Approval of the Instruction on Accounting for Operations with Securities in Commercial Banks

Decision of the Board of the Central Bank of the Republic of Uzbekistan, registered on 19.01.2009, registration number 1885

Date of entry into force

29.01.2009

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25.04.2023

10.08.2015

29.01.2009

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Document lost force 25.04.2023

[
OKOZ:
1.
07.00.00.00 Legislation on Finance and Credit. Bank Activity / 07.25.00.00 Securities Issuance / 07.25.06.00 Issuance of Securities;
2.
07.00.00.00 Legislation on Finance and Credit. Bank Activity / 07.29.00.00 Accounting. Financial Reporting / 07.29.01.00 General Rules;
3.
07.00.00.00 Legislation on Finance and Credit. Bank Activity / 07.29.00.00 Accounting. Financial Reporting / 07.29.02.00 Accounting for Fixed Assets]
[
TSZ:
1.
Finance / Securities. Securities Market;
2.
Finance / Accounting]

DECISION OF THE BOARD OF THE CENTRAL BANK OF THE REPUBLIC OF UZBEKISTON

ON APPROVING THE INSTRUCTION ON ACCOUNTING FOR OPERATIONS WITH SECURITIES IN COMMERCIAL BANKS

[Registered by the Ministry of Justice of the Republic of Uzbekistan on January 19, 2009, registration number 1885]

This decision has lost its force based on the Decision of the Board of the Central Bank of the Republic of Uzbekistan No. 4/7 dated March 7, 2023 "On Recognizing Certain Regulatory Legal Acts Adopted by the Central Bank of the Republic of Uzbekistan as Having Lost Their Force" (registration number 3428, dated April 20, 2023).

Based on Articles 7 and 51 of the Law of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan", the Board of the Central Bank of the Republic of Uzbekistan decides:

Approve the Instruction on Accounting for Operations with Securities in Commercial Banks in accordance with the Appendix.
Consider the following as having lost their force from the date of entry into force of this decision:

"Regulation on Accounting for Operations with Securities in Commercial Banks" (March 5, 1999, registration number 662);

"Amendments and Additions No. 1 to the Regulation on Accounting for Operations with Securities in Commercial Banks" (February 22, 2000, registration number 662-1);

Decision of the Board of the Central Bank of the Republic of Uzbekistan No. 11/4 dated May 3, 2008 "On Partially Recognizing the Regulation on Accounting for Operations with Securities in Commercial Banks as Having Lost Its Force" (June 3, 2008, registration number 662-3 — Collection of Legislation of the Republic of Uzbekistan, 2008, No. 22-23, Article 217).

This decision enters into force ten days after the day of its state registration by the Ministry of Justice of the Republic of Uzbekistan.

Chairman of the Central Bank F. MULLAJONOV

Tashkent city,

December 13, 2008,

No. 28/4

APPROVED

by the Decision of the Board of the Central Bank No. 28/4 dated December 13, 2008

INSTRUCTION

ON ACCOUNTING FOR OPERATIONS WITH SECURITIES IN COMMERCIAL BANKS

This Instruction establishes the procedure for reflecting in accounting the operations related to the issuance of securities by commercial banks, brokerage operations in the securities market, and operations involving time contracts with securities, in accordance with the Laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan", "On Banks and Banking Activity", "On Accounting", and "On the Securities Market". (amended by the Decision of the Board of the Central Bank of the Republic of Uzbekistan No. 19/12 dated July 22, 2015 (registration number 1885-1, dated August 5, 2015) — CLRU, 2015, No. 31, Article 423)

I. Accounting for Shares Issued by Commercial Banks

After the issuance of securities is registered with the state, the following accounting entry is made based on the copy of the decision on the issuance of securities issued to the issuing bank:

Dr 90329

—

"Bank's documentless securities";

Cr 96314

—

"Counter-account for the bank's securities"

(Paragraph 1 amended by the Decision of the Board of the Central Bank of the Republic of Uzbekistan No. 19/12 dated July 22, 2015 (registration number 1885-1, dated August 5, 2015) — CLRU, 2015, No. 31, Article 423)

The following accounting entry is made upon subscription and the conclusion of a share purchase agreement:

a) for preferred shares:

30303

—

"Unpaid part of subscription funds for preferred shares (counter-passive)";

30309

—

"Registered share capital — Preferred";

b) for ordinary shares:

30306

—

"Unpaid part of subscription funds for ordinary shares (counter-passive)";

30312

—

"Registered share capital — Ordinary".

The following accounting entry is made when payment for shares is received in full or in part:

10101

—

"Cash in circulation" or the bank's representative account or the client's account;

30303

—

"Unpaid part of subscription funds for preferred shares (counter-passive)" or 30306 — "Unpaid part of subscription funds for ordinary shares (counter-passive)".

