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Uzbekistan makes changes to requirements for commercial banks

Finance Materials 27 February 2020 17:47 (UTC +04:00)
Uzbekistan makes changes to requirements for commercial banks

BAKU, Azerbaijan, Feb. 27

By Ilkin Seyfaddini – Trend:

The concept of extending mortgage loans to the population of Uzbekistan to purchase apartments in apartment buildings has been approved, Trend reports citing the Uzbek media.

In pursuance of Presidential Decree of 28 November 2019 on additional measures to improve mortgage lending mechanisms, the Ministry of Finance and the Central Bank approved a concept for granting mortgage loans to the population for the purchase of apartments in apartment buildings based on market principles, under which the new procedure defines the requirements for individual borrowers and commercial banks involved in the provision of mortgage loans, the message said.

1. Potential applicants for a mortgage loan may be individuals who must meet the following requirements:

- Citizens of Uzbekistan who have reached the age of 18 and are not older than 50;

- Have a permanent job, permanent income from personal subsidiary, or from individual entrepreneurial activity, sufficient for monthly payment of accrued interest and repayment of the principal debt on the mortgage loan according to the payment schedule;

- To maintain the ratio of average monthly payments of the borrower for all loans and microcredits (including for the mortgage loan to be obtained), i.e. the debt burden indicator at the level of no more than 70 percent;

- Not to have, as of the date of consideration of an application for a mortgage loan, overdue debt on loans previously obtained from credit institutions.

2. The participating commercial banks shall meet the following requirements:

- Have developed a specific internal procedure for granting mortgage loans under the new procedure;

- To have a long-term credit rating of at least 'B' from Fitch Ratings or Standard & Poor's or 'B2' from Moody's Investors Service;

- To have an affirmative opinion of an audit firm on the financial statements for the last three years;

- Not to be in arrears with the funds provided from the state budget as well as with the financial resources placed by the Ministry of Finance under the new procedure;

- Absence of existing impact measures and sanctions as a result of violations of prudential norms established by the Central Bank;

- To have regulatory capital, at least 500 billion soum ($52.4 million).

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