On Additional Measures to Increase the Accessibility of Banking Services

10.06.2022

24.03.2018

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[OKOB: 1. 07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.21.00.00 Banking Activity / 07.21.21.00 Other Issues of Banking Activity] [ TSZ: 1. Finance / Banks and other credit institutions. Credits]

Decree of the President of the Republic of Uzbekistan

On Additional Measures to Increase the Accessibility of Banking Services

As a result of ongoing reforms, market mechanisms for providing services in the banking system are being introduced, their types are being expanded, and financial transparency for entrepreneurs and the population is increasing.

New banking services have been introduced to facilitate currency exchange operations for the population, and opportunities have been created for individual entrepreneurs to purchase foreign currency.

At the same time, a number of problems and shortcomings are observed in protecting the rights and legitimate interests of banking service consumers, especially in terms of compliance in regions and expanding financial transparency, as well as in further improving service culture and trust in the banking system. Specifically:

first, the excessive centralization of authority in making decisions on loan allocation hinders the clear delineation of responsibility between head offices and their branches;

second, the complicated mechanisms for reviewing loan applications limit the opportunity to obtain loans promptly;

third, the lack of opportunity for commercial banks to issue microloans does not allow increasing the level of obtaining microloans, and the high interest rates of microcredit organizations and pawnshops often lead to a deterioration in the financial situation of consumers;

fourth, the low level of development of the retail banking market and the absence of modern approaches to establishing customer cooperation create a basis for excessive bureaucracy and arbitrariness;

fifth, the absence of an organization of the state processing for cashless payments based on bank cards affects the security, continuity, and reliability levels of retail payment systems and hinders the promotion of modern technological solutions in implementing innovative projects open to wide layers of the population;

sixth, the collection of service fees and other payments for reviewing and issuing loans (microloans) leads to an increase in the real cost of debt;

seventh, the inclusion of conditions in contracts that allow for unilateral changes to service tariffs, interest rates on issued loans and attracted deposits, as well as the provision of one service conditional on the use of an additional service, violates the rights of banking service consumers;

eighth, the existence of restrictions on withdrawing foreign currency from bank payment cards and the insufficient number of ATMs do not allow providing service at the required level in performing currency exchange operations.

In order to eliminate these problems, further improve mechanisms for protecting the rights of banking service consumers, take into account trends in innovative development, increase the level of financial transparency, and implement the tasks set forth in the Strategy of Actions on Five Priority Development Areas of the Republic of Uzbekistan for 2017–2021:

Previous version. (Pursuant to the Decree of the President of the Republic of Uzbekistan dated June 9, 2022, No. PF-152, item 1 has lost its force — , 10.06.2022, No. 06/22/152/0507) Previous version. (Pursuant to the Decree of the President of the Republic of Uzbekistan dated June 9, 2022, No. PF-152, item 2 has lost its force — , 10.06.2022, No. 06/22/152/0507)

3. It is established that, starting from July 1, 2018, commercial banks:

ensure unrestricted access to the area where services are directly provided to customers without preliminary permits and identity documents;

provide customers with preliminary consultations on the banking services being provided from administrative staff responsible for preliminary reception;

create conditions for the transparent registration and review of loan applications, indicating the step-by-step process of making a decision on granting a loan (microloan) and the procedure for notifying or substantively refusing to grant a loan (microloan).

4. To credit institutions: [OKOB:

07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.22.00.00 Lending / 07.22.06.00 Specific Types of Lending / 07.22.06.02 Microcrediting. Lending to small business entities; 2. 07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.23.00.00 Other Credit Institutions / 07.23.02.00 Pawnshops]

prohibit calculating interest on amounts exceeding half of the annual loan sum under microloan contracts, as well as under credit contracts concluded by pawnshops, and imposing commissions, penalties (fines, late fees), and applying other liability measures;

prohibit charging fees for reviewing loan applications, servicing loan accounts, issuing loans, as well as for imposing penalties on individuals and small business entities for early termination of loans (microloans).

