Professional Documents
Culture Documents
Law
Law
Law
Bishkek
(As amended by the Laws of the Kyrgyz Republic of December 1, 2005 #157, March 27, 2009
#87, October 6, 2012 #169, April 26, 2013 #60)
OF MICRO-FINANCE ORGANIZATIONS
This Law outlines the status, regulates the activities of the micro-finance organizations and is
purposed to create the legal and organizational prerequisites for micro-finance activities in the
Kyrgyz Republic.
CHAPTER 1
GENERAL PROVISIONS
Article 1. Definitions
A micro-finance organization carries out its activity on the basis of license (certificate) from the
National Bank of the Kyrgyz Republic (hereinafter - the National Bank). A micro-finance
organization is not a bank and may carry out specific bank transactions in compliance with
requirements of this Law.
2. A micro - finance company is a specialized finance and credit institution established in the
form of a joint stock company and providing micro-credits to certain categories of legal entities
and individuals from its own funds, as well as borrowed funds, including funds from legal
entities and individuals, and other types of, provided in this Law transactions, including time
deposits from physical and legal entities in compliance with this Law.
9. The activities of other finance and credit institutions, including credit unions, are regulated by
the Law "On credit unions" and other normative legal acts of the Kyrgyz Republic.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
The goal of micro-finance organizations activities is to provide accessible micro finance services
to alleviate poverty, increase employment, assist in development of entrepreneurship and social
mobilization of population in the Kyrgyz Republic.
In this case, the micro-finance organization may pursue different objectives and defined by its
constituent documents do not contradict the current legislation of the Kyrgyz Republic.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
1. A micro-finance organization shall use only the name, which is outlined in the Charter of the
microfinance organization and depending on its type, use in its name the words "micro-finance
company", "micro-credit company", "micro-credit agency" and short names "MFC", "MCC",
"MCA" respectively.
2. A micro-finance organization cannot use a name different from that outlined in its Charter in
any of its documents, announcements or advertising material.
3. A micro-finance organization does not have the right to use in its name or logo the words
"National", "State", "Kyrgyz Republic", "Kyrgyzstan", in any language and in any combination.
4. The terms of micro-finance company, micro-credit company, micro-credit agency or
abbreviations MFC, MCC, MCA or any other words in combination with these terms can be
used in the brand name or with the purpose to advertise a micro-finance organization that acts in
compliance with its license or certificate within the framework of this Law.
6. It is not allowed to use as a name that are identical or similar to the point of confusion with the
name of the previously created or established in the territory of the Kyrgyz Republic of banks or
micro-finance institutions.
This prohibition does not apply to subsidiaries or affiliated micro-finance institutions in their use
of names of major banks (parent) or micro-finance institutions (parent).
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
1. Micro-finance organizations are not responsible for liabilities of the Kyrgyz Republic and the
Kyrgyz Republic is not responsible for liabilities of micro-finance organizations except for the
cases, when parties voluntarily accept such liabilities.
2. Micro-finance organizations are not responsible for liabilities of the National Bank and the
National bank is not responsible for liabilities of micro-finance organizations.
1. Micro-finance organizations independently organize and carry out their activities within their
terms of reference or authorities, outlined in this Law, the Law "On Banks and Banking Activity
in the Kyrgyz Republic", normative legal acts from the National Bank and other laws of the
Kyrgyz Republic.
2. It is prohibited for state power and government authorities and their executive officers to
interfere in any form in any decision associated with the activity of micro-finance organizations,
except for cases outlined by legislation of Kyrgyz Republic.
1. For the purpose of coordination of their activities, protection and representation of common
interests, implementation of joint projects and other similar purposes, micro-finance
organizations may establish associations or other similar unions, the membership of which may
include, in addition to micro-finance organizations, foreign citizens and legal entities or
individuals and legal entities that are citizens of Kyrgyz Republic.
A branch shares the micro-finance organization's seed capital, balance sheet and name that fully
correspond with the name of micro-finance organization by adding only the word "Branch".
Branch managers are appointed by the micro-finance organization that established it and act on
the basis of a duly authorized Power of Attorney issued to them.
4. Branches and representative offices are not subject to registration by local governmental
bodies except for registration of the branch and/or representative office in justice bodies.
5. Change of name, location, types of activity of a branch and/or representative office of a micro-
finance organization can be made after notification to the National Bank.
6. The National Bank has the right to require information and issue regulations pertaining to the
activity of branches and representative offices of micro-finance organizations.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60).
1. Besides main micro-credit activity, a micro-finance organization has the right to conclude
other transactions to ensure its activities comply with the legislation of the Kyrgyz Republic, in
particular:
1) Repossess and sell pledged property to fulfill client liabilities to the micro-finance
organization;
5) Borrow funds from founders (shareholders) within the restrictions, established by the National
Bank;
6) Carry out operations with derivative financial instruments subject to the restrictions set by the
National Bank.
