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In the Kyrgyz Republic, from January 1, 2022, it is planned to increase the authorized capital of pawnshops to 1 million soms

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by September 20, 2021 General

The Ministry of Economy and Finance of the Kyrgyz Republic submits for public discussion a draft resolution of the Cabinet of Ministers “On Amendments to Certain Government Decisions on the Non-Bank Financial Market”.

According to the document, this draft resolution was developed by the State Service for Regulation and Supervision of the Financial Market (hereinafter referred to as Gosfinnadzor) in order to increase the minimum authorized capital to increase the level of financial stability of pawnshops. The main tasks are:

– establishment and provision of an increase in the minimum size of the authorized capital of pawnshops;

– providing opportunities for expanding the activities of pawnshops;

– ensuring the growth of volumes and quality of services provided;

– increasing the level of financial stability of pawnshops.

Licensing of pawnshops began in July 2017, after the entry into force of the government decree “On issues of pawnshop activities” dated June 8, 2017 No. 353. In accordance with this decree, requirements are established for the minimum size of the authorized capital of pawnshops in the amount of at least 5 00 thousand rubles. soms.

As of 01.01.2021, 352 pawnshops operate in the republic (as of 01.01.2020 – 308).

Lombard activity provides an opportunity to obtain quick, but small in volume, short-term loans, which citizens use when they need to find cash for their consumer needs. When issuing a loan at interest, pawnshops accept movable property as collateral.

The draft resolution of the Cabinet of Ministers provides for an increase in the minimum authorized capital for the activities of pawnshops, which affects the level and scale of services provided, and the expansion of the activities of pawnshops.

An insignificant amount of financial resources does not allow improving the technical capabilities of pawnshops, acquiring high-quality and modern equipment, ensuring a high-quality assessment and control system, storage conditions for mortgaged property, subsequent problems with the sale of unclaimed property, etc. Lack of opportunities for pawnshops to attract additional financial resources, lack of opportunities to obtain loans due to the lack of collateral.

The draft resolution proposes to amend the Resolution No. 353 dated June 8, 2017 and establish phased requirements for the minimum size of the authorized capital of pawnshops:

– from January 1, 2022, in the amount of at least 1,000,000 (one million) soms;

– from January 1, 2023, in the amount of at least 2,000,000 (two million) soms;

– from January 1, 2025, in the amount of at least 3,000,000 (three million) soms.

Considering that paragraph 6 of clause 7-2 of the Temporary Regulation on Licensing Certain Types of Activities in the Field of the Non-Banking Financial Sector, approved by Decree of the Government of the Kyrgyz Republic No. 66.1 dated December 12, 2016, provides that the necessary documents are submitted to obtain a license to operate pawnshops in terms of the amount of the authorized capital of 500,000 soms, it is proposed to rewrite this paragraph of the paragraph as follows:

“- written confirmation of a commercial bank about the existence of an account with a legal entity, as well as the amount of the paid authorized capital of pawnshops.”

This change will exclude the binding of the size of the authorized capital to a certain amount, which, according to the proposal for the project, will increase in stages.

Therefore, in general, an increase in the authorized capital is necessary to replenish the resources of companies, provide additional opportunities for expanding their activities, equip with high-tech and modernized equipment, increase the potential and efficiency of pawnshops for high-quality customer service.

Source: Kyrgyz National News Agency

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