- “On Amendments to Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic”
The purpose of this project is to create equal conditions for traditional and financial institutions engaged in banking activities based on Islamic principles in the following aspects:
- updating requirements and methods for managing credit risk;
- improving mechanisms for collateral control;
- updating regulations related to capital.
Key Changes
1. Introduction of the concept of escrow accounts for virtual assets
It is proposed to include the concept of escrow accounts for virtual assets within the framework of Islamic banking. Banks will be able to act as intermediaries between sellers and buyers of such assets within the framework of tripartite agreements.
In addition, funds and assets in precious metals used in these operations will not be counted when determining limits on transactions with precious metals.
2. Changes in capital requirements
It is proposed:
- to allow the inclusion of certain instruments in additional Tier 1 capital with the consent of the National Bank;
- to consider assets secured by guarantees from international financial organizations with a rating of no less than “AAA” when calculating risk-weighted assets.
3. Clarification of credit risk regulations
The draft provides for an increase in threshold values:
- from 250,000 to 300,000 and 500,000 soms for outbound monitoring and confirmation of the targeted use of financing;
- simplification of monitoring requirements for assets with no violations over the course of a year;
- detailing the rules for monitoring collateral, including the possibilities of photo and video recording.
4. State guarantees and financing limits
It is proposed to exclude requirements and off-balance sheet liabilities secured by state guarantees or sureties issued by decisions of the Cabinet of Ministers for subjects of the national economy from financing limits, including for ensuring food and national security.
5. Classification of off-balance sheet liabilities
Banks are allowed to classify off-balance sheet liabilities that can be revoked or canceled at any time without prior notice to the client as “normal.”