2. A micro-finance organization can procure, own, use, dispose of property in compliance with
restrictions outlined in this Law, in relevant legislation of the Kyrgyz Republic and in its Charter,
and conduct other transactions, related to the provision of micro-finance services to ensure its
activity is in compliance with legislation of the Kyrgyz Republic.
1) issue sureties and guarantees, except for the issue of guarantees by micro-finance companies
in accordance with this Law;
2) carry out other banking operations and transactions as defined by the legislation of the Kyrgyz
Republic, except for operations and transactions provided for in this Law;
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60).
1. To carry out its activity, a micro-finance company is obliged to obtain a license from the
National Bank for the right to carry out specific banking transactions in compliance with the
requirements of this Law and normative legal acts of the National Bank.
2. To carry out its activity, a micro-credit company and/or micro-credit agency is obliged to
obtain a certificate from the National Bank of registration of the micro-credit company and/or
micro-credit agency. A certificate of registration is issued to micro-credit companies and micro-
credit agencies in simplified form as outlined in the regulations of the National Bank.
3. Micro-finance organizations, their branches and representative offices at the location should
have a sign with the mention of its name. The names of branches and representative offices must
match the name of the head organization. If you change the location of micro-finance
organizations and their branches and representative offices the micro-finance organizations must
promptly notify the authorized state registration authorities and the National Bank.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
Responsibility for the liquidation of the micro-finance organization, including the revocation of
the license and the certificate of the micro-finance organization by the National Bank, except as
provided in paragraphs 4 and 5 of this Article shall be borne by the participants (shareholders) or
to the management body which is authorized to liquidate by the charter of the micro-finance
organization.
3. In case of a micro-credit agency liquidation all property that remains after settling creditor
claims is distributed according to the charter goals of the non-commercial organization.
(As amended by the Laws of the Kyrgyz Republic of December 1, 2005 #157, April 26, 2013
#60)
Article 11. Reserves of micro-finance organization
1. A micro-finance organization classifies its assets and credit portfolio, creates loan loss reserve
in compliance with normative acts issued by National Bank.
2. Creation of Loan Loss Reserve, write off of debts and losses, as well as corrections to Loan
Loss Reserve are carried out in accordance with normative acts of the National Bank.
On general principles of classification of assets and create reserves to cover potential losses and
damages by the micro-finance organizations, see the Temporary Regulations, approved by the
Decree of the Board of the National Bank of the Kyrgyz Republic of October 22, 2003 #31/3.
3. Expenditures for creating Loan Loss Reserve are considered to be expenses of a micro-finance
organization that are deductible from taxable base in compliance with tax legislation of the
Kyrgyz Republic.
CHAPTER 2
MICRO-FINANCE COMPANIES
1. A micro-finance company is established as a joint stock company of open or close type and
acts on the basis of its charter, in compliance with the requirements of this Law and other
normative legal acts of the Kyrgyz Republic.
2. All activity of micro-finance company is subject to restrictions outlined in this Law and
normative acts, issued by the National Bank in accordance with this Law.
3. All changes and amendments to the Charter and other formation documents of the micro-
finance company shall be registered according to the legislation of the Kyrgyz Republic.
Changes and amendments to the Charter and formation documents shall be approved by the
National Bank prior to their registration in justice bodies.
2) existence of a criminal record in the field of financial and economic crimes of the founder or
shareholder (participant) is not withdrawn and not repaid in accordance with legislation of the
Kyrgyz Republic;
4) legal entities, registered in offshore zones or having as members of persons and / or affiliated
entities registered in offshore zones, or individuals living in the offshore areas, the list of which
is set by the National Bank;
5) individuals who are residents of offshore zones residing in offshore areas, the list of which is
set by the National Bank;
7) individuals who are residents and / or residing in states that do not apply the recommendations
of international organizations in the development and implementation of international standards
to anti-money laundering and anti-terrorist financing and are not involved in international
cooperation in anti-money laundering and anti-terrorist financing, the list of which is established
by the authorized body of the Kyrgyz Republic in the field of anti-money laundering and anti-
terrorist financing;
9) individuals who are residents and / or residing in the territory of the state in respect of which
taken decisions (resolutions) of international organizations to which jointed the Kyrgyz
Republic, the application of sanctions to include a prohibition and / or restrictions on cooperation
with individuals and legal entities from these states. The authorized state body in the sphere of
foreign affairs and other public authorities of the Kyrgyz Republic provides on request of the
National Bank of the available information about international sanctions.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
1. Fully paid charter capital shall form the basis of the capital of the micro-finance company. The
capital includes only charter capital on which the micro-finance company does not have any
obligation to repay funds contributed by its founders, shareholders;
2. The charter capital of the micro-finance company may be formed only in national currency of
the Kyrgyz Republic using the funds of founders (shareholders). Use of fixed assets and
intangible assets for formation of charter capital of micro-finance companies shall not be
allowed.
