Regulations on the Procedure for Carrying Out Factoring Operations by Commercial Banks in the Territory of the Republic of Uzbekistan

Regulation of the Board of the Central Bank of the Republic of Uzbekistan, registered on 03.08.2000, registration number 953

Date of Entry into Force

13.08.2000

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31.03.2021

24.01.2018

19.12.2016

13.10.2014

31.05.2012

13.08.2000

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Document lost its force 31.03.2021

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OKOZ:
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07.00.00.00 Legislation on Finance and Credit. Bank Activity / 07.21.00.00 Bank Activity / 07.21.15.00 Other Operations and Transactions]
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Finance / Banks and other credit institutions. Credits]

Central Bank of the Republic of Uzbekistan

By the Board

On July 15, 2000

No. 476

"APPROVED"

Regulations on the Procedure for Conducting Factoring Operations by Commercial Banks in the Territory of the Republic of Uzbekistan

Regulation

[State registered by the Ministry of Justice of the Republic of Uzbekistan on August 3, 2000, No. 953]

This Regulation was removed from the state register on the basis of the Order of the Minister of Justice of the Republic of Uzbekistan dated March 29, 2021, No. 8-mh "On Removing Certain Departmental Normative Legal Documents from the Register of Departmental Normative Legal Documents" (registration number 3293, 31.03.2021).

1. GENERAL PROVISIONS

1.1. This Regulation is developed in accordance with Articles 313–323 and 749–758 of the Civil Code of the Republic of Uzbekistan, the Laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan," "On Banks and Banking Activity," "On Foreign Economic Activity," Decrees of the President of the Republic of Uzbekistan No. PF-837 of April 20, 1994 "On Measures to Ensure Currency Control over Export-Import Operations," No. PF-2612 of June 2, 2000 "On Measures to Implement Programs for Liberalizing and Deepening Reforms in the Political, Economic, and Spiritual Spheres of Society and Ensuring the Security of the Country," as well as other legislative acts.

1.2. This Regulation establishes the procedure for conducting operations by banks to finance their clients, involving the transfer of the right to claim money from third parties, providing the opportunity to immediately compensate for the bulk of payments, guarantee full repayment of debts, and reduce account maintenance costs (factoring).

1.3. Factoring is a type of banking service for financing economic entities—suppliers (hereinafter referred to as clients)—whereby they are granted the right to receive payment for delivered goods, performed works, or rendered services, which have been accepted by payers (hereinafter referred to as payers) but not yet paid according to payment demands, without the right of recourse.

1.4. Banks carry out factoring operations based on contracts with clients whose main deposit accounts are located where the claims are collected.

1.5. The terms for the payer to fulfill the monetary claim to the financial agent, based on the provision of factoring services, must not exceed 90 days. Banks must take measures regarding obligations not paid within this period for debt collection from payers in the manner prescribed by law.

1.6. Factoring operations:

cannot be carried out based on claims submitted to budget organizations;

based on the debt obligations of individuals;

based on the obligations of enterprises declared insolvent;

based on loss-making enterprises;

for financing capital investments;

based on export consignment contracts;

based on compensation and barter agreements;

based on installment or partial payment;

cannot be carried out based on sales contracts where the payer has the right to return the product within the time stipulated in the contract, as well as after the provision of sales services.

1.7. When conducting a factoring operation, the bank transfers funds to the client's main deposit account before the claim is collected, up to the amount specified in the factoring contract for the payment demands presented to the bank for which the right to receive payment is transferred.

1.8. The difference between the amount transferred by the bank and the amount of the payment demand under the contract constitutes the bank discount.

1.9. The absence of overdue creditor debt in the payer is a mandatory condition for providing factoring services.

1.10. Unless otherwise provided in the contract, the subsequent transfer of the right to claim money by the bank is not permitted.

2. PROCEDURE FOR CONCLUDING A CONTRACT

2.1. Before concluding the contract, the client submits the following documents to the bank:

a sales, work performance, and service provision contract, officially оформлен in the prescribed manner and signed by the payer;

documents confirming the transfer of property, performance of works, and provision of services (cargo waybills, copies of powers of attorney, acceptance certificates of works, etc.);

a list of accounts opened by the payer in other banks;

the accounting balance (Form No. 1) for the last reporting period submitted by the payer to the relevant state tax inspectorate, as well as reconciliation certificates for debt exceeding 90 days and a report on financial results (Form No. 2)—except for newly established legal entities and individual entrepreneurs, and peasant farms operating without forming a legal entity.

2.2. The contract between the bank and the client regarding the provision of factoring services must specify:

the buyers to whom the claim is being transferred;

the total amount of the claims being transferred;

the discount amount;

the term of validity of the contract;

the terms for stating claims by the parties for violation of contract terms;

the liability of the parties for violation of contract terms;

conditions for terminating the contract;

other conditions provided for by legislative acts.