After the payment is received in full and the transaction is executed, the following accounting entries are made simultaneously based on the relevant extract obtained from the depository account confirming the transfer of ownership rights for the share:

(a first sentence of paragraph 4 amended by the Decision of the Board of the Central Bank of the Republic of Uzbekistan No. 19/12 dated July 22, 2015 (registration number 1885-1, dated August 5, 2015) — CLRU, 2015, No. 31, Article 423)

a) for the nominal value of preferred shares:

30309

—

"Registered share capital — Preferred";

30315

—

"Issued share capital — Preferred";

b) for the nominal value of ordinary shares:

30312

—

"Registered share capital — Ordinary";

30318

—

"Issued share capital — Ordinary";

c) for the positive difference between the subscription price and the nominal value:

30309

—

"Registered share capital — Preferred" or

30312

—

"Registered share capital — Ordinary";

30603

—

"Additional capital";

d) for placed shares:

Dr 96314

—

"Counter-account for the bank's securities";

Cr 90329

—

"Bank's documentless securities".

(Sub-paragraph "d" of paragraph 4 amended by the Decision of the Board of the Central Bank of the Republic of Uzbekistan No. 19/12 dated July 22, 2015 (registration number 1885-1, dated August 5, 2015) — CLRU, 2015, No. 31, Article 423)

Expenses related to the issuance of shares are accounted for in the separate personal account "Expenses related to the issuance of shares" of account 56795 — "Other operating expenses".
If the value of the shares is paid in full or in part by potential shareholders before the issuance of shares, prepayments for shares are reflected in liabilities until the issuance of shares. Also, a deposit (deposit) may be placed by potential shareholders as a guarantee of participation in subscribing to the bank's new shares.

In this case, the following accounting entries are made:

a) when a prepayment is made:

10101

—

"Cash in circulation" or the bank's representative account or the client's account;

29830

—

"Deposits for payment of subscription funds for shares";

b) when shares are sold, based on the relevant extract obtained from the depository account confirming the transfer of ownership rights for the share:

29830

—

"Deposits for payment of subscription funds for shares" — by the payment amount;

30315

—

"Issued share capital — Preferred" or

30318

—

"Issued share capital — Ordinary" — by the nominal value of the share;

30603

—

"Additional capital" — by the positive difference between the payment amount and the nominal value.

(Sub-paragraph "b" of paragraph 6 amended by the Decision of the Board of the Central Bank of the Republic of Uzbekistan No. 19/12 dated July 22, 2015 (registration number 1885-1, dated August 5, 2015) — CLRU, 2015, No. 31, Article 423)

c) simultaneously, the accounting entry specified in sub-paragraph "d" of paragraph 4 of this Instruction is made.

The accrual of declared dividends is carried out through the following accounting entries:

31203

—

"Undistributed profit (asset-passive)" (when calculating annual dividends);

31206

—

"Net profit (loss) (asset-passive)" (when calculating interim dividends);

30903

—

"General reserve fund" (in case of insufficient profit for preferred shares);

29822

—

"Dividends to be paid".

When dividends are paid, the following accounting entry is made:

29822

—

"Dividends to be paid";

10101

—

"Cash in circulation" or the bank's representative account or the client's account.

When accrued dividends are directed to increase the bank's share capital in the manner established by legislation, the following accounting entry is made:

29822

—

"Dividends to be paid";

30315

—

"Issued share capital — Preferred" or

30318

—

"Issued share capital — Ordinary" — by the nominal value of the share;

30603

—

"Additional capital" — by the amount exceeding the nominal value.

Simultaneously, the accounting entry specified in sub-paragraph "d" of paragraph 4 of this Instruction is made.

When the share capital is increased by increasing the nominal value of shares, the following accounting entry is made:

30603

—

"Additional capital" or

31203

—

"Undistributed profit (asset-passive)" or 31206 — "Net profit (loss) (asset-passive)" (if there are insufficient funds in account 30603);

30315

—

"Issued share capital — Preferred" or

30318

—

"Issued share capital — Ordinary".

When additional shares are placed by capitalizing undistributed profit, the following accounting entry is made:

31203

—

"Undistributed profit (asset-passive)";

30315

—

"Issued share capital — Preferred" or

30318

—

"Issued share capital — Ordinary" — by the nominal value of the share;

30603

—

"Additional capital" — by the amount exceeding the nominal value.

When bank shares are placed for free exchange of previously issued securities, the following accounting entries are made:

a) when preferred shares are exchanged for ordinary shares or preferred shares are exchanged for other types of preferred shares:

30315

—

"Issued share capital — Preferred" — by the nominal value of the share;

30315

—

"Issued share capital — Preferred" or

30318

—

"Issued share capital — Ordinary" — by the nominal value of the share;

b) when exchangeable bonds are presented for exchange:

23602

—

"Issued bonds" in the personal account "Exchangeable bonds" of the balance sheet account — by the value of the securities presented for exchange;

30315

—

"Issued share capital — Preferred" or

30318

—

"Issued share capital — Ordinary" — by the nominal value of the share;

30603

—

"Additional capital" — by the amount exceeding the nominal value, if the exchange coefficient is greater than 1.

