The National Bank of Kyrgyzstan intends to strengthen control over credit unions in Kyrgyzstan and the Financial Company of Credit Unions JSC (FCCU). A package of amendments to the regulations governing their activities has been submitted for public discussion.
It is noted that the proposed regulations are aimed at increasing ownership transparency, strengthening risk control, and preventing capital and lending concentration.
It is proposed to introduce a mandatory risk standard and adjust licensing rules for credit unions. Organizations that do not accept deposits and have no outstanding debt to the FCCU will be required to establish an internal maximum risk standard per borrower of no more than 25 percent.
New shareholding rules, funding source requirements, and risk concentration limits for the FCCU have also been developed. New ownership rules and structure have been defined:
- Shareholders are limited to residents of the Kyrgyz Republic—credit unions, individuals, and legal entities;
- The shareholding per shareholder is limited to 15 percent of voting shares;
- The total shareholding of shareholders who are not credit unions must not exceed 49 percent.
Shareholders will be required to provide detailed documentation of the sources of funds used to increase capital or purchase shares. Legal entities must provide financial statements, declarations, and audit reports. Individuals must provide tax returns, purchase and sale agreements, inheritance documents, and other confirmations.
The National Bank may request additional information if any doubts arise.
The Financial Company of Credit Unions is a specialized organization created to support credit unions in the Kyrgyz Republic. It provides them with financing, accepts funds, redistributes resources within the sector, and helps balance liquidity.
