(presumably version approved by Supreme Soviet on 12/12/1992)
The law determines the status of the National Bank of the Republic of Kyrghyzstan as the central element of the bank systems and the body to play the leading role in the shaping and implementation of the monetary and credit policies of the Republic.
Chapter 1. General Provisions
Article 1. National Bank of the Republic of Kyrghyzstan
1. The National Bank of the Republic of Kyrghyzstan (Bank of Kyrghyzstan) will be the central bank of the Republic and is property of the Republic.
2. The Bank of Kyrghyzstan will be a juridical person and will implement its activities in accordance with the present law.
3. The Bank of Kyrghyzstan will have its office in the city of Bishkek. The Bank can set up its branches and have representatives in the Republic of Kyrghyzstan and abroad. The Bank of Kyrghyzstan will have its stamp with its name and the State Emblem of the Republic of Kyrghyzstan.
4. The Republic of Kyrghyzstan will not be held responsible for the obligations and liabilities of the Bank of Kyrghyzstan. The Bank of Kyrghyzstan will not be held responsible for obligations and liabilities of the Republic of Ryrghyzstan.
Article 2. The main tasks of the Bank of Kyrghyzstan
1. The main tasks of the Bank will be: to ensure the stability of the official currency of the Republic of Kyrghyzstan and to implement monetary and credit policies in the Republic of Kyrghyzstan, to protect the interests of creditors and depositors, to promote fair bank competitions, to monitor the implementation of banking legislation.
2. The Bank of Kyrghyzstan established ties with the central banks of other countries in order to implement its tasks.
Article 3. Activities and Property of the Bank
1. The Bank of Kyrghyzstan will plan and implement its policies independently. Any interference by the governmental bodies or organs in the activities of the Bank as outlined in the present Law will not be permitted.
2. The Bank of Kyrghyzstan will be in possession and will make use of monetary resources, buildings, equipment and other material values and may set up to implement its policies commercial organizations with a status of juridical persons.
3. The Bank of Kyrghyzstan will not pursue activities outside the scope of its tasks, will not hold shares or will participate in the activities of Banks or other commercial organizations, will not buy buildings, houses or other property with exception.of cases given in the article 2 of the present chapter and unless such property is essential for maintaining the activities of the Bank of Kyrghyzstan and its officers.
4. The State will guarantee the protection of the legitimate property sights of the Bank of Kyrghyzstan and cannot expropriate or reduce its capital stock.
Article 4. Accountability of the Bank of Kyrghyzstan
1. The Bank of Kyrghyzstan will make an annual report about its activities and will direct it to the Supreme Soviet of the Republic before the 15th of April. The report will include financial reports, which will satisfy the international standards, and information on the banking system situation in the Republic.
2. The Bank of Kyrghyzstan will publish and annual composite balance sheet and information on the currency circulation in the Republic.
Chapter II. Capital, Profit, Funds
Article 5. Authorized Capital
1. The Bank's authorized capital will entirely be formed by the Republic of Kyrghyzstan amounting to 2 billion rubles with 30% of the said capital being deposited at once. Other shares of the said capital will be deposited in the 2 years following the coming into force of the present law. The size of the authorized capital can be enlarged by the Bank of Kyrghyzstan upon an agreement with the Government of the Republic of Kyrghyzstan,
2. The Bank of Kyrghyzstan cannot expropriate the authorized capital stock or let anybody use it as a deposit.
Article 6. Profit and Funds
1. The net profit of the Bank in the fiscal year in estimated in accordance with the international standards.
2. The Bank of Kyrghyzstan will form the reserve and other funds. The size of the reserve fund meant to cover possible loses must not be less than the size of the authorized capital stock. The size, formation and use of these funds will be determined by the Board of the Bank of Kyrghyzstan. After the formation of the authorized capital stock and their reserve fund no less than 30% of the profit of the Bank if the fiscal year will be directed into other funds.
3. The residual of the profit in the fiscal year will be directed to the state budget of the Republic. The Government upon the request from the Bank of Kyrghyzstan can increase the amount of profits left for the Bank's disposal. The Bank of Kyrghyzstan and its branches will be exempt from all taxes and duties, excluting self-financing organizations.
CHAPTER III. MONEY AND CREDITS
Article 7. Monetary and Credit Policies of the Bank
1. Monetary and Credit Policies of the Republic are shaped and adopted by the Bank of Kyrghyzstan and are agreed with the Government of Kyrghyzstan.
2. If the Government of Kyrghyzstan does not approve of the monetary and credit policies of the Bank, it will advise the supreme Soviet to this effect and the latter after the consultations with the Bank of Kyrghyzstan and having received the conclusions of the Control chamber of the Republic of Kyrghyzstan can oblige the Bank of Kyrghyzstan to revise its monetary and credit policies by adopting a document which will give grounds for such a move as well as the time for which the document is good.
