Regulatory Alerts2020-06-30
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Explanatory Note on the Regulation on the Procedure and Conditions for Granting Permission for Banking Activities
The Regulation aligns licensing procedures with the laws on the Central Bank and banking activities, consolidating previous normative acts into a single document. It establishes transparent criteria and evaluation mechanisms for bank founders, board members, and key employees, while introducing a simplified initial permission process for foreign banks and international financial institutions investing in the national system. The Regulation covers the entire lifecycle of banking entities, including establishment, licensing, structural changes, and liquidation, and enters into force on October 1, 2020.
Explanatory Note on the Regulation on the Procedure and Conditions for Granting Permission for Banking Activities
The Regulation on the Procedure and Conditions for Granting Permission for Banking Activities was developed by the Central Bank to align the licensing and permitting procedures in the banking sector with the requirements of the newly adopted laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan" and "On Banks and Banking Activities."
The Regulation was prepared based on the experience of foreign countries with the aim of further strengthening the stability and development of the banking system.
With the adoption of this Regulation, several normative legal documents regulating this area were optimized and consolidated into a single document.
It should be noted that this Regulation governs issues related to obtaining licenses that grant the right to establish banks and carry out banking activities, obtaining initial permission for the purchase of bank shares, evaluating members of the bank's supervisory board and management as well as employees of significant importance, opening and closing separate divisions (branches and offices) of the bank, registering changes and additions made to the bank's charter, and reorganization and liquidation of banks.
The Regulation establishes strict criteria that bank founders and potential acquirers, as well as members of the bank's supervisory board and management and employees of significant importance, must comply with, as well as a transparent mechanism for their evaluation.
At the same time, the Regulation provides for a special simplified procedure for obtaining initial permission when a bank is established or when participation in the bank's authorized capital is involved, with the aim of encouraging investment by foreign banks and other credit institutions with high capital and credit rating indicators, as well as international financial institutions, into the national banking system.
The requirements of the Regulation on the Procedure and Conditions for Granting Permission for Banking Activities enter into force on October 1, 2020.
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