When increasing the number of shares by reducing their nominal value (splitting), banks make appropriate adjustments in personal accounts to align with the number of shares for each shareholder. In this case, no accounting entries are made in the general ledger.

When increasing the nominal value of shares by reducing their number (consolidation), no accounting entries are required in the general ledger, and adjustments are made only in personal accounts.

If the bank buys back its shares for the purpose of subsequent resale or cancellation, the bank's own capital decreases by the cost of purchasing the shares. In this case, the following accounting entry is made:

30321

—

"Own shares repurchased from shareholders — Preferred (counter-passive)" or

30324

—

"Own shares repurchased from shareholders — Ordinary (counter-passive)";

10101

—

"Cash in circulation" or the bank's representative account or the client's account.

If the bank buys back its shares for the purpose of cancellation, the shares are recorded in account 90329 — "Bank's documentless securities" at a conditional price of 1 sum through the following accounting entry:

90329

—

"Bank's documentless securities";

96314

—

"Counter-account for the bank's securities".

If the bank buys back its shares for the purpose of subsequent resale, the shares are recorded in account 90337 — "Bank's purchased securities" at their nominal value through the following accounting entry:

90337

—

"Bank's purchased securities";

96314

—

"Counter-account for the bank's securities".

When the bank's own purchased shares are subsequently resold in the secondary market, the following accounting entries are made:

a) when sold at a higher price than the purchase price:

10101

—

"Cash in circulation" or the bank's representative account or the client's account — by the selling price of the share;

30321

—

"Own shares repurchased from shareholders — Preferred (counter-passive)" or 30324 — "Own shares repurchased from shareholders — Ordinary (counter-passive)" — by the purchase price of the share;

30603

—

"Additional capital" in the personal account "Additional capital on repurchased own shares" of the balance sheet account — by the positive difference between the resale and purchase prices;

b) when sold at a lower price than the purchase price:

10101

—

"Cash in circulation" or the bank's representative account or the client's account — by the selling price of the share;

30603

—

"Additional capital" — by the negative difference between the resale and purchase prices of the share, within the credit balance;

30321

—

If the balance of the separate personal account "Additional capital obtained from the purchase of own shares" of account 30603 — "Additional capital" is equal to zero, the negative difference between the resale and purchase prices of the share is transferred to account 31206 — "Net profit (loss) (asset-passive)" of the balance sheet account.

c) simultaneously, the following accounting entry is made:

96314

—

"Counter-account for the bank's securities";

90337

—

"Bank's purchased securities".

When shares are cancelled or the bank's share capital is reduced (after the appropriate amendments to the charter documents are registered with the Central Bank), the following accounting entry is made:

30315

—

"Issued share capital — Preferred" or

30318

—

"Issued share capital — Ordinary" — by the nominal value of the share;

30321

—

The positive or negative difference between the purchase of own shares and their nominal value is taken to the debit or credit of account 30603 — "Additional capital" respectively. If the credit balance of the account is insufficient, the missing negative difference is taken to account 31206 — "Net profit (loss) (asset-passive)".

Simultaneously, the following accounting entry is made:

96314

—

"Counter-account for the bank's securities";

90329

—

"Bank's documentless securities".

II. Accounting for Operations on Issuance and Redemption of Debt Obligations

Commercial banks may issue bonds, deposit certificates, bills of exchange, and other debt securities circulating in the market in accordance with legislative acts. Accounting for debt securities issued by the bank is maintained in the corresponding accounts of balance sheet account 23600 — "Securities issued by the bank" at their nominal value.
When blank forms of documentless or document securities are accounted for in the Central Depository, the following accounting entries are made:

90327

—

"Bank's securities blanks";

96314

—

"Counter-account for the bank's securities".

90329

—

"Bank's documentless securities";

96314

—

"Counter-account for the bank's securities".

When securities are placed at their nominal value, the following accounting entries are made:

10101

—

"Cash in circulation" or the bank's representative account or the client's account;

23600

—

"Securities issued by the bank".

96314

—

"Counter-account for the bank's securities";

90327

—

"Bank's securities blanks".

96314

—

"Counter-account for the bank's securities";

90329

—

"Bank's documentless securities".

When a security is sold at a price higher than its nominal value, the difference between the selling price and the nominal value (premium) is credited on the day of sale to account 23696 — "Premium on issued securities" through the following accounting entry:

10101

—

"Cash in circulation" or the bank's representative account or the client's account — by the selling price of the security;

23600

—

"Securities issued by the bank" — by the nominal value of the security;

23696

—

"Premium on issued securities" — by the difference between the selling price and the nominal value of the security.

Simultaneously, when a blank is issued or transferred to the investor's depository account, the following accounting entries are made:

96314

—

"Counter-account for the bank's securities";

90327

—

"Bank's securities blanks".

96314

—

"Counter-account for the bank's securities";

90329

—

"Bank's documentless securities".