5. To commercial banks: [OKOB:

07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.21.00.00 Banking Activity / 07.21.01.00 General Issues]

study advanced international experience in banking activity and introduce new types of banking services and products; [OKOB: 1. 03.00.00.00 Civil Legislation / 03.03.00.00 Legal Entities / 03.03.09.00 Powers and Branches. Subsidiary Enterprises]

expand the network of bank branches and mini-banks, taking into account their coverage and the demand for banking services;

recommend expanding the rights of branches to make independent decisions on loan allocation without additional agreement with head offices.

6. The Central Bank of the Republic of Uzbekistan: [OKOB:

03.00.00.00 Civil Legislation / 03.11.00.00 Specific Types of Obligations / 03.11.17.00 Settlements (also see 07.21.03.00) / 03.11.17.06 Plastic Cards and Electronic Payment Systems]

a) by April 1, 2018, introduce a mechanism for commercial banks to withdraw foreign currency purchased by individuals on international payment cards in cash within established limits in the territory of the Republic of Uzbekistan; [OKOB: 1. 07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.21.00.00 Banking Activity / 07.21.02.00 Procedure for Opening and Maintaining Bank Accounts; 2. 07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.21.00.00 Banking Activity / 07.21.05.00 Bank Deposits and Other Deposit Operations]

b) by April 1, 2018, jointly with commercial banks, introduce a system for remote management of individuals' accounts that ensures the execution of foreign currency purchase and sale operations and the transfer of funds from international payment cards to time deposits in foreign and national currencies;

c) by May 1, 2018: [OKOB: 1. 01.00.00.00 Constitutional System / 01.14.00.00 Lawmaking Activity of State Bodies / 01.14.03.00 Procedure for Preparing and Reviewing Draft Legal Acts; 2. 07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.21.00.00 Banking Activity / 07.21.01.00 General Issues]

develop and approve the Regulation on Minimum Requirements for the Activity of Commercial Banks in Interacting with Banking Service Consumers;

submit proposals to the Cabinet of Ministers regarding amendments and additions to legislative acts granting commercial banks the right to issue microloans; [OKOB: 1. 01.00.00.00 Constitutional System / 01.14.00.00 Lawmaking Activity of State Bodies / 01.14.03.00 Procedure for Preparing and Reviewing Draft Legal Acts]

introduce amendments to normative legal acts regarding the application of sanctions by the Central Bank against commercial banks if the rights of banking service consumers are violated by credit institutions; [OKOB: 1. 01.00.00.00 Constitutional System / 01.14.00.00 Lawmaking Activity of State Bodies / 01.14.03.00 Procedure for Preparing and Reviewing Draft Legal Acts]

develop and approve a regulation establishing the requirement for the existence of a scoring model in a credit bureau that allows commercial banks to assess the creditworthiness of potential borrowers and shorten the terms for issuing loans (microloans) to individuals and small business entities; [OKOB: 1. 02.00.00.00 Fundamentals of State Administration / 02.03.00.00 Republican State Administration Bodies and Economic Management Bodies / 02.03.04.00 Agencies, Inspectorates and Other Departments; 2. 02.00.00.00 Fundamentals of State Administration / 02.08.00.00 General Issues of State Administration in the Sphere of Economy, Social and Cultural Construction / 02.08.01.00 State Programs, Concepts and Others]

d) by July 1, 2018, jointly with the National Agency for Project Management under the President of the Republic of Uzbekistan, develop a concept for organizing a National Banking Processing Center that ensures information and technological interaction between participants in local and international bank card payments, with its main tasks being:

the creation and development of a national retail payment system ensuring the secure and continuous execution of transactions;

the creation and development of convenient payment services;

the development and promotion of innovative products for cashless payments, including direct communication-free and mobile technologies;

the implementation of direct communication-free and mobile technologies, primarily in the spheres of social and household services, transport, trade, and public catering, especially in regions;

ensuring cooperation with international payment systems;

e) by July 1, 2018, jointly with the Association of Banks of Uzbekistan and commercial banks, complete the process of integrating local payment systems with major international payment systems to enable the acceptance of payment cards of non-residents through all payment terminal networks;

f) by November 1, 2018, jointly with commercial banks, ensure the establishment of automated currency exchange branches operating around the clock, especially in places with high tourist traffic.

