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Banking system

State Regulation


The banking system of the Kyrgyz Republic consists of the National Bank of the Kyrgyz Republic and commercial banks. Banking activities are regulated by the Law of the Kyrgyz Republic “On the National Bank” and the Law of the Kyrgyz Republic “On Banks and Banking”.


The National Bank is a central bank of the Kyrgyz Republic owned by the Kyrgyz Republic. Powers and functions of the National Bank include:  


  • Determination and implementation of the monetary policy in the Kyrgyz Republic;
  • Issuance of licenses for all types of banking operations;
  • Exercise of currency regulation, including issuance of guidelines for foreign currency transactions, as well as purchase, sale and exchange of foreign currency in accordance with Kyrgyz law;  
  • Exercise of other functions and powers in accordance with Kyrgyz law.


Establishment and Licensing


A bank can be established and operate only as a joint-stock company (whether closed or open) and the amount of its charter capital must be not less than KGS 600 million (or approximately USD 9 million ). The banks established before July 1, 2016 must have a minimum charter capital of KGS 400 million, and those established after July 1, 2017 must have a minimum charter capital of KGS 600 million.       


Banking operations subject to licensing include: deposit-taking operations; investing own or borrowed funds; opening and maintaining accounts of individuals and legal entities; independently establishing correspondent relations; carrying out settlements upon the request of customers and correspondent banks; providing cash services to them; issuing, cashing, accepting, keeping, and confirming payment instruments (cheques, letters of credit, promissory notes, and other instruments), including credit and debit cards;  purchasing and selling debt (factoring); promissory note and bill of exchange forfeiting; issuing debt securities (deposit certificates, bonds, promissory notes); performing financial leasing transactions; issuing bank guarantees; providing paid services using electronic money in the form of prepaid cards.


The right to issue respective licenses rests with the National Bank of the Kyrgyz Republic.


Foreign banks can set up their representative offices, subsidiaries and joint ventures in the Kyrgyz Republic with the consent of the National Bank of the Kyrgyz Republic. Branches of foreign banks must obtain the license from the National Bank of the Kyrgyz Republic.


Standard Requirements for Banks


The National Bank establishes standard requirements including minimum capital and reserve funds requirements. The National Bank also establishes mandatory requirements with respect to commercial bank officers (chair and members of the Board of Directors, chair and deputy chairs and members of the Management Committee, chair of the Audit Committee, head of the Crediting Department, chief accountant and internal auditor) who are appointed with the consent of the National Bank. 


All the requirements for domestic banks, including minimum authorized capital and minimum reserve funds and other requirements, also apply to banks with foreign ownership. 


Liquidation and Re-Organization


A bank may be liquidated or re-organized as a result of revocation of its banking license by the National Bank, by a respective court decision, or by a voluntary decision of the bank.


Bank Secrecy


Disclosure of information representing a bank secret is regulated by the Law of the Kyrgyz Republic “On Bank Secrecy” and the Law of the Kyrgyz Republic “On Banks and Banking”.


The following information is considered to be a bank secret: information on customers’ accounts and deposits; information on transactions/operations performed upon customer’s request or to the customer’s benefit; information about a customer which the bank may have obtained in the course of its relations with the customer. 


In addition to the National Bank, banks may provide information to: investigation agencies (with authorization of procurator); courts (on the basis of a court ruling); and representatives of an individual (on the basis of a notarized power of attorney).


Many commercial banks operating in the Kyrgyz Republic, including other financial institutions provide credit information to Ishenim Credit Information Bureau of the Association of Financial Institutions for the creation and maintenance of the credit registry.


Anti-Money Laundering and Counter-Terrorism Financing Measures


Under Kyrgyz law, capital control is imposed on cash transactions over 1 million KGS (or around USD 16,000 as of June 2016 ) referring to any of the following:   


1)   Internal or external transactions and operations performed by banks and other financial institutions, except transactions and operations listed by the competent public authority in coordination with the National Bank of the Kyrgyz Republic ;

  1. Transactions or operations in which at least one party is registered, domiciled or located or maintains bank account in the  jurisdiction where no disclosure or submission of information on financial operation is required.

The list of such jurisdictions is determined by the competent public authority in coordination with the National Bank of the Kyrgyz Republic on the basis of the lists approved by the international organizations involved in anti-money laundering and is subject to publication.      

3)   Other transactions and operations in excess of the established limit such as:

-              -          The purchase or sale of foreign currency in cash;

-              -          The purchase of securities by an individual for cash; 

-              -          The exchange of banknotes of different denomination; 

    -          The contribution by an individual of cash to the authorized capital of an organization;

-          The flow of funds of charities, public organizations and institutions, and foundations; 

4)    Other movable and immovable property transactions:

    -        The pawning of securities, precious metals, jewels, or other valuables;     

    -        The payment of insurance contributions by an individual or receipt of a premium of life           insurance, another type of contribution-based insurance, and pension benefits; 

-          The transactions involving immovable property in the amount equal to or exceeding 4.5 million KGS;

-          Movable property transactions;

-          Receiving or giving property under a financial lease agreement;

-          The payment of lottery, pari-mutuel, or other gamble-related gains.

5) Money transfers:

-          Performed by organizations other than financial and lending institutions, upon request of a customer; 

-          Performed through systems not requiring account opening for transfer or receipt of money.


Kyrgyz legislation sets forth mandatory control over transactions and operations, if at least one of their parties is included in the List of persons who served sentences for committing terrorist or extremist crime as determined by the Government of the Kyrgyz Republic.

This also applies to transactions and operations that raise suspicion, i.e., have no clear economic or evident legal purpose and are not typical of a given individual or legal entity.


