On Approval of the Regulation on the Procedure for Commercial Banks to Grant Loans to Farmer Holdings Pledged with Future Harvest

Resolution of the Board of the Central Bank of the Republic of Uzbekistan, registered on April 16, 2004, registration number 1337

Date of Entry into Force

26.04.2004

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19.08.2019

28.03.2016

22.06.2015

02.07.2012

10.05.2005

26.04.2004

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Document lost its force 19.08.2019

[
OKOB:
1.
03.00.00.00 Civil Legislation / 03.10.00.00 Law of Obligations / 03.10.04.04 (Lost Force) Pledge of Goods in Circulation / 03.10.99.00 (Lost Force) Pledge;
2.
07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.22.00.00 Lending / 07.22.06.00 Specific Types of Lending / 07.22.06.01 Lending to Agricultural Commodity Producers (see also 09.14.17.05);
3.
09.00.00.00 Entrepreneurship and Economic Activity / 09.14.00.00 Agriculture / 09.14.17.00 Contracts in Agriculture / 09.14.17.05 Lending, accounting, insurance in the agro-industrial production sector (see also 07.22.06.01)]
[
TSZ:
1.
Economy / Agriculture;
2.
Finance / Banks and other credit institutions. Loans]

RESOLUTION OF THE BOARD OF THE CENTRAL BANK OF THE REPUBLIC OF UZBEKISTON

ON APPROVAL OF THE REGULATION ON THE PROCEDURE FOR COMMERCIAL BANKS TO GRANT LOANS TO FARMER HOLDINGS PLEDGED WITH FUTURE HARVEST

[Registered by the Ministry of Justice of the Republic of Uzbekistan on April 16, 2004, under number 1337]

This resolution was removed from the state registry based on the Order of the Minister of Justice of the Republic of Uzbekistan No. 347-mh dated August 19, 2019 "On Removing Departmental Normative Legal Documents from the State Registry" (registration number 1337-5, 19.08.2019).

In order to ensure the implementation of the "Program of Measures for the Implementation of the Concept of Development of Farmer Holdings for 2004-2006", approved by the Decree of the President of the Republic of Uzbekistan No. PF-3342 dated October 27, 2003 "On the Concept of Development of Farmer Holdings for 2004-2006" and the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No. 476 dated October 30, 2003 "On Measures for the Implementation of the Concept of Development of Farmer Holdings for 2004-2006", the Board of the Central Bank resolves:

1. Approve the Regulation on the Procedure for Commercial Banks to Grant Loans to Farmer Holdings Pledged with Future Harvest in accordance with the Appendix.

2. This resolution shall enter into force ten days after the day of its state registration by the Ministry of Justice of the Republic of Uzbekistan.

Chairman of the Board of the Central Bank F. MULLAJONOV

Tashkent city,

March 1, 2004,

No. 563

APPROVED

by the Resolution of the Board of the Central Bank No. 563 dated March 1, 2004

REGULATION

on the Procedure for Commercial Banks to Grant Loans to Farmer Holdings Pledged with Future Harvest

This Regulation establishes the procedure for granting loans (hereinafter referred to as loans) by commercial banks to farmer holdings pledged with future harvest, in accordance with the Civil Code of the Republic of Uzbekistan, the Law "On the Central Bank of the Republic of Uzbekistan", the Law "On Banks and Banking Activity", the Law "On Farmer Holdings", the Decrees of the President of the Republic of Uzbekistan No. PF-3342 dated October 27, 2003 "On the Concept of Development of Farmer Holdings for 2004-2006", No. PF-4478 dated October 22, 2012 "On Further Improvement and Development of Farmer Activity in Uzbekistan", and the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No. 476 dated October 30, 2003 "On Measures for the Implementation of the Concept of Development of Farmer Holdings for 2004-2006". (Introduction in the edition of the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 12/10 dated June 6, 2015 (registration number 1337-3, 18.06.2015) — Collection of Legislation of the Republic of Uzbekistan, 2015, No. 24, Art. 324)

I. General Provisions

1. Loans are granted to farmer holdings producing agricultural products for state needs on the basis of the conditions of repayability, profitability, security, term, and targeted use.

Lending to farmer holdings that do not supply agricultural products for state needs is carried out on the basis of the Regulation on the Procedure for Lending Subjects of Small Entrepreneurship in National Currency (registration number 2546, December 27, 2013). (Second paragraph of Item 1 in the edition of the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 12/10 dated June 6, 2015 (registration number 1337-3, 18.06.2015) — Collection of Legislation of the Republic of Uzbekistan, 2015, No. 24, Art. 324)

2. The Settlement Fund of Agricultural Products Purchased for State Needs under the auspices of the Ministry of Finance of the Republic of Uzbekistan (hereinafter referred to as the Fund) may grant loans to farmer holdings that have received preferential loans from credit lines in an amount of up to 30 percent of the contract amount concluded with "Uzdonmahsulot" production enterprises for grain production, and to farmer holdings that have not received preferential loans from these credit lines in an amount of up to 80 percent of the contract amount.

