«Decline in public confidence in the banking system may lead to an outflow of deposits from commercial banks,» the National Bank of Kyrgyzstan commented to 24.kg news agency on the possible consequences of the State Finance Intelligence Service’s requirement to provide information on clients of banks.
The National Bank of the Kyrgyz Republic reminds that confidence in the banking system has been formed for decades. The banking sector is quite sensitive and very vulnerable to all sorts of information. At the same time, bank secrecy is an important element of the stability of the financial system and contributes to attracting money from citizens and legal entities to the country’s economy.
«The confidentiality of relations between the bank and its clients contributes to the opening of accounts and deposits in banks by citizens, since the parties (the bank and its client) know the set by law guarantees and the procedure for transmission and disclosing information on open bank accounts and operations on them. At the same time, simplified access to such information can undermine the trust of customers in banks and lead to an outflow of capital from the country,» the National Bank believes.
The bank notes that in recent years there has been a steady growth in the deposit base of the banking system. This was a result of the measures taken by the National Bank and commercial banks aimed at improving and maintaining the efficiency, safety and reliability of banking activities, guarantee of the preservation and observance of the principles of bank secrecy and confidentiality of information.
Further development of the banking system is inextricably linked with the factor of increasing confidence in banks due to public confidence in the safety of their savings, as well as legislative guarantees of protection of the rights of consumers of financial services, including the protection of information from unauthorized disclosure.
National Bank
«One of the functions of the National Bank, established in Article 17 of the Law on the National Bank of the Kyrgyz Republic, Banks and Banking Activities, is to protect the rights of consumers of banking services. The rules on the protection of the rights and legitimate interests of clients are one of the significant innovations of this law. Government agencies authorized to receive information constituting bank secrecy must strictly comply with the requirements of the legislation on request, disclosure and ensuring the confidentiality of information received. Otherwise, a decline in public confidence in the banking system can lead to an outflow of deposits from commercial banks and, as a result, to an increase in interest rates both on deposits and on loans, as well as a general decrease in the investment attractiveness of banks in Kyrgyzstan,» the National Bank summed up.