3. Before obtaining a license the micro-finance company is obliged to place minimum charter
capital into accumulation account, opened in a commercial bank of the Kyrgyz Republic. The
requirement to enter the minimum share capital for the accumulation account in the commercial
bank does not apply to micro-credit companies, which transform into micro-finance companies
and have capital in the amount established by the legislation of the Kyrgyz Republic, and past
audit demands made by the National Bank. If the size of the charter capital of micro-credit
company, which is transformed to a micro-finance company, is less than the amount established
by the National Bank, its shareholders must pay the remaining amount in the accumulation
account in the commercial bank. From the National Bank can be made a special inspection to
form the charter capital of the micro-credit companies for approval of compliance with the
requirements for minimum charter capital.
4. The National Bank determines the calculation base for defining the capital adequacy standard
and minimum size of the charter capital for newly established micro finance companies and
capital the structure for a micro-finance company.
5. The size of the charter capital for a micro-finance company shall not fall below the minimum
requirements set forth in the regulations of the National Bank.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
A micro-finance company, which claims to obtain a license (instructions in the license), the right
to attract the deposits on its behalf on the terms agreed with the depositor, in addition to the
documents specified in Article 23 of this Law, shall submit the documents provided by the Law
of the Kyrgyz Republic “On Banks and Banking activities in the Kyrgyz Republic” for obtaining
a banking license. At the same facilities and equipment of the micro-finance companies must
comply with the requirements, established by the National Bank, to ensure the safety of
depositors' funds.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
1. A micro-finance company may carry out the following banking operations taking into account
the limitations, set by the National Bank, under condition that these operations are indicated in
the license:
1) Issue secured and non-secured micro-credits
2) Accept time deposits from individuals and legal entities on conditions of repayment with the
purpose of accumulating client savings.
4) (Null and void in accordance with the Law of the Kyrgyz Republic of October 6, 2012 #169)
5) Implementation of retail banking services under the agency agreement with the bank - without
opening accounts for clients in the micro-finance company;
6) The issuance of guarantees in the amount not exceeding in the aggregate with the micro-credit
(leasing) of maximum amount of loans per borrower.
1-1. In the presence of an additional license (instructions in the license) of the National Bank the
micro-finance company may exercise all or any of the operations, listed in paragraphs 1-3 and 6
of paragraph 1 of this article, in foreign currency, as well as the purchase and sale of foreign
currency on its own behalf. In this case, the National Bank may establish requirements for micro-
finance companies to obtain an additional license.
1-2. The borrower (lessee), or a group of borrowers of micro-finance companies can make
payments in satisfaction of micro-credit (leasing) in both the foreign and local currency to the
extent to which micro-credit received in foreign currency, including payments on the principal
amount of the micro-credit, interest and (or ) other fees associated with the repayment of
microcredit. With payment in local currency to repay the microcredit (leasing) the borrower
(lessee, or a group of borrowers carry out according to the official foreign exchange rate on the
payment date, determined in accordance with the legislation of the Kyrgyz Republic, unless a
different rate is set by the agreement.
2. Within the initial two years from the start of its activity the micro-finance company may not
obtain the right to engage in transactions, indicated in paragraph 2 of clause 1 of this article
except in the following cases:
1) If the organization carried out its activity before this law came into force and legally accepted
deposits, issued credits within two years before obtaining this license, and changes its
organization and legal form to obtain the license as a micro-finance company and on condition
that the National Bank will be satisfied that it is the same entity that carried out the activity
previously;
2) When the entity, established as a credit union in compliance with Law of the Kyrgyz Republic
"On Credit Unions" actively, acts and accepts deposits on a mutual basis and issues credits
within two years from the moment this law comes into force and changes its organizational and
legal form to that of a joint stock company with the purpose of obtaining a license as a micro-
finance company and on condition that the National Bank is satisfied that it is the same entity
that carried out the activity previously;
3) When the entity, established as a micro-credit company or agency, has been working for two
years on the base of a certificate issued by the National Bank and meets the qualification and
other requirements of the National Bank in order to obtain the license for accepting time
deposits;
3. Micro-finance organizations may not obtain the right to carry out transactions, indicated in sub
clause 2 of clause 1 of this article, even if they meet the requirements of item 2 of this Article,
if:
1) They are declared bankrupt and are the subject to liquidation and/or reorganization;
2) Available preventive measures and sanctions of the National Bank, as well as they made other
violations of the National Bank normative documents;
4) Do not meet the qualification criteria and other requirements of the National Bank in order to
obtain a license for accepting time deposits.
4. A micro-finance company has the right to issue common shares and debt securities within the
limits, permitted by the National Bank and relevant legislation of the Kyrgyz Republic.
5. National Bank issues normative acts, defining limitations for micro-finance company
including:
7. A micro-finance company has no right to conduct banking operations, not provided for in this
Article.
(As amended by the Laws of the Kyrgyz Republic of October 6, 2012 #169, April 26, 2013 #60)
Article 17. Placement of funds
1. The placement of funds of a micro-finance company shall be carried out in accordance with
the internal credit policy of the micro-finance company that is subject for approval by the
relevant management body for the purposes, determined by this Law.