If a security is sold at a price lower than its nominal value, the difference between the nominal value and the selling price (discount) is debited on the date of sale to account 23698 — "Discount on issued securities (counter-passive)" through the following accounting entry:

10101

—

"Cash in circulation" or the bank's representative account or the client's account — by the selling price of the security;

23698

—

"Discount on issued securities (counter-passive)" — by the difference between the nominal value and the selling price of the security;

23600

—

"Securities issued by the bank" — by the nominal value of the security.

Discounts are reflected in the balance sheet report as a deduction from the total amount of issued securities.

Amortization of premiums and recognition of interest income, as well as amortization of discounts and recognition of interest expenses, are carried out in accordance with the "Regulation on Calculating Interest in Commercial Banks" (January 30, 2004, registration number 1306 — Collection of Legislation of the Republic of Uzbekistan, January 2004, No. 4) using real interest rates.
If securities are sold between interest payment periods, the sold and payable interest obligations are recorded on the date of sale through the following accounting entry:

10101

—

"Cash in circulation" or the bank's representative account or the client's account;

22414

—

"Accrued interest on issued securities".

When securities are bought back under redemption or resale terms, the securities are removed from the balance sheet. If the purchase is at balance sheet value, the following accounting entries are made:

a) when securities previously sold at nominal value are bought back:

23600

—

"Securities issued by the bank" — at nominal value;

10101

—

"Cash in circulation" or the bank's representative account or the client's account — at nominal value;

b) when securities previously sold at a discount are bought back:

23600

—

"Securities issued by the bank" — at nominal value;

23698

—

"Discount on issued securities (counter-passive)" — within the remaining value of the discount;

10101

—

"Cash in circulation" or the bank's representative account or the client's account — by the purchase price of the security;

c) when securities previously sold at a premium are bought back:

23600

—

"Securities issued by the bank" — at nominal value;

23696

—

"Premium on issued securities" — within the remaining value of the premium;

10101

—

"Cash in circulation" or the bank's representative account or the client's account — by the purchase price of the security;

d) when paying accrued interest:

22414

—

"Accrued interest on issued securities";

10101

—

"Cash in circulation" or the bank's representative account or the client's account.

If the bank buys back a security at a price lower than its nominal value, the positive difference between the nominal value and the purchase price is reflected in the credit of the separate personal account "Income from operations related to issued debt obligations" of account 45994 — "Other non-interest income". If the bank buys back a security at a price higher than the balance sheet value, the negative difference between the balance sheet value and the purchase price is reflected in the debit of the separate personal account "Expenses incurred for operations related to issued debt obligations" of account 55995 — "Other non-interest expenses".
If the bank buys back a security for the purpose of cancellation, the security is recorded through the following accounting entry at a conditional price of 1 sum:

90327

—

"Bank's securities blanks";

96314

—

"Counter-account for the bank's securities".

90329

—

"Bank's documentless securities";

96314

—

"Counter-account for the bank's securities".

If the bank buys back securities for the purpose of subsequent resale, the securities are recorded in account 90337 at their nominal value through the following accounting entry:

90337

—

"Bank's purchased securities";

96314

—

"Counter-account for the bank's securities".

III. Accounting for Other Operations Related to Securities

§ 1. Accounting for Collection Operations Related to Securities

When local (internal) or foreign (internal) bills of exchange are accepted for collection from the client or the bank-correspondent, the bank performs the following accounting entry in off-balance sheet accounts for the nominal value of the bill of exchange:

Dr
90965
—
"Local (internal) bills of exchange accepted for collection" or

90972
—
"Foreign (internal) bills of exchange accepted for collection";

Cr
96323
—
"Counter-account for bills of exchange accepted for collection (internal)".

When the payment due date for the bill of exchange arrives, the bank presents the bill of exchange to the payer. When the payment on the bill of exchange is made in full or in part, or when it is returned without payment (in cases of refusal to pay or lack of funds in the account), the following accounting entry is performed:

Dr
96323
—
"Counter-account for bills of exchange accepted for collection (internal)";

Cr
90965
—
"Local (internal) bills of exchange accepted for collection" or

90972
—
"Foreign (internal) bills of exchange accepted for collection".

When a partial payment on the bill of exchange is made, the unpaid amount of the bill of exchange is transferred to account 90963 — "Documents for settlement not paid on time" via the following accounting entry:

Dr
90963
—
"Documents for settlement not paid on time";

Cr
96321
—
"Counter-account for documents for settlement not paid on time".

When bills of exchange are sent for collection to payees or representative banks who do not have an account in this bank for receiving payment on the bill of exchange, the following accounting entry is performed for their nominal value:

Dr
90979
—
"Local (external) bills of exchange sent for collection" or

90986
—
"Foreign bills of exchange sent for collection";

Cr
96330
—
"Counter-account for bills of exchange sent for collection (external)".