Article 8. Emission of Currency
1. The Bank of Kyrghyzstan will have a exclusive right to issue and cancel money (bank notes and coins).
2. The use of emission of currency to finance the deficit of budget of the Republic of Kyrghyzstan will be prohibited.
Article 9. Money Circulation Control
1. Currency circulation control in the Republic of Kyrghyzstan is effected by the Bank of Kyrghyzstan by means of :
1) by changing economic laws binding for the banks
2) by purchasing and selling foreign currency and securities
3) by changing the volume of credit given by the Bank of Kyrghyzstan as
well as interest rate.
4) by changing the size of the obligatory reserves
5) by fixing the minimal quantity of the interest rate on credits to commercial
banks
2. The Bank of Kyrghyzstan:
1) works out and approves the implementation of cash operations,
2) ensures the formation of reserve funds of bank notes and coins,
3) determines the rules of transportation, keeping and encashing of money
and coordinates them with the Interior Ministry,
4) determines the patterns and ways of identifying the value of bank notes
and coins as well as procedures of removing and eliminating damaged money
and money no longer allowed in circulation,
5) develops ant implements hard-currency policy [valutnyi politiky] of
the Republic of Kyrghyzstan and declares the exchange rate for the currency
of the Republic of Kyrghyzstan.
CHAPTER IV. RELATIONSHIP BETWEEN THE SATE AND THE BANK OF KYRGHYZSTAN
Article 10. Budget Operations
1. The Bank of Kyrghyzstan can provide short-term cretits for a period not exceeding 6 months to the Ministry of Economy and Finance of the Republic of Kyrghyzstan to bridge a temporary gap between the current profit and expenditures of the budget. The debt on such credits should not exceed 5X of the gross internal product of the Republic of Kyrghyzstan.
2. The Bank of Kyrghyzstan will be prohibited to directly credit the deficit of budget of the Republic of Kyrghyzstan and to purchase the securities of the state during their first selling.
Article 11. Handling the deft of the state.
The Bank of Kyrghyzstan will handle the state debt of the Republic of Kyrghyzstan by carrying out operations to place the state loans, to cancel them and to pay interest on them.
Article 12 Organization of treasuryand budget operations (?)
1. The Bank of Kyrghyzstan together with the Ministry of Economy and Finance determines the procedures of implementing the budget of the Republic and the local budgets.
2. The Bank of Kyrghyzstan implements the encashment of the budget of the Republic and the local budgets through the Banks and can carry out operations necessary for the implementation of budget through its offices.
Article 13. The Bank of Kyrghyzstan as a financial advisor
1. The Bank of Kyrghyzstan will be a financial advisor to the Supreme Soviet of the Republic, President of the Republic, Government of the Republic on matters of national reserve system and other issues related to banking.
2. The Government of Kyrghyzstan will have consultation with the Bank when developing the budget of the Republic.
3. The draft laws and other moves related to banking will be considered by the Supreme Soviet only after consultations with and statement of the Bank of Kyrghyzstan.
CHAPTER V. RELATIONS OF THE BANK OF KYRGHYZSTAN WITH OTHER BANKS Article 14: Operations and transactions with banks 1. The Bank of Kyrghyzstan can on certain terms: 1) open accounts and accept deposits of banks and other juridical persons, 2) buy and sell precious oetals, foreign currency, securities issued or ensured by the Republic of Kyrghyzstan, foreign states, international organizations, 3) buy, sell, conduct other deals with short-term (up to 3 months) bills 4) give short-term credits (a) for a period not exceeting 6 months - on a security of assets mentioned in subarticles 2,3 of the present article, - in case of emergency in accordance with the decision of the Board of the Bank of Kyrghyzstan without the security or on the security of assets not included in the subarticles 2,3 of the present article; (b) for a period not exceeding 12 months for production of agricultural products accorting to the list agreed with the Government of the Rebublic of Kyrghyzstan. 5) provide credits for a period up to 1 year for production of agricultural products according to the special list agreed vith the Government of the Republic of Kyrghyzstan and approved by the Supreme Soviet of the Republic. 6) act as a guarantor on the deals made by banks which involve currency. 7) act as a creditor of the highest instance. 2. The Bank of Kyrghyzstan can perform other operations and make deals in accordance with its tasks. Article 15. Control of the Interest Rates The Bank of Kyrghyzstan will control the banks interest rates in the Republic using the instruments of monetary and credit policies. [The earlier draft included a second sub-article: The Bank of Kyrghyzstan can fix the minimal level of interest rates on deposits attracted by banks. Article 16. Settlements between the banks The bank of Kyrghyzstan can render services on the settlement of interbank payments, encourage the organization of interbank clearing and other forms of the settlement in accordance with the current banking legislation. The Bank of Kyrghyzstan is responsible for the transaction time. In case of delay of payments exceeding agreed periods, the Bank of Kyrghyzstan will pay double interest rates effective at that time for each day of delay. Article 17. Bank supervision 1. The Bank of Kyrghyzstan will issue licenses to carry out bank operations and supervise banks. 