Uzbekistan adopts program on financial-banking system

Uzbekistan, Tashkent, Nov. 30 / Trend D. Azizov /

The Uzbek President signed a decree "Priorities for further reforming and improving the stability of the financial and banking system of the republic in 2011-2015 and achieving high international rating indicators" last Friday.

The key provisions of the regulation have been published on the official website of the Central Bank of the Republic on Tuesday.

The regulations aims to intensifying the reforms and improving the stability of the financial and banking system, a radical change of approaches and evaluation system of banks and the entire financial and banking system, as well as attaching a high level to banking activities in accordance with generally accepted international norms, standards and indicators, the document said.

The main directions of the reforms of financial and banking system are enhancing financial stability and liquidity of banks in accordance with international standards established by the Basel Committee through the further capitalization of commercial banks, attracting private capital, increasing the resource base, improving asset quality and improving banking.

The President decided to take the systematic measures on strengthening the guarantees for depositors and the confidence of the population and foreign investors in the banking system, widespread involvement of free funds of people and facilities in a banking sector by introducing attractive new types of deposits and expanding the range of banking services.

The document also introduces a modern system of assessment and analysis of the commercial banks' activity and financial-banking system, based on international standards, criteria and standards. It allows to objectively assess the progress of individual banks and the entire system to a higher level adopted worldwide.

The actions will be taken to enhance the investment activity of commercial banks to increase their participation in financing investment projects, increasing and improving the quality of loan portfolio, adopting warning measures to prevent the formation of bad debts on loans.

The country plans to develop a network of non-bank financial institutions, credit unions, leasing, insurance and audit companies, by ensuring their sustainability and efficiency in accordance with international norms and standards, as well as strengthening the institutions of financial market infrastructure.

Stimulating the development of the microfinance as a major tool of financing the development of small business and private entrepreneurship, increasing employment, and welfare are provided.

A separate item includes the formation of new approaches and introduction of modern technologies, methods of accounting in commercial banks, increasing the level and quality of financial and banking information, ensuring its wide accessibility in accordance with the requirements of the leading international rating organizations.

Moreover, it is planned to improve training and retraining of staff in the field of finance and banking, as well as the relevant legislation.

It was reported that the Uzbek leadership has been conducting a policy of sharp acceleration in capitalization and expansion of the volume of banking services to enhance participation of banks in the investment processes on economic modernization since 2007.

In particular, President Karimov approved the program of measures to further strengthen the capitalization and investment activity of commercial banks in 2010-2012  in accordance with the Resolution "Measures to further improve the financial sustainability and strengthening the investment activity of the banking system" in April this year.

The document envisages an increase in the total capital of commercial banks by at least 20 percent annually, as well as in 2010 - totaling 490 billion soums due to the additional issue of shares.

The program also determined that this year the banks should ensure the growth of total long-term deposits by 1.6 trillion soums by introducing new types of banking services. The amount of deposits attracted by banks should hit at least 20 percent annually in the future.

It was previously reported that the minimum allowable amount of the newly established commercial banks as of Jan. 1, 2011 will be doubled - up to 10 million euros, for private banks - up to five million euros to strengthen the resource base of commercial banks.

The program also provides that the banks should increase the aggregate amount of credit investments through the domestic sources in 2010 aimed at the implementation of strategically important investment projects on modernization, technical and technological re-equipment of production worth 3.2 trillion soums.

It is also envisaged that the amount of lending to small business and private entrepreneurship in 2010 will be increased by at least 1.4 times, and microlending - in 1,3 times.

At present, the Uzbek banking system is represented by 32 commercial banks including three state, five - with the participation of foreign capital, 11 joint stock and 13 private.

The total assets of the Uzbek commercial banks increased by 30.2 percent in 2009 compared to the final figure of 2008 - up to 15.703 trillion soums, the total loan portfolio increased by 34.3 percent - up to 8.557 trillion sum, the aggregate bank capital increased during the year by 38,7 percent - up to 3 trillion 10.4 billion soums as of January 1, 2010.

The official exchange rate is 1633,90 soums per $1.

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