After the payer makes the payment on the bill of exchange, the following accounting entry is performed:

Dr
96330
—
"Counter-account for bills of exchange sent for collection (external)";

Cr
90979
—
"Local (external) bills of exchange sent for collection" or

90986
—
"Foreign bills of exchange sent for collection".

Banks may recognize income and expenses from collection operations related to securities. In this case, income is accounted for in account 45257 — "Income received for services provided for collection operations for clients" and expenses are accounted for in account 55158 — "Expenses for carrying out collection operations and intermediary expenses".

§ 2. Accounting for Investment Intermediary Operations Related to Securities

Banks may perform operations on the purchase and sale of securities based on intermediary or mandate contracts concluded with clients. The accounting for funds transferred by clients for the purchase of securities, as well as funds received from the sale of clients' securities under intermediary and mandate contracts, is maintained in the separate account "Client funds for brokerage operations with securities" of the balance sheet account 22608 — "Funds of clients for operations with securities".
Securities purchased for sale or on the instruction of the client are accounted for at nominal value in off-balance sheet accounts 93616 — "Securities conditionally held by the State" and 93623 — "Securities/Commercial documents held privately":

Dr
93616
—
"Securities conditionally held by the State" or

93623
—
"Securities/Commercial documents held privately";

Cr
96379
—
"Counter-account for held securities and other valuables".

When securities received for sale on the instruction of clients are not sold, when they are returned to clients, as well as when delivering securities purchased on the instruction of clients to them, the following accounting entry is performed for the nominal value of the securities:

Dr
96379
—
"Counter-account for held securities and other valuables";

Cr
93616
—
"Securities conditionally held by the State" or

93623
—
"Securities/Commercial documents held privately".

Income received from performing intermediary operations by banks is accounted for on the credit of account 45209 — "Income from investment intermediary operations performed with securities".

§ 3. Accounting for Underwriting Operations Related to Securities

Banks may perform underwriting operations, i.e., operations on the sale of securities to their initial owners (initial placement of the issue), as well as operations on the redemption of securities according to the issuer's instruction.
When securities are received from the issuer for placement, the following accounting entry is performed:

Dr
93616
—
"Securities conditionally held by the State" or

93623
—
"Securities/Commercial documents held privately";

Cr
96379
—
"Counter-account for held securities and other valuables".

The accounting for funds received from the placement of securities is maintained in the separate personal account "Issuer funds related to servicing the issuance of securities" of the balance sheet account 22608 — "Funds of clients for operations with securities".
When placing securities to their initial owners, as well as when returning unplaced securities to the issuer, the following accounting entry is performed for the nominal value of the securities:

Dr
96379
—
"Counter-account for held securities and other valuables";

Cr
93616
—
"Securities conditionally held by the State" or

93623
—
"Securities/Commercial documents held privately".

The bank redeems securities based on the issuer's instruction at the expense of the issuer's funds. Funds received from the issuer are accounted for in the separate personal account "Issuer funds for the issuance of securities" of account 22608 — "Funds of clients for operations with securities". When the issuer's securities are redeemed, the following accounting entry is performed for the redemption amount:

Dr
22608
—
"Funds of clients for operations with securities";

Cr
10101
—
"Cash in circulation" or the bank's representative account or client account.

At the same time, the blanks of redeemed securities are recorded in off-balance sheet accounts at a conditional value of 1 sum via the following accounting entries:

Dr
90303
—
"Blanks of state securities";

Cr
96305
—
"Counter-account for blanks of state securities"; or

Dr
90317
—
"Blanks of securities of other organizations and institutions";

Cr
96315
—
"Counter-account for blanks of securities of other organizations and institutions".

When transferring or canceling the blanks of securities redeemed according to the issuer's instruction, the following accounting entry is performed at a conditional value of 1 sum:

Dr
96305
—
"Counter-account for blanks of state securities";

Cr
90303
—
"Blanks of state securities"; or

Dr
96315
—
"Counter-account for blanks of securities of other organizations and institutions";

Cr
90317
—
"Blanks of securities of other organizations and institutions".

Income received from performing underwriting services is accounted for on the credit of the separate personal account "Income received from bank operations related to servicing the issuance of securities" of account 45294 — "Income received for other services and intermediation".

§ 4. Accounting for Operations Related to the Storage of Securities

Banks may store securities based on contracts concluded with clients. When securities are accepted from clients for storage, the following accounting entry is performed for the nominal value:

Dr
93616
—
"Securities conditionally held by the State"; or

93623
—
"Securities/Commercial documents held privately";

Cr
96379
—
"Counter-account for held securities and other valuables".

When securities are removed from storage and returned to the client, the following accounting entry is performed for the nominal value:

Dr
96379
—
"Counter-account for held securities and other valuables";

Cr
93616
—
"Securities conditionally held by the State" or

93623
—
"Securities/Commercial documents held privately".

Income received from performing storage operations is accounted for on the credit of the separate personal account "Income received from bank operations performed for the storage of securities" of account 45294 — "Income received for other services and intermediation".