2. The bank of Kyrghyzstan can: 1) check on the activity of banks or entrust it to independent persons and auditors, 2) request the banks to submit any balance sheets, reports and information related to banking, 3) publish documents within the Bank's competence binding on banks and physical persons. 4) stop for the perlod of up to 7 days all 8ank transactions of a suspicious character having the features of "laundring" the money received through illegal activities, upon a written notifaction from the law-enforcing bodies responsible for preventing "laundring" of money and other illegal financial operations. The Bank of Kyrghyzstan can maintain cooperation with foreign bank control organs in matters of supervision of banks Article 18. Reserve Requirements 1. The Bank of Kyrghyzstan establishes the size of compulsory reserves, which are placed on the reserve accounts of the Bank of Kyrghyzstan. The Bank of Kyrghyzstan can fine any other bank if the latter does not maintain the agreed level of compulsory reserves. The fine will be on a daily basis and not exceeding twice the refinancing rate on the missing difference. Article 19. Economic Norms Established by the Bank of Kyrghyzstan 1. To control the activities of banks, the Bank of Kyrghyzstan establishes and declares the following economic norms: 1 1) minimal size of the authorized stock capital, 2) critical ratio between the size of a bank's resources and the sum of its assets or liabilities including the risk estimate, 3) index of a bank's liquidity, 4) maximal risk per a borrower, 5) limit on exchange and interest risks, 6) other norms essential for the financial security of a bank. 2. If a bank fails to observe the economic norms or it violates the banking legislation the Bank of Kyrghyzstan gives a bank a written notification requiring it to eliminate the malpractice within the indicated time. If a bank fails to comply with the provisions of the present Law, if it fails to provide accounting or it provides false accounting, if a bank is non-profitable or if the situation arises which jeopardizes the interest of creditors and a bank's depositors, the Bank of Kyrghyzstan can take the following steps; 1) address a bank requesting it: - to take appropriate measures to improve the financial situation - to replace the managers of a bank - to reorganize a bank or to liquidate it 2) use the following sanctions: - to raise the norms (quotas) of compulsory reserves, - to administer a monetary fine with the size of the fine and the procedure of obtaining it being determined by the Board of the Bank of Kyrghyzstan in each concrete case but not exceeding l% of the size of a Bank's authorized capital stock. - to expropriate and to invest into the budget the profit obtained through a bank's malpractice, - to temporarily suspend the validity of the license, - to recall the banking license 3. Banks and their establishers can appeal to the Court of Arbitration against to the decision taken by the Bank of Kyrghyzstan while exercising control. CHAPTER VI. EXTERNAL ECONOHIC RELATIONS AND CURRENCY OPERATIONS Article 20. Operations related to the particiDation of the Republic of Kvrghyzstan in international financial and credit organizations 1. In cases provided for by the legislation and international agreements of the Republic of Kyrghyzstan, the Bank of Kyrghyzstan will represents the interest of the Republic, will carry out operations on its behalf and make deals with central banks of other countries, IMF and other international financial and credit organizations. 2. The Bank of Kyrghyzstan can give credits to the Government of the Republic on agreed terms and carry out other operations to place deposits and other payments related to the membership of the Republic of Kyrghyzstan in IMF and other international financial and credit organizations. Article 21. Management of official goal and currency reserves of the Republic of Kyrghyzstan The Bank of Kyrghyzstan in accordance with the legislation of the Republic of Kyrghyzstan will manage gold and currency reserves of the Republic which are on the balance of the Bank of Kyrghyzstan, will carry out operations to place (including the foreign banks) official gold and currency reserves of the Republic of Kyrghyzstan independently on through the Banks authorized by the Bank of Kyrghyzstan. Article 22. International reserves of the Bank of Kyrghyzstan 1. To ensure its liabilities in foreign currency and to protect the authorized capital stock from foreign currencies fluctuations the Bank of Kyrghyzstan will have part of its resources in foreign currency and other international assets the value of which will not be subject to changes on international markets. The Bank of Kyrghyzstan establishes on terms defined by the Board of the Bank an international reserve which will consist of: 1) gold, 2) foreign currency in the form of bank notes and coins including the currency placed abroad, 3) any reserve assets acknowledged in the world including the right to purchase shares of the reserve from the International Monetary Fund and the right to borrows loans, 4) bills of exchange and other liabilities for debts as well as banker's bills and other securities issued or guaranteed by foreign states, international financial organizations in foreign currency and paid in foreign currency of the states selected by the Board of the Bank of Kyrghyzstan, 5) other external assets are determined by the Board of the Bank of Kyrghyzstan. 