7. It is recommended that the Association of Banks of Uzbekistan develop and implement a program of measures aimed at strengthening its role in increasing the accessibility of banking services and improving banking activity, including: [OKOB:

02.00.00.00 Fundamentals of State Administration / 02.08.00.00 General Issues of State Administration in the Sphere of Economy, Social and Cultural Construction / 02.08.01.00 State Programs, Concepts and Others; 2. 09.00.00.00 Entrepreneurship and Economic Activity / 09.01.00.00 Legislation on Entrepreneurship / 09.01.10.00 Associations of Entrepreneurs (Unions, Associations, etc.) / 09.01.10.02 Other Associations of Entrepreneurs (Unions, Associations, Funds, etc.)]

approve the Concept for Further Improving the Efficiency of the Activity of the Association of Banks of Uzbekistan;

improve the professional skills of banking system employees, establish the exchange of experience with foreign banks based on advanced international experience;

implement measures to increase the financial literacy of the population in cooperation with local state authorities, involving foreign specialists;

carry out relevant research on urgent problems of banking service accessibility, study international experience, develop proposals for its application in the republic's banking service market, and organize information-analytical and consulting services for banks and their customers;

promote initiatives to introduce modern and advanced types of banking services in practice for the development of remote banking services, and introduce new information technologies;

study advanced foreign banking activity to identify new types and products of banking services and subsequently introduce them in republic banks. [OKOB: 1. 02.00.00.00 Fundamentals of State Administration / 02.03.00.00 Republican State Administration Bodies and Economic Management Bodies / 02.03.02.00 Ministries; 2. 07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.19.00.00 Banking System / 07.19.01.00 Central Bank, Its Structural Divisions and Institutions]

8. The Ministry of Information Technologies and Communications of the Republic of Uzbekistan, jointly with the Central Bank of the Republic of Uzbekistan and other interested agencies, shall, by January 1, 2019:

create a Unified Interdepartmental Information System for the processing and electronic exchange of information between state agencies and the credit bureau, enabling the acquisition of information on:

funds calculated for citizens in the accumulated pension system;

insurance premiums calculated by citizens to the Non-Budgetary Pension Fund under the Ministry of Finance of the Republic of Uzbekistan;

debts calculated for taxes and other mandatory payments;

individuals and business entities for identification purposes;

property and other income of individuals; [OKOB: 1. 12.00.00.00 Information and Informatization / 12.04.00.00 Informatization. Information Systems, Technologies and Means of Their Provision / 12.04.02.00 Information Systems, Technologies and Means of Their Provision]

information on the financial status of legal entities. [OKOB: 1. 01.00.00.00 Constitutional System / 01.15.00.00 Local State Authority Bodies / 01.15.03.00 Local Executive Bodies (Hokimiyats) (also see 02.04.00.00); 2. 11.00.00.00 Environment and Natural Resources / 11.03.00.00 Land Use and Protection / 11.03.09.00 Emergence of Rights to Land Plots / 11.03.09.01 Emergence of Right to Land Based on State Agency Documents (Land Grant)]

9. The Council of Ministers of the Karakalpakstan Republic, the Hokimiyats of regions and the city of Tashkent shall assist commercial banks in allocating land plots necessary for the establishment of branches, mini-banks, and automated currency exchange branches in the prescribed manner.

10. The forecast indicators for the additional expansion of the ATM network for 2018, developed by the Central Bank of the Republic of Uzbekistan, the Association of Banks of Uzbekistan, and commercial banks, are approved in accordance with Appendix 1.

11. The list of equipment, software, components, and other materials imported by commercial banks and processing organizations, which are exempt from customs payments (except for customs clearance fees) until January 1, 2020, is approved in accordance with Appendix 2. [OKOB:

01.00.00.00 Constitutional System / 01.11.00.00 Cabinet of Ministers of the Republic of Uzbekistan (also see 02.01.00.00); 2. 07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.07.00.00 Other Issues of the Budget System / 07.07.02.00 State Funds / 07.07.02.04 Funds of Ministries and Departments]

12. The Cabinet of Ministers, together with interested ministries and agencies, shall review the current mechanism of financial support for business entities provided by the State Fund for Supporting Entrepreneurship under the Cabinet of Ministers of the Republic of Uzbekistan, applying a differentiated approach based on the socio-economic situation of regions in covering certain parts of interest expenses on bank loans.