2. A micro-finance company shall not issue credit to any third party to purchase securities, issued
by the micro-finance company itself or as a security for such purposes.
3. Micro-finance company has no right to issue letters of credit and carry out operations with
precious metals and property trust.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
1. In order to avoid any conflict of interest, a member of the Board of Directors of a micro-
finance company shall:
1) Act in the interests of the micro-finance company, take efforts to protect the interests of the
micro-finance company and make reasonable and sound decisions while performing his/her
responsibilities and bear material responsibility for losses, incurred by micro-finance company as
a result of poor performance of responsibilities.
3) Shall not simultaneously hold the position of executive officer or employee in any state body,
including local authorities.
4) Shall not take part in voting on issues, or in any way influence voting that is of personal
interest.
2. Board member of a micro-finance company shall act in the interests of the micro-finance
company and not in his or her personal interests and take the best possible efforts to protect
interests of micro-finance company and also make reasonable and sound decisions while
performing his or her responsibilities and bear material responsibility for losses incurred by
micro-finance institutions as a result of poor performance of responsibilities.
Article 19. Transactions with affiliated persons
1. Any transaction between the micro-finance company and any affiliated person is subject for
approval by the Board of Director of micro-finance company. The National Bank shall adopt
normative acts towards the requirements for transactions between micro-finance company and
affiliated person.
1) the total amount of transactions towards any affiliated person shall not exceed the identified
percentage ratio to capital and reserves of micro-finance company (as outlined in normative legal
acts, issued by National Bank);
2) the gross amount of all these transactions shall not exceed the identified percentage ratio to
capital and reserves of micro-finance company (as outlined in normative acts issued by National
Bank).
3. In any cases in which the transactions between the micro-finance company and affiliated
person are involved, when the Board of Directors refuses to vote or is unable to make a decision
on this issue, the Board may by majority of votes make a decision to transfer this issue for
consideration at the next General Assembly of shareholders or Annual meeting of shareholders.
4. A micro-finance company issues micro-credits and carries out other transactions in favor of
affiliated persons of micro-finance company in compliance with requirements, set forth in
normative acts of the National Bank.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
Article 20. Qualification of the Board of Directors members and executive officers of a micro-
finance company
1. The National Bank has the right to adopt normative acts, setting out qualification requirements
for the following positions in a micro-finance company that attracts deposits: Board of Directors
members, Board members, managers of large structural divisions and chief accountant.
2. Board of Directors members, Board members of micro-finance company that attracts deposits
shall have relevant professional qualification and good reputation.
See:
Decree of the Board of the National Bank of the Kyrgyz Republic of February 8, 2006 #4/2 “On
approval of the Regulations on minimum qualification requirements for officers of micro-finance
companies licensed by the National Bank of the Kyrgyz Republic”
1. Any individual or legal entity that wishes to acquire a package of shares of a micro-finance
company that gives a controlling interest, whether directly or indirectly or jointly with other
persons or unions, is obliged to submit an application in writing to National Bank thirty days
prior to the date of acquisition of the shares.
In this article acquisition applies to purchase, transfer, pledging or any other form of transfer of
ownership or control of shares of the micro-finance company.
In this article control implies the ability to control directly or indirectly elections of a majority of
members of the Board of Directors in the micro-finance company or to otherwise influence
management of the micro-finance organization. Control may be fulfilled through ownership of
five or more percent of shares of any type issued by the micro-finance company with voting right
or other way of influencing management decisions.
2. Applications for the acquisition of shares, as indicated in clause 1 of this article, shall be
submitted by the persons that become direct or indirect owners of a controlling interest in the
stock as a result of a supplementary acquisition of shares of the micro-finance organization.
3. No later than thirty days from the date of receipt of the application or within sixty days in case
of acquisition of shares by a non-resident, the National Bank notifies the applicant in writing of
its decision (approval or denial). Denial shall be explained. In case if the National Bank did
advise its decision within the indicated period, the acquisition of the shares of the micro-finance
company is considered to be permitted.
4. Within the terms of its supervisory functions the National Bank may request and obtain
information on the financial condition and business reputation of shareholders of a micro-finance
company in case of their acquisition of more than five percent of stock.
2) The financial condition of the acquiring parties may threaten stability of the micro-finance
company;
3) Competence, experience and qualifications of the proposed management do not meet the
statutory requirements;
4) The acquiring parties did not submit complete information or submitted distorted or false
information;
6. The process for submission and consideration of applications is regulated by the National
Bank.
A micro-finance company publishes in the mass media balance reporting with explanations on
this reporting at least once a quarter and annually publishes financial statement confirmed by
independent External Auditor.
CHAPTER 3
1. To obtain a license for carrying out transactions by a micro-finance company, the applicant
shall submit two copies of the following documents to the National Bank:
1) Application for the license completed in compliance with the form, prescribed by regulations
of the National Bank.