2. The Bank of Kyrghyzstan will manage its international reserve with the aim of protecting its purchasing capability. Article 23. Operations and deals in foreign currency 1. The Bank of Kyrghyzstan outside the Republic can: 1) carry out any operations in foreign currency in the Republic of Kyrghyzstan and outside the Republic which satisfy the legislation currently in use in the Republic and are acceptable in the international banking practice, 2) purchase and sell banker's bills and other securities issued or guaranteed by foreign states or international financial organizations and make deals which do not contradict the legislation of the Republic of Kyrghyzstan and which are acceptable in the international banking practice, 3) to open bank accounts in Central Banks and foreign banks, 4) to open bank accounts and represent Central Bank and other financial institutions of foreign countries interests in Kyrghyzstan. CHAPTER VII. THE MANAGEMENT ORGANIZATION OF THE BANK OF KYRGHYZSTAN Article 24. Management Structure of the Bank of Kyrghyzstan 1. The Board of Directors, Chairman of the Bank and officials, appointed by chairman. 2. The Board of Directors consists of 9 people, including Chairman and his deputies. 3. Chairman of the Bank of Kyrghyzstan is appointed by President of Kyrghyzstan with approval of the Supreme Soviet for the term of 5 years with the possibility to be appointed for the 2nd term. 4. The Chairman's salary is established by the President of the Republic. 5. Deputies chairman and other members of the Board are nominated by President of Kyrghyzstan by Chairman's recommendation for five years, and can be assigned for the following terms: Their terms in office should not begin and end at the same time. When first nominated, 4 members of the Board should be nominated for the term less than 5 years. 6. Besides chairman of the bank and his deputies, the Board of Directors should consist of: 1) one representative of the Ministry of Finance and Economies 2) representatives of the financial-credit system, branches of economy and academic circles. 7. The Chairman of the Bank, his deputies, and other members of the Board can be released of their duties before their terms expire in the cases of resignation, miuse of their position for personal benefit, or physical inability to perform the duties. Article 25. The Board of Directors' Authority The Board of Directors considers and approves: 1. the financial-credit policy of the Bank of Kyrghyzstan 2. types, dimensions and order of establishing target funds of the Bank of Kyrghyzstan 3. the financial plan of the Bank of Kyrghyzstan and the account of its implementation 4. the organization structure of the Bank of Kyrghyzstan 5. credit sizes of the Bank of Kyrghyzstan, provided to other Banker, credit interest rates, accounting rates 6. decisions to provide credits to the Government of Kyrghyzstan 7. Rubles and regulations of the Bank of Kyrghyzstan 8. economic norms 9. types of assets, necessary for the Bank of Kyrghyzstan in its international reserves 10. other questions, which are related to the Board of Directors. The Board of Directors is in a position to consider any question, if it thinks to be important Article 26. Authority of the Chairman of the Bank 1. The Chairman of the Bank heads the Board of Directors and signs its decisions. He works without any letter of authorization from the Bank and represents the interests of the Bank in Kyrghyzstan and abroad, concludes agreements, makes decisions on all question of its activity, except those related to the Board of Directors, envisaged by this law. 2. The Chairman establishes the salaries of the Board members. 3. The Chairman of the Bank determines salaries of the Bank's specialists, agreeing this upon with his deputies and managers of structure divisions. 4. When chairman of the Bank is absent, he is substituted by one of his deputies. Article 27. The Board of Directors Meeting 1. The Board of Directors hold its meetings on an as-needed basis, but not rarer than 1 time a month. Irregular meetings can be convened at the initiative of the chairman or 5 members of the Board. 2. The quorum of the meeting is 6 members of the Board, one of them should be Chairman of the Bank or one of his deputies. 3. A Board of Directors decision is adopted by a majority of votes. If pro and contra votes are equal, the vote of chairman or his deputy is decisive. 4. The Chairman of the Bank is usually chairman of the conference. Article 28. High ranking bank officials law to occupy other positions The Chairman of the Bank of Kyrghyzstan, his deputies, top managers and their deputies have no right to occupy any positions in financial-credit and other organizations, no matter if this position is paid for or not. This prohibition is not valid for those officials, who represent the Ba nk's interests in those organizations, in which the Bank exercises his membership, and those who occupy positions in international financial credit and other organizations. President of the Republic of Kyrghyzstan A. Akaev