Decision of the Management of the Central Bank of the Republic of Uzbekistan, registered on 20.05.2024, registration number 2696-4

Effective date

22.06.2024

All

01.01.2027

22.06.2024

Appearance

Russian

Uzbek

O’zb

Uzbek|Russian

OKOZ:

1.07.00.00.00 Legislation on finance and credit. Banking activity / 07.19.00.00 Banking system / 07.19.03.00 Banking associations and reserves. Capitalisation;

2.21.00.00.00 Complex documents on amendments and additions / 21.04.00.00 Regulatory legal documents

TSZ:

1. Finance / Banks and other credit institutions. Loans

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Decision of the Management of the Central Bank of the Republic of Uzbekistan

On amendments and additions to the Regulation on classification of asset quality in commercial banks and the procedure for forming and using provisions for covering potential losses on assets

Registered by the Ministry of Justice of the Republic of Uzbekistan on 20 May 2024, registration number 2696-4

This decision is based on the Management’s decision No. 22/3 of 14 August 2026 “On approval of the Regulation on classification of asset quality in banks and the procedure for forming and using provisions for covering potential losses on assets” (registration number 3937, 10.09.2026) and will lose its force as of 1 January 2027.

In accordance with the laws “On the Central Bank of the Republic of Uzbekistan” and “On Banks and Banking Activity”, the Management of the Central Bank of the Republic of Uzbekistan decides:

1. Amend and add to the Regulation on classification of asset quality in commercial banks and the procedure for forming and using provisions for covering potential losses on assets, and to its annex, as approved by the Management’s decision of 13 May 2015 No. 14/5 (registration number 2696, 14 July 2015) (Collection of Legal Acts of the Republic of Uzbekistan, 2015, No. 28, Article 374).

2. This decision shall enter into force one month after the day it is officially announced.

Chairman M. NURMURATOV

Tashkent,

22 April 2024,

11/2‑No

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Annex

Amendments and additions to the Regulation on classification of asset quality in commercial banks and the procedure for forming and using provisions for covering potential losses on assets

1. The Introduction shall be edited as follows:

“This Regulation determines the procedure for forming provisions (hereinafter referred to as provisions) and their use for covering potential losses in commercial banks.”

2. In clause 13, the word “Finance” shall be replaced with the words “Economy and Finance”.

3. The third sub‑paragraph of clause 10 shall be removed.

4. Clause 121 shall be added with the following wording:

121. When an asset classified as “Substandard” has its principal debt and/or interest obligations fully repaid, the asset’s quality may be re‑classified as “Standard” if three consecutive payments are made on time and in full according to the asset’s repayment schedule and the requirements of clause 9 of this Regulation are met.

5. Clause 141 shall be added with the following wording:

141. After an asset is classified as “Unsatisfactory” (excluding assets whose conditions have been re‑examined), its quality may be re‑classified as “Substandard” if the improvement complies with the requirements of clause 9 or clause 12 of this Regulation.

6. Clause 171 shall be added with the following wording:

171. After an asset is classified as “Doubtful” (excluding assets whose conditions have been re‑examined), its quality may be re‑classified as follows:

• if the improvement complies with clause 9 or clause 12 – “Substandard”;
• if the improvement complies with clause 14 – “Unsatisfactory”.

7. In clause 19, the words “not returned or not returned as stipulated in the contract” shall be replaced with the word “Not returned”.

8. Clause 20 shall be edited as follows:

20. If at least one of the following factors is present, the asset’s quality is classified as “Hopeless”:

• Real estate or other assets pledged as collateral that have not been sold within one year from the date they were accepted into the balance sheet by the commercial bank;
• Real estate or other assets that are not needed for the bank’s operations (i.e., unused) and, excluding pledged assets, have not been sold or used within three years;
• Payment documents in the debtor’s file whose maturity is delayed by 366 days or more;
• Principal debt and/or interest obligations that are overdue by 366 days or more.

9. Clause 201 shall be added with the following wording:

201. After an asset is classified as “Hopeless”, including when it is reflected in an off‑balance‑sheet account, its quality may be re‑classified as follows:

• if the improvement complies with clause 9 or clause 12 – “Substandard”;
• if the improvement complies with clause 14 – “Unsatisfactory”;
• if the improvement complies with clause 17 – “Doubtful”.

In this case, assets reflected in off‑balance‑sheet accounts may be transferred to the appropriate loan account of the balance sheet for subsequent accounting.

10. The second sub‑paragraph of clause 29 shall be edited as follows:

“the grounds or reasons for revising the terms, including the emergence of factors that negatively affect the borrower’s financial condition;”.

11. Clauses 30 through 303 shall be edited as follows:

30. The first revision of an asset’s terms does not change its previous classification.

The revision of an asset’s terms does not allow the asset’s quality to be classified into a better category.

If the asset’s terms are revised a second time, the asset’s quality must be one grade lower than before the revision.

If the asset’s terms are revised three or more times, the asset’s quality is classified as “Hopeless” and cannot be re‑classified into a better category.

301. After an asset’s quality is classified as “Substandard”, “Unsatisfactory” or “Doubtful”, if at least three consecutive payments (principal, interest and other payments) are made in full and on time according to the repayment schedule, the asset’s classification may be upgraded by one grade.

In this case, if equal (proportional) payments are made each month from the month when payments start until the contract’s final date, three consecutive payments are required; otherwise, more than three payments of equivalent amount must be made on time and in full.

302. When an asset classified as “Hopeless” has its overdue obligations (principal, interest and other payments) fully repaid and, over at least six months, the remaining principal does not fall below 10 % of the original amount, the asset’s quality may be re‑classified as “Doubtful”.

In this case, if equal (proportional) payments are made each month from the month when payments start until the contract’s final date, six consecutive payments are required; otherwise, more than six payments of equivalent amount must be made on time and in full.

303. In cases of extraordinary circumstances or measures aimed at preventing the spread of infectious and parasitic diseases (e.g., quarantine) that prevent the debtor from fulfilling obligations to the bank, the Central Bank may deem the asset’s quality as not re‑classifiable, and provisions for classification, reserve creation and term revision may be applied.

12. Clauses 33 and 337 shall be considered ineffective.

13. The sixth sub‑paragraph of clause 34 shall be edited as follows:

“when the bank receives income in the form of dividends or interest.”

14. In clause 51:

• In the first sub‑paragraph, the words “Unforeseen circumstances” shall be replaced with “off‑balance‑sheet account”.
• In the second sub‑paragraph, after the word “voidable” the words “or as provided for in the contract” shall be added.

15. Clauses 52 and 53 shall be edited as follows:

52. Transfer of a “Hopeless” asset formed from credits granted from centralized resources or other funds to off‑balance‑sheet items shall not lead to the cancellation of the debt by the Government or the Central Bank, and the repayment of the debt to the Government or the Central Bank remains mandatory for the commercial bank.

53. If, despite all measures taken by the commercial bank to recover a debt accounted for in off‑balance‑sheet items, the debt is not repaid within five years after transfer, or the bank writes off the asset, the asset (both principal and interest) may be written off by decision of the shareholders’ general meeting approved on the recommendation of the Commercial Bank Council.

(21.05.2024, 10/24/2696-4/0354‑No)