Disclosure of Information


Entities required to disclose information on the above transactions include banks, financial institutions, credit unions, insurance/reinsurance companies, mortgage companies, pension assets management companies, exchange offices, pawnshops and buying offices, professional participants of the securities market, commodity exchanges, insurance companies, leasing companies, operators of payment systems, lottery organizers, organizations carrying out registration of rights to immovable and/or movable property, organizations handling accounts, realtors and dealers in precious metals and/or stones, trustees, postal and telegraph services, and others.  


All information on transactions and operations that raise suspicion shall be provided by the respective entities within 1 business day following the transaction/operation to the financial intelligence service which, in its turn, may share this information with investigation agencies and courts. Legislation precludes liability of the entities for disclosing such information while providing their services to  customers. Moreover, the entities are prohibited from  disclosing the fact that information was provided to the Financial Intelligence Service of the Kyrgyz Republic.  


Deposit Insurance 


Under the Law of the Kyrgyz Republic “On Bank Depositor Protection”, there has been established a Deposit Insurance Fund which is administered by the Deposit Insurance Agency.


When an insurance contingency occurs, each depositor shall be paid a compensation of not more than KGS 100 thousand (about USD 1,500  as of June 2016 ) in total, including interests on deposits.


An insurance contingency means a bank’s failure to repay a deposit due to its liquidation or bankruptcy. The Law also provides for a category of deposits not subject to protection, for  example, deposits of bank insiders and affiliates, deposits made under the power of attorney issued by a legal entity, deposits associated with  the financing of terrorism and proceeds of crime (money-laundering), etc.


Banking Services


In the Kyrgyz Republic,  pursuant to the data of the National Bank as of May 31, 216  there are 25 registered commercial banks, including banks with foreign or government participation , and one foreign bank branch. Also, there are 2  foreign bank representative offices.


Banks in Kyrgyzstan operate with credit cards such as MasterCard, Diners Club, Visa, traveller’s cheques American Express, Thomas Cook, CitiCorp, (CUP) ChinaUnion Pay[1] and with registered cheques.


Banks take demand deposits and time deposits (for a term of 0 to 12 months) from legal entities and individuals with an interest rate ranging between 0% and 18%.


Banks may offer loans for 5-1- years at 5% or more in the local or foreign currency.  No mortgage loans in the foreign currency may be offered to individuals.


According to the World Bank’s Report, ‘Doing Business’, 2016, the Kyrgyz Republic ranks 67th  out of 189 countries in the world in terms of ease of doing business and 6th in the world in terms of ease of access to loans  .[2]


Principles of Islamic Finance in Kyrgyzstan


One of the maxims of Islam is “the prohibition to participate in any interest-bearing transactions”. Therefore, banks that follow the Islamic principles issue interest-free loans for business development. Under this scheme, a bank obtains a share in the financed or newly established company and participates both in gains and losses of the financed business project. 


In May 2006, the Kyrgyz Republic, the Islamic Development Bank, and EcoIslamicBank Closed Joint Stock Company signed a Memorandum of Understanding related to the introduction of the principles of Islamic banking and finance in the Kyrgyz Republic. Parties to the Memorandum agreed to a phased introduction of the Islamic principles in the Kyrgyz Republic as an alternative to the existing traditional principles of finance.  



To promote the implementation of the second phase of the pilot project set forth in the above Memorandum, Eco Islamic Bank Closed Joint Stock Company continues its efforts to finalize its transformation into an Islamic bank.


The bill proposing amendments to the Laws of the Kyrgyz Republic “On the National Bank of the Kyrgyz Republic” and “On Banks and Banking in the Kyrgyz Republic” came into effect on July 2, 2009 with an aim to ensure equal conditions for all participants of the banking sector and to promote the Islamic banking in the Kyrgyz Republic. 


MFC Companion Financial Group CJSC began practicing Islamic finance in Osh, Kyrgyz Republic in 2013.


Kyrgyzstan Leasing Company engaging in Islamic finance leasing started operations in 2015.


Operations in Offshore Zones


Under Kyrgyz legislation, Kyrgyz banks are prohibited from establishing direct correspondent relations with banks, their affiliates and envelope banks incorporated in the following offshore zones:


  • Anguilla (United Kingdom);
  • Antigua and Barbuda;
  • Aruba;
  • Barbados;
  • Belize;
  • The Bermuda Islands (United Kingdom);
  • The British Virgin Islands (United Kingdom);
  • Gibraltar (United Kingdom);
  • Bahrain;
  • Grenada;
  • The Dominican Republic;
  • Andorra;
  • Lichtenstein;
  • Lebanon;
  • Macao (China);
  • the Maldives;
  • Monaco;
  • Montserrat (United Kingdom);
  • Western Samoa;
  • The Antilles Islands (Netherlands);
  • Niue (New Zealand);
  • The Labuan Island (Malaysia)
  • The Cayman Islands;
  • The Cook Islands (New Zealand);
  • The Turks and Caicos Islands (United Kingdom);
  • Vanuatu;
  • Costa Rica;
  • Liberia;
  • Mauritius;
  • Malta;
  • The Marshall Islands;
  • Nauru;
  • Palau (Belau);
  • Panama;
  • The Seychelles Islands;
  • San Marino;
  • Saint Vincent and the Grenadines;
  • Saint Lucia;
  • The Bahamas Islands;
  • Saint Kitts and Nevis;
  • Montenegro.



Companies incorporated in the above states and territories may not act as founders or shareholders of resident banks of the Kyrgyz Republic including microfinance companies. 


[1] http://www.knews.kg/pr_articles/35723_tseremoniya_zapuska_ekvayringa_kart_Union_Pay_Int_/

[2] http://www.doingbusiness.org/rankings