IV. Accounting for Operations on Time-Bound Agreements Related to Securities

For accounting purposes, time-bound agreements with securities are understood to be agreements on the purchase and sale of securities (REPO agreements, futures on securities, etc.) formalized by contracts specifying an exact date for settlement different from the date of concluding the agreement. In this case, the date of settlement in concluding a time-bound agreement does not coincide with the date of concluding the agreement. Time-bound agreements are accounted for in off-balance sheet accounts from the date of concluding the agreement until the settlement period, in accordance with the regulatory documents of the Central Bank. On the day settlement begins, accounting in off-balance sheet accounts is stopped simultaneously with reflecting the agreements in balance sheet accounts in the established manner.
A REPO (agreement on the purchase and sale of securities with a condition for repurchase) agreement is understood to be an agreement on the sale of securities with an obligation to repurchase them at a pre-agreed price after a certain period. REPO agreements are accounted for as financing operations if one of the following principles is met:

1) the securities previously sold are repurchased;

2) if the securities being repurchased are similar in all respects to the securities sold.

Securities are considered "similar in all respects" if the following conditions are met:

a) the securities must be owned by the same person who incurred the obligations;

b) the securities must be identical in form and appearance so that the owners of the securities are provided with the same risks and rights;

c) the securities must have the same interest rate;

d) the securities must have the same payment term;

e) the securities must have the same nominal value.

Otherwise, REPO agreements are accounted for as operations on the purchase and sale of securities.

Accounting for REPO agreements is part of the accounting for financing operations.

Due to the legal form of REPO agreements being a purchase and sale agreement, the economic essence of these operations is financing secured by purchased (sold) securities.

REPO agreements differ from credit operations on the pledge of securities (lombard credit) in that, upon performance of the first part of the agreement on the purchase and sale of securities with a condition for repurchase, the right to ownership of the securities passes from the debtor (seller of securities) to the creditor (buyer of securities). In these operations, the seller of securities plays the role of the debtor, and the buyer plays the role of the creditor of funds. Upon expiration of the term specified in the REPO agreement, if the second part of the agreement on the purchase and sale of securities with a condition for repurchase is performed, the right to ownership of the securities passes from the creditor back to the debtor.

Securities sold under REPO agreements are accounted for in the relevant account of balance sheet account 22300 — "Securities sold under REPO agreements". Upon performance of the first part of the agreement on the purchase and sale of securities with a condition for repurchase, the bank selling the securities performs the following accounting entries for the amount of the sale of securities under the first part of the agreement:

Dr Representative account of the bank or client account;

Cr
22300
—
"Securities sold under REPO agreements".

Simultaneously, in off-balance sheet accounts:

Dr
92802
—
"Time-bound agreements for the purchase of securities";

Cr
96374
—
"Counter-account for time-bound agreements for the purchase of securities".

Securities are accounted for in account 92802 — "Time-bound agreements for the purchase of securities" in accordance with the first part of the REPO operation from the date of sale of the securities, and in accordance with the second part of the REPO operation, until the date of purchase of the securities by the bank.

The difference between the price of repurchasing securities under the second part of the agreement and the price of selling securities under the first part of the agreement is, by its nature, a payment for the funds received. The specified difference is amortized and is carried to the interest expense account by the selling bank monthly during the term of validity of the agreement on the purchase and sale of securities with a condition for repurchase:

Dr
54300
—
"Interest expenses on REPO agreements performed with securities";

Cr
22300
—
"Securities sold under REPO agreements".

If the REPO amount is expected to decrease by the amount of interest (coupon) income under the first part of the REPO agreement, then the REPO amount decreases by the amount of interest (coupon) income received by the initial buyer, and the following accounting entry is performed:

Dr
22300
—
"Securities sold under REPO agreements";

Cr The relevant account for interest to be received on the securities that are the object of the REPO agreement.

Upon performance of the second part of the agreement on the purchase and sale of securities with a condition for repurchase, the bank performs the following accounting entry for the amount of securities repurchased under the second part of the agreement:

Dr
22300
—
"Securities sold under REPO agreements";

Cr Representative account of the bank or client account.

Simultaneously, in off-balance sheet accounts, the following accounting entry is performed for the value of securities repurchased under the second part of the agreement:

Dr
96374
—
"Counter-account for time-bound agreements for the purchase of securities";

Cr
92802
—
"Time-bound agreements for the purchase of securities".

The agreement on the purchase and sale of securities with a condition for repurchase usually provides for penalty measures if each party does not perform its obligations. If the second part of the agreement is not performed and the securities are transferred to the portfolio of the buyer, the selling bank performs the following accounting entry:

Dr
22300
—
"Securities sold under REPO agreements" — for the amount of repurchasing the security under the second part of the agreement;

Cr
10700
—
"Securities for trading",

10800
—
"Investments in securities intended for sale",

15900
—
"Investments in debt securities held until maturity",

11300
—
"Purchased bills of exchange" — for the balance sheet value of the security.