Loans to farmer holdings producing cotton raw materials that have received preferential loans from credit lines may be granted in an amount of up to 20 percent of the contract amount, and to farmer holdings that have not received preferential loans from these credit lines in an amount of up to 70 percent of the contract amount.

3. Loans are granted on a contractual basis for a term of up to 1.5 years (18 months) to borrowers capable of repaying the loan under the conditions specified in this Regulation, without the right to extend the repayment term, at the location of the client's main deposit account until the main debt is collected.

4. Interest rates for the use of loans are determined based on the agreement between the borrower and the bank on the basis of the loan contract.
   (See previous edition.)

Commercial banks have the right to decide on setting preferential interest rates for these loans.
(Item 4 supplemented by a paragraph in accordance with the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 6/3 dated April 9, 2005 (registration No. 1337-1, 30.04.2005) — Collection of Legislation of the Republic of Uzbekistan, 2005, No. 17-18, Art. 137)

5. Loans are granted to borrowers for the following purposes:

purchase of agricultural machinery, spare parts, and equipment;

purchase of fuel and lubricants;

purchase of mineral fertilizers, chemical and biological plant protection agents, and veterinary medicines;

payments for services of MTP, alternative MTP, joint-stock companies, SUUs (water consumers associations), and other economic entities; (fifth paragraph of Item 5 in the edition of the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 17/4 dated June 9, 2012 (registration number 1337-2, 22.06.2012) — Collection of Legislation of the Republic of Uzbekistan, 2012, No. 25, Art. 287) (See previous edition.)

payments for harvesting grain crops and picking cotton raw materials; (Item 5 supplemented by a paragraph in accordance with the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 6/3 dated April 9, 2005 (registration No. 1337-1, 30.04.2005) — Collection of Legislation of the Republic of Uzbekistan, 2005, No. 17-18, Art. 137)

other expenses directly related to the production activity of grain and cotton raw materials.

II. Procedure for Formalizing Loans

6. To obtain a loan, a farmer holding must submit the following documents to the bank servicing its main deposit account:

an application for obtaining a loan;

copies of contractation contracts concluded with production organizations;

a business plan with a mandatory cash flow analysis;

the accounting balance (Form 1) for the last reporting period submitted by the borrower to the relevant state tax inspection, as well as comparison statements regarding debts with a term exceeding 90 days and a report on financial results (Form 2); (fifth paragraph of Item 6 in the edition of the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 12/10 dated June 6, 2015 (registration number 1337-3, 18.06.2015) — Collection of Legislation of the Republic of Uzbekistan, 2015, No. 24, Art. 324)

security for loan repayment.

7. As security for the repayment of the loan to be obtained, the borrower submits to the bank the future harvest to be obtained in the current year from land leased for a long term.

In this case, a pledge contract for the future harvest is signed between the bank and the farmer holding. The contract establishes conditions that all proceeds from the sale of the pledged harvest to production enterprises within the structure of the joint-stock companies "Uzdonmahsulot" and "Uzpachtasanoat" and other economic entities shall be directed primarily to repay these loans and interest accrued on them. (second paragraph of Item 7 in the edition of the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 4/2 dated February 27, 2016 (registration number 1337-4, 22.03.2016) — Collection of Legislation of the Republic of Uzbekistan, 2016, No. 12, Art. 114)

In addition, an insurance policy regarding the voluntary insurance of the future harvest for the benefit of the lending bank-beneficiary must be attached to the pledge contract by the farmer holding.

8. Upon receiving the application with all necessary documents specified in Items 6 and 7 of this Regulation, the bank must provide a conclusion on granting or refusing the loan within no more than 3 working days from the date of receipt of the application.
   (Item 8 in the edition of the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 12/10 dated June 6, 2015 (registration number 1337-3, 18.06.2015) — Collection of Legislation of the Republic of Uzbekistan, 2015, No. 24, Art. 324)

9. After the loan contract is concluded, the head of the credit department (employee) issues an order to the accounting department to open a loan account, specifying the amount, term, and interest rate of the loan to be granted.

III. Procedure for Granting, Accounting for, and Repaying Loans

10. After the loan contract is signed and entered into force between the bank and the farmer holding, the bank opens a separate loan account for the farmer holding and grants the loan only in non-cash form based on payment orders from the borrower.
    (See previous edition.)

