On Approval of the Regulation on Maximum Exposure Amounts for a Single Borrower or a Group of Interrelated Borrowers

Resolution of the Board of the Central Bank of the Republic of Uzbekistan, registered on August 5, 2015, registration number 2707

Date of entry into force

10.11.2015

All

30.01.2021

21.02.2020

06.09.2018

03.04.2018

31.07.2017

10.11.2015

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Document lost force 30.01.2021

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03.00.00.00 Civil Legislation / 03.11.00.00 Specific Types of Obligations / 03.11.12.00 Debt;
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03.00.00.00 Civil Legislation / 03.11.00.00 Specific Types of Obligations / 03.11.14.00 Financing Contract by Cession to a Third Party Other Than a Monetary Claim (Factoring);
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07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.22.00.00 Lending / 07.22.01.00 General Matters]
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Socio-cultural issues / Social insurance, social security and social protection]

Resolution of the Board of the Central Bank of the Republic of Uzbekistan

On Approval of the Regulation on Maximum Exposure Amounts for a Single Borrower or a Group of Interrelated Borrowers

[Registered by the Ministry of Justice of the Republic of Uzbekistan on August 5, 2015, registration number 2707]

This resolution loses its force on January 30, 2021, based on the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 21/12 dated September 21, 2020 "On Approval of the Regulation on Maximum Exposure Amounts for a Single Borrower, a Group of Interrelated Borrowers, Including Persons Related to the Bank" (registration number 3283, dated 29.10.2020).

In accordance with the Laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan" and "On Banks and Banking Activity" and the Resolution of the President of the Republic of Uzbekistan No. PQ-2344 dated May 6, 2015 "On Further Improving the Financial Stability of Commercial Banks and Developing Their Resource Base", the Board of the Central Bank of the Republic of Uzbekistan resolves:

1. Approve the Regulation on Maximum Exposure Amounts for a Single Borrower or a Group of Interrelated Borrowers attached hereto.

2. This resolution enters into force three months after its official publication.

Chairman of the Central Bank F. MULLAJONOV

Tashkent city,

July 22, 2015,

No. 19/16

APPENDIX

to the Resolution of the Board of the Central Bank of the Republic of Uzbekistan dated July 22, 2015, No. 19/16

REGULATION

on Maximum Exposure Amounts for a Single Borrower or a Group of Interrelated Borrowers

This Regulation establishes maximum exposure amounts for a single borrower or a group of interrelated borrowers in accordance with the Laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan" and "On Banks and Banking Activity" and the Resolution of the President of the Republic of Uzbekistan No. PQ-2344 dated May 6, 2015 "On Further Improving the Financial Stability of Commercial Banks and Developing Their Resource Base".

Chapter 1. General Provisions.

1. The following main concepts are used in this Regulation:

debtor
— a physical or legal entity indebted to the bank under a credit and any other obligation;

major participant (shareholder) of a legal entity — a physical or legal entity owning directly or indirectly 10 percent or more of the authorized capital or voting shares (stocks) of a legal entity;

large exposure
— exposure for a single borrower or a group of interrelated borrowers, the total amount of which exceeds 10 percent of the bank's Tier 1 capital.

2. A person is considered to exercise significant influence over a legal entity in the following cases:

if the person is a major participant (shareholder) of the legal entity;

if the person has the opportunity to manage or direct the activities of the legal entity based on an official agreement concluded with the legal entity or by any other means.

3. The following cases are considered as a group of interrelated borrowers of the bank:

if one of the debtor(s) can exercise significant influence over the other debtor(s);

if a participant of a full partnership or limited partnership, limited liability or additional liability company, which is a debtor of the bank, is simultaneously a debtor of the bank;

if two or more debtors are under the influence of exactly one person (regardless of whether this person is a debtor to the bank or not);

if two or more participants of a business society or partnership, which are debtors of the bank, have assumed joint and several liability with exactly one person (regardless of whether this person is a debtor to the bank or not);

if one debtor has provided funds obtained as a credit to another, or if two or more debtors have jointly or separately provided funds obtained as a credit to one person (regardless of whether this person is a debtor to the bank or not) (excluding routine commercial operations such as two or more debtors purchasing equipment from the same seller);

if two or more debtors use credits obtained from the bank to participate in business societies and partnerships or to conduct joint activities, and repay these credits from a single source;

if payment problems arise for one of the debtors due to financial difficulties, and similar problems arise for the other debtors.

4. Exposures (credits) attributable to a single borrower or a group of interrelated borrowers include:

credits, interbank deposits, investments in the authorized capital of legal entities and other securities, guarantees issued and funds paid and not recovered thereunder, guarantees accepted (sureties), assets sold with deferred payment terms, acceptances or letters of credit, leasing, any legally justified obligations for the purchase of securities and foreign currency, factoring, repo, swap, and accrued interest and obligations reflected in off-balance sheet items; (Paragraph 2 of item 4 was amended by the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 1/6 dated January 16, 2020 (registration number 2707-4, dated 21.02.2020) — National Database of Legislative Acts of the Republic of Uzbekistan, 21.02.2020, No. 10/20/2707-4/0201)

all legal obligations related to financing;

overdrafts (debit balances in customers' accounts);

all amounts transferred to non-accrual accounts (classified as "hopeless"), except for cases where the debtor's payment obligation is legally canceled as a result of the debtor being declared bankrupt.
(Paragraph 5 of item 4 was amended by the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 9/9 dated March 17, 2018 (registration number 2707-2, dated 03.04.2018) — National Database of Legislative Acts of the Republic of Uzbekistan, 03.04.2018, No. 10/18/2707-2/0989)

Chapter 2. Maximum Level of Exposure for a Single Borrower or a Group of Interrelated Borrowers

5. The maximum amount of exposure for a single borrower or a group of interrelated borrowers of a bank must not exceed 25 percent of the bank's Tier 1 capital.