The difference between the price of purchasing securities under the second part of the agreement and its balance sheet value is reflected in the relevant profit or loss account.

Simultaneously, the following accounting entry is performed in off-balance sheet accounts:

Dr
96374
—
"Counter-account for time-bound agreements for the purchase of securities";

Cr
92802
—
"Time-bound agreements for the purchase of securities".

Upon performance of the first part of the agreement on the purchase and sale of securities with a condition for repurchase, the bank purchasing the securities performs the following accounting entry for the amount of purchasing securities under the second part of the agreement:

Dr
11800
—
"Securities purchased under REPO agreements";

Cr Representative account of the bank or client account.

Simultaneously, the bank performs the following accounting entry in off-balance sheet accounts for the value of securities that the bank must sell upon performance of the second part of the agreement on the purchase and sale of securities with a condition for repurchase:

Dr
92806
—
"Time-bound agreements for the sale of securities";

Cr
96376
—
"Counter-account for time-bound agreements for the sale of securities".

Securities are accounted for in account 92806 — "Time-bound agreements for the sale of securities" in accordance with the first part of the REPO operation from the date of purchasing the securities, and in accordance with the second part of the REPO operation, until the date of selling the securities by the bank.

The difference between the price of reselling securities under the second part of the agreement and the price of purchasing securities under the first part of the agreement is, by its nature, a payment for the funds provided. The specified difference is amortized and is accounted for by the receiving bank monthly in the interest income account during the term of validity of the agreement on the purchase and sale of securities with a condition for repurchase:

Dr
11800
—
"Securities purchased under REPO agreements";

Cr
45000
—
"Interest income on REPO agreements performed with securities".

If the financial condition of the counterparty on the REPO agreement deteriorates and the repurchase of securities raises doubts in the bank, banks should use the principle of not accruing interest.

In this case, interest income must be written off from the bank balance sheet via the following accounting entry:

Dr
45000
—
"Interest income on REPO agreements performed with securities";

Cr
11800
—
"Securities purchased under REPO agreements".

After writing off, the amortization of the difference between the price of reselling securities under the second part of the agreement and the price of purchasing securities under the first part of the agreement is accounted for in off-balance sheet accounts:

Dr
95411
—
"Accrued interest on securities to be received";

Cr
96333
—
"Counter-account for accrued interest on securities to be received".

Accounting maintained in the off-balance sheet account is stopped after the second part of the REPO agreement is performed:

Dr
96333
—
"Counter-account for accrued interest on securities to be received";

Cr
95411
—
"Accrued interest on securities to be received".

On the date of the balance sheet report, the market value of securities purchased under the first part of the agreement is equated to the balance sheet value (i.e., the amount accounted for in account 11800 — "Securities purchased under REPO agreements"). If the market value falls below the balance sheet value, a reserve for possible losses is created at the expense of bank expenses. In this case, the difference between the balance sheet value and the market value is accounted for on the debit of account 56824 — "Assessment of possible losses on REPO agreements":

Dr
56824
—
"Assessment of possible losses on REPO agreements";

Cr
11899
—
"Reserve for covering possible losses on securities purchased under REPO agreements (counter-asset)".

If the market value exceeds the balance sheet value, the reserve is equated to zero:

Dr
11899
—
"Reserve for covering possible losses on securities purchased under REPO agreements (counter-asset)";

Cr
56824
—
"Assessment of possible losses on REPO agreements".

The reserve for possible losses related to the REPO agreement is determined separately for each REPO agreement. If the amount of the previously created reserve for possible losses exceeds the amount of the newly calculated reserve for possible losses, the reserve is reduced by the excess amount. If the amount of the previously created reserve for possible losses is less than the amount of the newly calculated reserve for possible losses, the reserve is additionally increased to the calculated volume.

Upon performance of the second part of the agreement on the purchase and sale of securities with a condition for repurchase, the bank performs the following accounting entry:

Dr Representative account of the bank or client account;

Cr
11800
—
"Securities purchased under REPO agreements" — for the amount of repurchasing the security under the second part of the agreement.

Simultaneously, upon performance of the second part of the agreement on the purchase and sale of securities with a condition for repurchase, the bank performs the following accounting entry in the off-balance sheet account for the value of securities sold:

Dr
96376
—
"Counter-account for time-bound agreements for the sale of securities";

Cr
92806
—
"Time-bound agreements for the sale of securities".

The agreement on the purchase and sale of securities with a condition for repurchase usually provides for penalty measures if each party does not perform its obligations.

If the bank adheres to the principle of not accruing interest, the balance sheet value of the securities accounted for in account 11800 — "Securities purchased under REPO agreements" on the date of performance of the second part of the agreement must be equal to the amount of purchasing securities under the first part of the agreement.

