying out guarantee activities, the guarantee fund shall be obliged to create relevant reserves and reflect the real value of assets in its financial statements in accordance with the international financial reporting standards.

2. For regulatory purposes, the National Bank shall be entitled to determine the amount, the procedure for creating and the methods for calculating the reserves created by the guarantee fund to cover losses on assets bearing credit and other risks that are charged to the expenses of the guarantee fund.

Article 21. Enforcement Measures

1. The National Bank shall take enforcement measures against the guarantee fund and its officials.

2. The purpose of applying enforcement measures by the National Bank is to respond promptly, make adjustments, and resolve problems in order to maintain the stability and the sustainability of the guarantee funds.

3. Enforcement measures shall be applied by the National Bank on the grounds, in the cases, and in accordance with the procedure stipulated by the legislation of the Kyrgyz Republic in the field of the National Bank, banks, and banking activities.

4. The National Bank shall independently determine the appropriateness of, the types of, and the procedure for applying enforcement measures against the guarantee fund and its officials.

5. The National Bank shall establish the signs of unhealthy and unsafe activities of guarantee funds and determine the involvement of guarantee funds and their officers in such activities.

6. The National Bank shall publish information on enforcement measures taken with regard to guarantee funds, as well as on any change or termination of such measures, except in cases where publication could harm the interests of the creditors of the guarantee fund, the stability, the security, and the integrity of the financial system of the Kyrgyz Republic, and other cases established by the regulatory legal acts of the National Bank. The deadlines and the procedure for publishing such information shall be established by the National Bank. The publication of such information does not constitute the disclosure of banking secrecy.

7. Decisions of the National Bank regarding the imposition of enforcement measures on the guarantee fund may be appealed in accordance with the procedure established by the legislation of the Kyrgyz Republic.

Article 22. Information and Documents

1. The National Bank shall be entitled to request and receive any information that is available to the guarantee fund.

2. Information received in the course of performing its duties by the National Bank may not be disclosed to a third party, except in cases stipulated by the legislation of the Kyrgyz Republic.

Chapter 6. Final Provisions

Article 23. Reorganization and/or Liquidation of Guarantee Funds

1. The guarantee fund may be reorganized (merger, acquisition, division, spin-off) or liquidated subject to compliance with the requirements established by the civil legislation of the Kyrgyz Republic.

2. In case of liquidation, the assets of the guarantee fund shall be distributed in accordance with the legislation of the Kyrgyz Republic.

(As amended by Law of the Kyrgyz Republic No. 86 as of August 5, 2022)

Article 24. Enactment of This Law

1. This Law shall come into effect fifteen days after the date of its official promulgation.

Published in the newspaper “Erkin Too” No. 30 dated April 19, 2019

2. The Government of the Kyrgyz Republic shall, within six months from the date this Law comes into effect, bring its regulatory legal acts into compliance with this Law.

3. The National Bank of the Kyrgyz Republic shall, within six months from the date this Law comes into effect, bring its regulatory legal acts into compliance with this Law.

4. The guarantee funds of the Kyrgyz Republic shall, within six months from the date this Law comes into effect, bring their activities into compliance with this Law.

5. From the date this Law comes into effect, the following shall be deemed repealed:

1) Law of the Kyrgyz Republic “On Guarantee Funds in the Kyrgyz Republic” No. 167 as of July 30, 2013 (Bulletin of the Jogorku Kenesh of the Kyrgyz Republic, 2013, No. 7, Art. 924);

2) Law of the Kyrgyz Republic “On Amendments to the Law of the Kyrgyz Republic “On Guarantee Funds in the Kyrgyz Republic” No. 172, as of October 26, 2016 (Bulletin of the Jogorku Kenesh of the Kyrgyz Republic, 2016, No. 9, Art. 949).

President of the Kyrgyz Republic		S. Zheenbekov

Adopted by the Jogorku Kenesh of the Kyrgyz Republic		March 7, 2019