5) List of the members of management bodies of the micro-finance company and data,
confirming their qualification fitness verified by the National Bank;
6) Document, confirming the payment of the license issuance fee;
8) Feasibility Study (business plan) for the establishment of the micro-finance company;
9) Information to help determine the source of funds of the founders, contributed as capital of the
micro-finance company.
2. The National Bank has the right to determine additional information that the applicants shall
submit to obtain a license.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60).
1. The National Bank shall issue a license or deny the license application within two months
after receiving the application and all required documents for a micro-finance company. During
this time it is not included a registration (re-registration) of a micro-finance company in the
authorized state authority, responsible for the registration of legal entities.
3. In the event of any change to any of the information, submitted to the National Bank, the
applicant shall immediately notify the National Bank and shall submit to the National Bank
documents with changes within 3 days from the moment the changes were made. The National
Bank may extend the period of review for 10 working days. If the National Bank considers that
the change in information is essential, it may restart the period of review from the day of receipt
of the notification of changes in the initial information.
4. If the documents, received by the National Bank, do not comply with the requirements of the
National Bank for obtaining a license, the calculation of the review period shall start as of the
date of receipt of satisfactory documents.
1. The National Bank may deny issuance of a license for any of the following reasons:
4)Court decision in respect of the applicant, forbidding him/her to carry out this type of activity;
5)Non-compliance with other provisions, set out in regulations, issued by the National Bank
pursuant to this Law.
6)Other reasons, determined by this Law and legal acts of the Kyrgyz Republic.
2. The National Bank must provide the applicant with written notification, setting forth the
reasons based on which it has denied issuance of license.
1. Prior approval of the National Bank is required for the following additions or changes in
information, submitted for obtaining a license and establishing of a micro-finance company:
2) Any changes in any other documents or information, which was required to be included in the
list of documents for obtaining a license;
3. Any proposed change or amendment may be denied by the National Bank on the same basis as
applied for denial of issuance of a license.
CHAPTER 4
ORGANIZATIONS
See also:
Temporary Rules, regulating the activities of micro-finance companies in the Kyrgyz Republic,
approved by the Decree of the Board of the National Bank of February 19, 2003 #4/2
1. The National Bank regulates and supervises the activity of micro-finance companies with the
purpose to perform functions and tasks, delegated to the National Bank by Law “On the National
Bank of the Kyrgyz Republic”, and to support a sustainable financial system, protect consumers'
interests and ensure compliance of micro-finance organizations with relevant legislation of the
Kyrgyz Republic.
2. The National Bank issues regulations that regulate the activity of micro-finance organizations
in addition to provisions of this Law that also considers the issues of prudent regulation,
including:
4) other economic norms (capital adequacy, maximum loan size per borrower, liquidity, etc.).
3. Specific authorities of the National Bank related to regulation and supervision of micro-
finance organizations, including development of draft regulations may be delegated by the
National Bank to an authorized person.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
The National Bank has the right to apply any of the following measures to micro-finance
companies:
1) Determine financial standards, including standards related to minimum size of initial charter
capital, structure and characteristics of charter capital and reserves, capital adequacy ratios,
liquidity, rules restricting types of activities with different persons and extent of such activities
and other financial standards outlined in this Law or required form the viewpoint of the National
Bank for the purpose of carrying out prudent activities by micro-finance companies;
5) Apply preventive measures and sanctions (including penalties) outlined by this Law, the Law
"On banks and banking activity in the Kyrgyz Republic", other legislative acts of the Kyrgyz
Republic and normative legal acts of the National Bank;
6) Request or demand and obtain balance sheet, reporting and other documentation or
information on the activity or transactions carried out by micro-finance companies;
See:
The Decree of the Board of the National Bank of the Kyrgyz Republic of May 27, 2009 #25/3
“On Approval of the Regulations “On the periodic regulatory report of the micro-credit company
/ micro-credit agencies and pawn” and the Regulations “On the periodic regulatory report of the
micro-finance company”
7) Suspend or withdraw license or temporarily suspend or forbid execution of transactions,
permitted by this law;
8) In case of default to take actions in its relation in compliance with Law of the Kyrgyz
Republic "On bankruptcy (insolvency)";
9) Take other actions, allowed in compliance with regulations issued by the National Bank in
accordance with this Law or permitted by legislation of the Kyrgyz Republic.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
1. The National Bank supervises the activity of micro-finance companies by auditing financial
reporting and other information, provided by micro-finance companies, and conducting on sight
inspections.
The National Bank conducts inspections of the activity of micro-finance companies on internal
control in order to anti-money laundering and anti-terrorist financing and sends information
about its results to the authorized body to anti-money laundering and anti-terrorist financing.
2. The National Bank has the right to delegate the authority to audit to professional independent
auditors.
Executive officers of micro-finance companies are obliged to assist the auditors appointed by the
National Bank.