In this case, it is recommended to determine the maximum amount of loans granted for financing each type of crop production expenses based on the agro-technical cards approved annually by the Ministry of Finance of the Republic of Uzbekistan and the Ministry of Agriculture and Water Resources for each harvest, as specified in Item 5 of this Regulation. (Item 10 supplemented by a paragraph in accordance with the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 6/3 dated April 9, 2005 (registration No. 1337-1, 30.04.2005) — Collection of Legislation of the Republic of Uzbekistan, 2005, No. 17-18, Art. 137)

11. Granted loans are accounted for in the balance sheet accounts 13301 — "Short-term loans granted for growing grain for purchase by state needs" and 14301 — "Long-term loans granted for growing cotton raw materials for purchase by state needs".
    (Item 11 in the edition of the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 17/4 dated June 9, 2012 (registration number 1337-2, 22.06.2012) — Collection of Legislation of the Republic of Uzbekistan, 2012, No. 25, Art. 287)

12. Loans granted on separate loan accounts are formalized based on the order of the credit department with term liabilities, and they are accounted for in accounts named 91901 — "Liabilities of borrowers for short-term loans" and 91905 — "Liabilities of borrowers for long-term loans and leases", depending on the lending terms, until they are fully extinguished.
    (Item 12 in the edition of the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 17/4 dated June 9, 2012 (registration number 1337-2, 22.06.2012) — Collection of Legislation of the Republic of Uzbekistan, 2012, No. 25, Art. 287)

13. Continuous monitoring of the use of loans is carried out by commercial banks throughout the entire term of use, and it must be aimed at comprehensive assistance to the borrower in implementing the project and loan contract conditions. The procedure for monitoring by banks and liability measures applied to borrowers who have used granted loans for other purposes must be specified in the loan contract.

14. During the monitoring process, inspections are conducted at sites to assess the condition of crops being grown by the farmer holding, the implementation of necessary agrotechnical work, and the effective and targeted use of the loan. If there is a risk of insufficient harvest due to the absence (full or partial) of crops or their unsatisfactory condition, including failure to implement agrotechnical measures on time, weed infestation of crop areas, crop destruction due to lack of irrigation, or similar situations, the bank shall suspend lending and recover the granted loan and accrued interest in advance. These situations must be agreed upon in the loan contract.

15. Calculation of interest for the use of loans is carried out in the manner prescribed by legislation, and their collection is carried out once a month on the date agreed in the loan contract. The balance of interest accrued on the obtained loan and the main debt repayment shall be primarily executed from funds received by the borrower from the sale of agricultural products to production enterprises to special accounts No. 23210 and 23220. In this case, accrued interest shall be collected before the loan debt.

Farmer holdings have the right to repay the main debt and accrued interest on the loan before the term specified in the loan contract.

16. If the funds in the borrower's special accounts No. 23210 and 23220 are insufficient to repay the obtained loan and accrued interest, the collection of interest and the loan balance shall be carried out in the order prescribed by legislation from the funds available in the borrower's main deposit account until the main debt is collected.

In this case, the accrued interest and loan balance are submitted for collection through the account for overdue loans, and term liabilities regarding it are placed in the 2nd card file.

17. If the funds in the borrower's main deposit account are insufficient to collect interest and the loan balance until the main debt is collected, the debt shall be collected in the manner prescribed by the "Instruction on the Procedure for Deducting Funds from Bank Accounts of Business Entities" (registration number 2342, March 15, 2012) (Collection of Legislation of the Republic of Uzbekistan, 2012, No. 11, Art. 127). Interest is collected first in the repayment of loans.
    (Item 17 in the edition of the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 17/4 dated June 9, 2012 (registration number 1337-2, 22.06.2012) — Collection of Legislation of the Republic of Uzbekistan, 2012, No. 25, Art. 287)

18. If the funds received from the sale of the harvest produced by the borrower and the funds in their deposit accounts until the main debt is collected are insufficient to make payments for the bank loan and accrued interest, the bank shall direct the funds received from the future harvest insurance payment to repay the loan and accrued interest.

If the funds received from the sale of the harvest and insurance payments are insufficient to repay the accrued interest and loan, the bank shall recover the loan and accrued interest balance in the manner prescribed by the "Procedure for Directing Recovery to Liquid Property of Borrowers in Case of Untimely Repayment of Bank Loans" approved by the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No. 422 dated December 4, 2002.

19. This Regulation was agreed upon with the Ministry of Finance of the Republic of Uzbekistan, the Ministry of Agriculture and Water Resources, the Committee for State Property Management and Support of Entrepreneurship, the State Committee for Land Resources, and the Union of Peasant and Farmer Holdings.

Minister of Finance M. NURMURATOV

Tashkent city,

February 27, 2004.

Minister of Agriculture and Water Resources A. JO'RAYEV

Tashkent city,

February 27, 2004.

Chairman of the Committee for State Property Management and Support of Entrepreneurship M. ASKAROV

Tashkent city,

February 27, 2004.

Chairman of the State Committee for Land Resources E. KURBONOV

Tashkent city,

February 27, 2004.

Chairman of the Union of Peasant and Farmer Holdings S. QOBILOV

Tashkent city,

February 27, 2004.
(In the Collection of Legislation of the Republic of Uzbekistan, 2004, No. 15, Art. 182, 2005, No. 17-18, Art. 137; 2012, No. 25, Art. 287; 2015, No. 24, Art. 324; 2016, No. 12, Art. 114)