2.3. When concluding a contract for the provision of factoring services, the client and the bank-financial agent must notify the payer in writing about this transaction.

2.4. If funds are insufficient in the payer's main deposit account before collection for payment, the payer's bank informs the bank-financial agent that the payment demand has been accepted into Form No. 2 of the card file.

2.5. The contract:

can be terminated by mutual agreement of the parties;

at the initiative of the supplier if the bank violates the contract terms;

at the initiative of the bank if the supplier violates the contract terms;

on other grounds in accordance with legislative acts.

In this case, the parties notify each other in writing within the terms specified in the contract about the termination of the contract's validity.

2.6. If the contract is terminated by one party, mutual claims are resolved in the manner prescribed by legislative acts.

3. PROVISION OF FACTORING SERVICES IN FOREIGN CURRENCY BY COMMERCIAL BANKS FOR EXPORT OPERATIONS

3.1. Commercial banks provide factoring services for export products in foreign currency only to enterprises and organizations that have a deposit account before collection with them and for which they provide services.

3.2. In providing factoring services, bank income is understood as the difference between the nominal value of the payment document in foreign currency and the amount transferred to the bank by it in accordance with the contract, known as the discount.

3.3. The absence of overdue debtor debt in the supplier enterprise for export contracts concluded with the relevant foreign partner and previously entered into the Single Electronic Information System for Foreign Trade Operations is a mandatory condition for providing factoring services for export operations.

3.4. Commercial banks provide factoring services only for export contracts entered into the Single Electronic Information System for Foreign Trade Operations in the prescribed manner, and in an amount not exceeding the sum of bank guarantees from foreign correspondent banks obtained or open irrevocable letters of credit drawn on these contracts.

3.5. When conducting a factoring operation for export contracts, the commercial bank transfers funds in foreign currency to the client's transit deposit account before collection, deducting the agreed discount amount, in the amount waived by the supplier for the benefit of another person.

3.6. After signing the contract regarding the transfer of the right to claim money, the client must notify the foreign counterparty and its guarantor (guarantor) about this and provide them with the bank details of the bank-financial agent for making payment on these payment documents.

If a letter of credit is accepted as the form of payment, in this case, the client must timely reissue the letter of credit for the benefit of the bank-financial agent and then notify the bank about the reissue.

3.7. The provisions of paragraphs 1.9, 1.10, 2.3, 2.4, 2.6, and 4.6 of this Regulation do not apply to factoring services related to export operations.

4. ACCOUNTING AND SUBSEQUENT CONTROL OF BANKS FOR FACTORING OPERATIONS

4.1. Accounting for factoring operations is maintained in accordance with the "Chart of Accounts for Accounting in Commercial Banks of the Republic of Uzbekistan" (August 13, 2004, registration number 773-17).

4.2. For accounting of payment documents for factoring operations, the bank opens a personal account 90966 "Purchased Debtor Debt—Factoring" in suspense accounts. The full amount of purchased debtor debt is reflected on the debit of this account, and on the credit, purchased debtor debt fully repaid by payers is written off.

4.3. After signing the contract between the parties regarding factoring (transfer of monetary claim), the bank-financial agent transfers funds to the client's main deposit account before collection, deducting the discount amount.

The transfer of funds to the client's main deposit account before collection is carried out by the bank using memorial orders, which are prepared in two copies. The first copy is placed in the bank's daily documents after accounting operations are performed on the accounts, and the second copy is sent to the client in the prescribed manner.

4.4. The client is responsible for complying with all requirements for the formalization of settlement documents, as well as for timely transferring (no later than the next banking day) funds credited to their bank account for any reason for the monetary claims provided by them to the bank.

4.5. In factoring operations, the client must stamp or write "Factoring" in the upper part of the payment demand, and the bank-financial agent must indicate the number of the factoring account on the credit side.

4.6. Due to the high level of risk inherent in factoring operations, banks are required to classify the quality of factoring operations in accordance with the Regulation "On the Procedure for Classifying the Quality of Assets in Commercial Banks and Forming Reserves to Cover Possible Losses on Assets and Their Use" (July 14, 2015, registration number 2696).

In connection with the implementation of this Regulation, the Regulation "On the Procedure for Conducting Factoring Operations by Commercial Banks in the Territory of the Republic of Uzbekistan," approved by the Ministry of Justice of the Republic of Uzbekistan on February 5, 1999, No. 621, loses its force.

Chairman of the Central Bank F. MULLAJONOV

Agreed:

First Deputy Minister of Finance T.G. GUSKOVA