6. The maximum amount of exposure for unsecured credit (credit line) for a single borrower or a group of interrelated borrowers of a bank, as well as for factoring services, must not exceed 5 percent of the bank's Tier 1 capital, except for interbank credits (deposits), which are carried out in accordance with the requirements of
   item 5 of this Regulation.
   (Item 6 was amended by the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 1/6 dated January 16, 2020 (registration number 2707-4, dated 21.02.2020) — National Database of Legislative Acts of the Republic of Uzbekistan, 21.02.2020, No. 10/20/2707-4/0201)

7. The total amount of large exposures must not exceed 8 times the bank's Tier 1 capital.

8. The restrictions provided for in
   items 5 — 7 of this Regulation do not apply in the following cases:

credits secured by securities of the Government of the Republic of Uzbekistan and the Central Bank, whose market value can cover 125 percent of the credits, or credits secured by guarantees or other obligations of the Government of the Republic of Uzbekistan;

credits secured by deposits in the lending bank;

exposures arising with the International Monetary Fund and the World Bank Group (International Bank for Reconstruction and Development, International Finance Corporation, Multilateral Investment Guarantee Agency, International Development Association), as well as the Asian Development Bank, Asian Infrastructure Investment Bank, European Bank for Reconstruction and Development, European Investment Bank, European Investment Fund, Islamic Development Bank, and the Council of Europe Development Bank, as well as when bank assets and/or off-balance sheet obligations are guaranteed by these organizations. (Item 8 was amended by the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 1/6 dated January 16, 2020 (registration number 2707-4, dated 21.02.2020) — National Database of Legislative Acts of the Republic of Uzbekistan, 21.02.2020, No. 10/20/2707-4/0201)

9. If a credit is secured by deposits in the bank, the deposit must be credited to a special account specifically for securing the credit, and the credit contract or other applicable agreement must stipulate that the bank may use the deposit if the credit is not repaid. The bank must take necessary measures and establish control to prevent the withdrawal of funds from the special account until the credit repayment date.

10. If the deposit is made in foreign currency, the value of this currency must constitute at least 105 percent of the credit balance. The value of the deposit currency must be revalued in case of changes in the exchange rate of the national currency to foreign currency for the purposes of the accounting and statistical reporting of currency operations by the Central Bank of the Republic of Uzbekistan, as well as for calculating customs and other mandatory payments in the territory of the Republic of Uzbekistan.
    (Item 10 was amended by the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 9/9 dated March 17, 2018 (registration number 2707-2, dated 03.04.2018) — National Database of Legislative Acts of the Republic of Uzbekistan, 03.04.2018, No. 10/18/2707-2/0989)

11. The bank management must take appropriate measures to maintain the collateral value at the level required by this Regulation. If the market value of the collateral decreases, the bank must take measures to adjust the collateral amount in accordance with this Regulation within 10 working days.
    See previous edition.
    (Chapter 3 was repealed by the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 9/9 dated March 17, 2018 (registration number 2707-2, dated 03.04.2018) — National Database of Legislative Acts of the Republic of Uzbekistan, 03.04.2018, No. 10/18/2707-2/0989)

Chapter 4. Reporting

14. Each bank must maintain reporting containing information on exposure for a single borrower or a group of interrelated borrowers, as well as on all potential large losses, and submit it to the Central Bank once a month.

15. The report submitted to the Central Bank must include information on the names of debtors for each borrower and group of interrelated borrowers, the total amount of unpaid bank credits, and information on other obligations of the debtor. Additionally, the report must include the total amount of all potential large exposures of the bank.

Chapter 5. Final Provisions

16. If the amount of exposure for a single borrower or a group of interrelated borrowers in a bank exceeds the established norms on the date this Regulation enters into force, such assets may be repaid under the initial terms and deadlines.

17. If the total amount of exposure for a single borrower or a group of interrelated borrowers is within the limits provided for in this Regulation at the time of granting the credit, but subsequently exceeds the established norms (due to a decrease in the bank's total capital or changes in the exchange rate), the bank must promptly notify the Central Bank of this situation.

18. Persons guilty of violating the requirements of this Regulation are liable in accordance with the legislation.
    (Compilation of Legislation of the Republic of Uzbekistan, 2015, No. 31, Article 420; 2017, No. 30, Article 744; National Database of Legislative Acts, 03.04.2018, No. 10/18/2707-2/0989, 06.09.2018, No. 10/18/2707-3/1845; 21.02.2020, No. 10/20/2707-4/0201)