3. After presenting evidence of their appointment, the auditors have the right to:
1) Have access to any premises (head office, branch, representative office) of micro-finance
companies on any business day during office hours or any other time during which the members
of the supervisory body, management bodies, administration, chiefs of subdivisions or persons in
charge of accounting are actually on the premises;
2) Have meetings with members of the supervisory body and administration of micro-finance
companies and its employees during office hours;
3) Research and make copies or take extracts from any documents or records (including
computer records) and demand clarification of these documents or records from executive
officers of micro-finance companies, any of their employees or other persons who are currently
or were their main founders, shareholders, or participants;
4) Prepare instructions to write off bad debts or to create and maintain sufficient reserves or
comply with other economic norms, this Law, other laws or regulations of the Kyrgyz Republic;
5) Take other necessary measures, related to audit of the activity of micro-finance companies.
4. The authority of the National Bank to audit micro-finance companies (including all authority
related to any of such audits) is valid in respect of any company that has associated interests
(insiders and affiliated companies) with a micro-finance organization and subsidiary companies.
In order to conduct audits of micro-finance companies, the National Bank has the right to request
consolidated balance sheets that show the general financial condition of the micro-finance
organization and all of its subsidiary companies. In case of violation of this Law and/or banking
legislation, the National Bank may apply sanctions and measures outlined by this Law and other
laws and regulations of the Kyrgyz Republic to micro-finance companies.
5. Auditing employees from National Bank (Audit Company) shall be prohibited from disclosing
or transferring information, obtained in the course of an audit to third parties, except for the
cases, outlined by legislation of the Kyrgyz Republic.
6. Persons, conducting an audit, are liable for unlawful disclosure or transfer of information
obtained in the course of the audit to third parties within the limits outlined by legislation of
Kyrgyz Republic.
(As amended by the Law of the Kyrgyz Republic of March 27, 2009 #87)
1. The National Bank has the right to make decision on suspension or restriction of transactions
of a micro-finance company, or suspension or withdrawal of its license (certificate) by
complying with terms on license suspension and its withdrawal outlined in legislation in case of:
1) Violation of this Law, normative legal acts issued by the National Bank under this Law and
other legislative and normative acts of Kyrgyz Republic;
5) Failure to submit information that should be submitted to the National Bank or provision of
false or incomplete information;
3) Require the sale of specified assets by the micro-finance company and utilize the sale
proceeds in a certain way;
5) Require the micro-finance company to suspend certain types or all activities, permitted by its
license (certificate);
7) Apply bankruptcy procedures in compliance with the Law "On banks and banking activity in
the Kyrgyz Republic" and the Law "On bankruptcy".
3. From the moment of withdrawal of a license, the National Bank removes the micro-finance
company from the register for micro-finance companies. In this case, the micro-finance company
is subject for liquidation, carried in accordance with the legislation of the Kyrgyz Republic.
The method of notifying clients of the suspension or revocation of the license of micro-finance
company shall be established in the normative legal acts of the National Bank.
1. The National Bank has the right to request and obtain any information which a micro-finance
company or any of its subsidiary companies has, including information on customers of the
micro-finance company and sources of their funding.
2. Information acquired by the National Bank while fulfilling its responsibilities may not be
given to a third party unless it is outlined by legislation.
CHAPTER 5
See also the Temporary Regulations “On the establishment of micro-credit companies and
micro-credit agencies in the Kyrgyz Republic”, approved by the Decree of the Board of the
National Bank of the Kyrgyz Republic of September 11, 2002 #37/2
Article 32. Founders and establishment documents of a micro-credit company and micro-credit
agency
2. A micro-credit company may be established in any organizational and legal form outlined by
legislation for commercial organizations.
3. A micro -credit agency may be established in any organization and legal form outlined by
legislation of the Kyrgyz Republic for non-commercial organizations, except political parties,
professional unions and religious organizations.
4. A micro-credit company and/or micro-credit agency shall have a charter that contains main
elements required by civil legislation and in the provisions of this Law and other legislation of
the Kyrgyz Republic.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
Article 33. Transactions, carried out by a micro-credit company and micro-credit agency
2. A micro-credit company may in addition carry out the following banking transactions, upon
condition that these transactions are outlined in the license obtained in accordance with the
procedures for licensing micro-finance companies by National Bank defined by this Law:
2) Retail banking services under the agency agreement with the bank without opening accounts
for clients in the micro-credit company;
4. A micro-credit company, licensed by the National Bank to carrying out banking transactions
mentioned in paragraph 2 of this Article, should carry out its activities in accordance with
requirements and rules set out by legislation and the National Bank for these activities.
The National Bank has a right to apply the regulatory measures, mentioned in Chapter 4 of this
Law to the micro-credit company or agency carrying out the activities mentioned in item 2 of
this Article.