In this case, if the second part of the agreement is not performed and the securities are transferred to the portfolio of the purchasing bank, the following accounting entry is performed:

1) if the market value of the securities exceeds the amount of purchasing securities under the first part of the agreement:

a) the accounting entry for adjusting the amount of the reserve for possible losses (if necessary) is performed in accordance with paragraph 61 of this Instruction;

b) the accounting entry for transferring the securities to the bank's portfolio is performed:

Dr
10700
—

"Buy-sell securities" or 10800 — "Investments in securities intended for sale" or 11300 — "Purchased bills of exchange" or 15900 — "Investments in debt securities held to maturity";

Cr.

11800

—

"Securities purchased under REPO agreements" — at the amount of purchasing the securities under the first part of the agreement.

2) when the market value of the securities is less than the value of the securities purchased under the first part of the agreement:

a) the accounting entry for changing the reserve amount (if necessary) is carried out in accordance with the accounting entry specified in paragraph 61 of these Guidelines;

b) the accounting entry for transferring securities to the bank portfolio is carried out:

Dr.

10700

—

"Buy-sell securities" or 10800 — "Investments in securities intended for sale" or 11300 — "Purchased bills of exchange" or 15900 — "Investments in debt securities held to maturity" — at the market value of the securities;

Dr.

11899

—

"Reserve for possible losses from securities purchased under REPO agreements" — at the amount of the formed reserve;

Cr.

11800

—

"Securities purchased under REPO agreements" — at the amount of purchasing the securities under the first part of the agreement.

In cases not provided for simultaneously, the following accounting entry is carried out in the off-balance sheet account:

Dr.

96376

—

"Counter-account for forward contracts for the sale of securities";

Cr.

92806

—

"Forward contracts for the sale of securities".

If the bank does not apply the principle of not accruing interest, the balance value of the securities recorded in account 11800 — "Securities purchased under REPO agreements" on the date of performance of the second part of the agreement must be equal to the amount of the resale of securities under the second part of the agreement.

If the second part of the agreement is not performed, the bank must exclude interest income from the balance sheet, i.e., apply the principle of not accruing interest:

Dr.

45000

—

"Interest income on REPO transactions with securities";

Cr.

11800

—

"Securities purchased under REPO agreements".

The accounting entry specified in paragraph 63 of these Guidelines is carried out for the transfer of securities to the bank portfolio by the bank purchasing the securities.

Banks may account for REPO transactions as securities buy-sell operations:

a) when performing the first part of the agreement on the buy-sell of securities with a repurchase condition, the bank that is the seller of the securities carries out the relevant accounting entry for the sale of securities. In this case, the sold securities are removed from the bank's balance sheet.

Simultaneously, in the off-balance sheet account for the value of securities that the bank must purchase when performing the second part of the agreement on the buy-sell of securities with a repurchase condition, the following accounting entry is carried out:

Dr.

92802

—

"Forward contracts for the purchase of securities";

Cr.

96374

—

"Counter-account for forward contracts for the purchase of securities".

In account 92802 — "Forward contracts for the purchase of securities", securities are recorded from the date of purchase of securities in accordance with the first part of the REPO transaction by the bank until the date of sale of securities in accordance with the second part of the REPO transaction.

b) when performing the second part of the agreement on the buy-sell of securities with a repurchase condition, the bank carries out the relevant accounting entry for the purchase of securities.

Simultaneously, in the off-balance sheet account for the value of securities purchased by the bank when performing the second part of the agreement on the buy-sell of securities with a repurchase condition, the following accounting entry is carried out:

Dr.

96374

—

"Counter-account for forward contracts for the purchase of securities";

Cr.

92802

—

"Forward contracts for the purchase of securities".

When performing the first part of the agreement on the buy-sell of securities with a repurchase condition, the bank that is the purchaser of the securities carries out the relevant accounting entry for the sale of securities.

Simultaneously, in the off-balance sheet account for the value of securities purchased by the bank and the value of securities that the bank must sell when performing the second part of the agreement on the buy-sell of securities with a repurchase condition, the following accounting entry is carried out:

Dr.

92806

—

"Forward contracts for the sale of securities";

Cr.

96376

—

"Counter-account for forward contracts for the sale of securities".

In account 92806 — "Forward contracts for the sale of securities", securities are recorded from the date of purchase of securities in accordance with the first part of the REPO transaction by the bank until the date of sale of securities in accordance with the second part of the REPO transaction.

When performing the second part of the agreement on the buy-sell of securities with a repurchase condition, the bank carries out the relevant accounting entry for the sale of securities. In this case, the sold securities are removed from the bank's balance sheet.

Simultaneously, in the off-balance sheet account for the value of securities sold by the bank when performing the second part of the agreement on the buy-sell of securities with a repurchase condition, the following accounting entry is carried out:

Dr.

96376

—

"Counter-account for forward contracts for the sale of securities";

Cr.

92806

—

"Forward contracts for the sale of securities".

(Collected Legislation of the Republic of Uzbekistan, 2009, No. 4, Article 27; 2015, No. 31, Article 423)

Lineage: Superseded

Timeline

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