13. The Central Bank of the Republic of Uzbekistan, together with the Ministry of Justice and other interested agencies, shall submit proposals to the Cabinet of Ministers of the Republic of Uzbekistan regarding amendments and additions to legislative acts arising from this Decree within one month.

14. Control over the implementation of this Decree is entrusted to Deputy Prime Minister J.A. Kuchkarov and Chairman of the Central Bank of the Republic of Uzbekistan M.B. Nurmuratov.

President of the Republic of Uzbekistan Sh. MIRZIYOYEV

Tashkent city,

March 23, 2018,

No. PQ-3620

APPENDIX 1 to the Decree of the President of the Republic of Uzbekistan dated March 23, 2018, No. PQ-3620

FORECAST INDICATORS FOR THE ADDITIONAL EXPANSION OF THE ATM NETWORK FOR 2018

No.

Name of Banks

Minimum Number of ATMs Planned for Installation

"Agrobank" JSC

300

"Asia Alliance Bank" JSC

140

National Bank for Foreign Economic Activity of the Republic of Uzbekistan

85

JSC "Alloqabank"

80

"Kapitalbank" JSC

60

"Asaka" JSC

55

"UzSanoatQurilishBank" JSC

50

"Ipak Yuli" JSC

45

"Microcreditbank" JSC

30

"Hamkorbank" JSC

25

"Infobank" JSC

25

"Ipoteka-bank" JSC

20

Halk Bank

25

"Qishloq Qurilish Bank" JSC

20

"Turonbank" JSC

20

"Trustbank" JSC

20

JSC "Savdogarbank"

10

"Orient Finance" JSC

10

"Ravnaq-bank" JSC

5

"Turkiston" JSC

5

"HI-TES BANK" JSC

5

"Davr-bank" JSC

5

"Universal Bank" JSC

5

Total

1,045

Appendix 1 is an unofficial translation.

APPENDIX 2 to the Decree of the President of the Republic of Uzbekistan dated March 23, 2018, No. PQ-3620

LIST OF EQUIPMENT, SOFTWARE, COMPONENTS, AND OTHER MATERIALS IMPORTED BY COMMERCIAL BANKS AND PROCESSING ORGANIZATIONS, EXEMPT FROM CUSTOMS PAYMENTS (EXCEPT FOR CUSTOMS CLEARANCE FEES) UNTIL JANUARY 1, 2020

No.

Name of Equipment

TIF TN Code

ATM

8472 90 300 0

Self-service payment terminal (info kiosk), automated deposit machines

8470 50 000 9

Terminal

8470 50 000 1

Embossers and graphic personalizers

8443 19 700 0

8443 32 100 9

8443 39 900 9

PinPad (card reader)

8473 29 100 9

8471 90 000 0

VISA, MasterCard, UnionPay unpersonalized chip, magnetic stripe, contactless bank cards.

EMV local bank cards

8523 21 000 0

8523 52 900 1

8523 52 900 9

HSM encryption hardware module and crypto equipment

8471 80 000 0

8543 70 900 0

Touchscreen for terminals

8471 60 700 0

License for software (for all carriers)

4907 00 900 0

8523 49 450 0

Thermal paper

9612 10 100 0

9612 10 800 0

Self-copying work blanks for printing personal identification numbers of bank cards in the form of PIN envelopes

4820 40 000 0

Foil for embossing relief paint

9612 10 800 0

3212 10 000 0

Cassette for embossing and relief paint foil

8443 99 900 9

8443 91 990 0

Note: Final codes according to TIF TN will be clarified during the customs clearance process.

Appendix 2 is an unofficial translation. (National Database of Legislative Acts, 24.03.2018, No. 07/18/3620/0933; , 10.06.2022, No. 06/22/152/0507)