5. A micro-credit company or micro-credit agency have not rights not issue securities other than
shares, issued by micro-credit companies in the form of joint stock companies, and are not
allowed to carry out other banking operations not provided for in this Article, with the exception
of financial leasing.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
1. Fully paid charter capital forms the base of a micro-credit company capital. The capital
includes only charter capital on which the micro-credit company is free any obligation to repay
funds, contributed by its founders, shareholders, participants.
2. Charter capital of a micro-credit company is formed only in the national currency of the
Kyrgyz Republic using the funds of founders, shareholders, and/or participants. Use of fixed
assets and intangible assets for the formation of charter capital of a micro-credit company shall
not be allowed.
3. Prior to obtaining a certificate the micro-credit company is obliged to place the minimum
charter capital in a deposit account, opened in a commercial bank of the Kyrgyz Republic.
4. The National Bank sets the minimum size of the charter capital for newly established micro-
credit companies.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
Article 35. Additional provisions for micro-credit companies and micro-credit agencies
1. Micro-credit agencies carry out their activity in compliance with legislation of the Kyrgyz
Republic for non-commercial organizations in and in accordance with the provisions of this
Law.
2. In order to start its activity and/or agent functions of donors, a micro-credit company and/or
micro-credit agency is obliged to obtain a certificate from the National Bank in accordance with
the requirements of the regulations of the National Bank.
1) Application for a certificate, completed in compliance with the form prescribed by regulations
of the National Bank;
4) List of management body members in the micro-credit company and/or micro-credit agency;
5) Document, confirming deposit of the charter capital funds of the micro-credit company to a
deposit account in commercial bank (except for a micro-credit agency);
6) Information, certified by the founders, on the sources of funds contributed as registered capital
of a micro-credit company.
4. The National Bank shall issue a certificate of registration or deny a certificate application
within one month after receiving the application and all required documents for registration.
During this time does not include a time of registration (re-registration) of a micro-credit
company and / or micro-credit agency in the authorized state authority responsible for the
registration of legal entities.
5. If the documents, received by the National Bank, do not comply with the requirements of the
National Bank for obtaining a certificate, the calculation of the review period for the application
and required documents shall start from the time of delivery of satisfactory documents.
7. In the event of any change to any of the information, submitted to the National Bank, the
applicant shall notify the National Bank and shall submit to the National Bank the documents
with changes within ten days from the moment the changes were made.
9. The National Bank or individual, authorized by the National Bank, has the right to revise,
require and receive any information related to the activities of micro-credit companies and
micro-credit agencies.
The National Bank may carry out inspections of micro-credit companies and micro-credit
agencies on matters of internal control in order to anti-money laundering and anti-terrorist
financing. Information on the results of this check is sent to the authorized body to anti-money
laundering and anti-terrorist financing.
10. The National Bank or individual, authorized by the National Bank, has a right to recall the
certificate of registration of a micro-credit company or a micro-credit agency in cases mentioned
in item 1 of Article 10 of this Law.
11. The National Bank provides a letter of consent for the state registration (re-registration) of a
micro-credit company and micro-credit agency in the authorized state agency registration form
and manner, established by the National Bank in consultation with the registration authority for
financial and credit and credit institutions regulated by the National Bank.
12. The National Bank is entitled to apply to micro-credit and micro-credit agencies of
companies control measures, monitoring and impact under this Law.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
CHAPTER 5-1
MICRO-FINANCE ORGANIZATIONS
(Chapter as amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
1. Information on the amount of interest rates and the commission fees and charges for services
should be open and not be the subject of commercial and banking secrecy. The interest rate for
each type of micro-credits granted (leasing) should be provided to clients in the annual nominal
terms, in addition to the interest rate for the period and on an annualized basis using the effective
interest method. The nominal rate of interest shall be calculated on the declining balance of the
credit. Definition and method of calculation of the effective interest rate for the purpose of
presenting to clients established by the normative legal acts of the National Bank.
2. Along with information on the amount of nominal and effective interest a micro-finance
organization prior to execute (signing) an agreement on micro-credit (lease) with the client, is
obliged to provide information to the client on the total cost of micro-credit in absolute value,
showing separately the principal amount of micro-credit, interest, fees, and other payments
related to the negotiation and execution of the agreement on micro-credit. Micro-finance
organizations may not refuse to provide clients with comprehensive information on the cost of
services. It is not allowed to use credit products, distorting the cost of providing services and the
indexing of payments on the loan in relation to currencies other than the currency of the loan
agreement.
4. In order to prevent a dominant position in the micro-finance sector and ensure transparency of
services provided by micro-finance organizations, compliance with antitrust laws by micro-
finance organizations supervised by the National Bank. To this end, the National Bank may issue
normative legal acts and take action of antitrust regulations.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
1. Micro-finance organizations are crediting and other services on the principles of integrity,
transparency, reliability to clients based on their economic interests and abilities and the
requirements of the legislation of the Kyrgyz Republic on the commercial and banking secrecy.
Micro-finance organizations in the placement of funds raised as commercial credits are required
to ensure their correspondence for purpose activities referred to in Article 2 of this Law.
2. A micro-finance organization shall ensure that the following minimum requirements for the
provision of crediting:
1) effective interest rate on the credit issued by a micro-finance organization shall not exceed the
declared value (published) the effective interest rate on the date of the credit;
2) before the conclusion of the credit agreement should be provided full disclosure to clients
(potential borrowers) comprehensive information on conditions for granting credits, including
information on the total cost of the credit product at the state and / or the official language of the
client's choice. Form of information should be standardized and systematized to allow
comparison of credit products of different creditors;
3) before the conclusion of the credit agreement should be studied real creditworthiness of the
borrower, including employment levels, income of family members, expenditure, number of
dependents, etc., especially when given as collateral only home of the borrower;
4) prohibits the inclusion of the terms of the credit agreement additional fees, commissions and
other charges levied and paid in the micro-finance organization and related to the negotiation and
execution of the agreement for micro-credit, in addition to the published as well as other related
services for a fee, regardless of the agreement with the borrower ;
5) types of credit products and agreements to them should be unified;
6) text of the credit agreement should be very clear and easy to read and understand. In this case,
the language of the agreement - the state or official should be determined by the choice of the
borrower;
7) agreement must provide for the right of the client at no charge to refuse receiving credit
(leasing) in the period after the conclusion of the agreement until the client receives the money or
make a payment in return for the property on leasing under the agreement;
8) agreement must provide for the client's right to early repayment of the credit (lease) at any
time without penalty, provided notice to the micro-finance organization not less than thirty days
prior to the date of such return;
9) it should be explained to the client by hand all the consequences of failure or improper
execution of its obligations under the agreement;
10) borrowers should be given full information about the amount of actual debt and to changes in
the credit agreement - the new payment schedule;
11) rate of interest on the damages (fine, penalty) for arrears of principal and interest, established
in the credit agreement with the client - individual, including individual entrepreneurs without
legal entity shall not be greater than the nominal interest rate on the credit, specified in the
agreement. The amount of damages (fines, penalties) assessed for the entire period of the credit
shall not exceed 20 percent of the credit amount;
12) client must be informed of the complaints procedure and contact responsible in micro-
finance organization for receiving requests, complaints and proceedings;
13) micro-finance organization is not entitled to unilaterally amend or supplement the terms of
the credit agreement, if it impairs the rights and obligations of the borrower;
14) borrower must be given the right to redeem the collateral in accordance with the agreement.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
1. For violations of the requirements, specified in this Law, the officers of micro-finance
organizations are established by the legislation of the Kyrgyz Republic responsibility.
2. For violation of the rights and legitimate interests of consumers under this Law and normative
legal acts of the National Bank, the National Bank may apply to the micro-credit organization
sanctions, provided for in this Law, the normative legal acts of the National Bank and other
normative legal acts of the Kyrgyz Republic.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
CHAPTER 6
CONCLUDING PROVISIONS
2. The National Bank has the right to request any micro-finance organization to change or cancel
any advertisement or published information about the activity of the micro-finance organization
or its name within the period, determined by the National Bank, if the National Bank finds the
advertisement or information to be delivered by the micro-finance organization is wrong or
misleading.
3. In case of noncompliance with the requirements of the National Bank within the period
determined by the National Bank as provided in clause 2 of this article, the National Bank has
the right to publish at the expense of micro-finance organization a statement advising that the
announcement or information given by micro-finance organization is incorrect or misleads the
clients and public. In this case the National Bank has the right to request reimbursement of such
expenses from micro finance organization as they rose in form of debt to be repaid to it by the
micro-finance organization.
4. Other penalties for intentional publication of false or misleading information of the micro-
finance organization must be applied in accordance with Law of the Kyrgyz Republic.
3. Micro-credit agency may conduct an external audit of its activities. Micro-credit company
shall conduct an external audit of its activities and report to the National Bank in the form and
terms of the National Bank.
3. The National Bank issues regulations that set forth the minimum criteria for the independent
annual audit.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #60)
1. The financial year in a micro-finance organization begins on January 1 and ends on December
31. As for the first financial year, if state registration of the micro-finance organization took
place after January 1, the financial year shall begin on the date of state registration and end on
December 31 of the same year.
2. Specifics, volume, list of forms and report submission deadlines for micro-finance
organizations shall be determined in regulations issued by the National Bank.
3. The micro-finance organization is liable for the authenticity and completeness of information
and reports, submitted in compliance with the legislation of the Kyrgyz Republic.
4. The structure and deadlines for submission of the annual report by a micro-finance
organization are determined by regulations of the National Bank.
The Resolution of the Board of the National Bank of the Kyrgyz Republic of October 23, 2004 #
26/2 “On approval of the Regulations “On the requirements for the accounting policy of
commercial banks and other financial organizations licensed by the National Bank”
1. This Law enters into force from the moment of its publication.
2. Existing micro-finance organizations are obliged to conform their activity with this Law
within 6 months from the moment this Law comes into force.