ON MEASURES TO FURTHER INCREASE BANK CAPITALIZATION AND ACTIVATE THEIR PARTICIPATION IN INVESTMENT PROCESSES IN MODERNIZING THE ECONOMY

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Finance / Banks and Other Credit Institutions. Loans]

RESOLUTION OF THE PRESIDENT OF THE REPUBLIC OF UZBEKISTAN

ON MEASURES TO FURTHER INCREASE BANK CAPITALIZATION AND ACTIVATE THEIR PARTICIPATION IN INVESTMENT PROCESSES IN MODERNIZING THE ECONOMY

In order to further increase the level of capitalization of commercial banks, ensure their wide participation in investment processes, implementation of structural changes in the economy, modernization of production, technical and technological re-equipment:

1. The following shall be determined as priority directions for further deepening and liberalizing reforms in the banking and financial system:
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• increasing the level of bank capitalization by increasing the authorized fund of banks, issuing shares to attract free funds of the population, business entities and potential investors, including foreign investors, to their capital, and actively placing them on the stock market;

• wide participation of commercial banks in investment processes for organizing new modern productions and modernizing existing enterprises, technical and technological re-equipment at the expense of their own capital, and on this basis ensuring the expansion of competitive, export-oriented product production and increasing employment of the population;

• further reduction of cash circulation outside banks, uninterrupted and unconditional provision of customers with cash on demand;

• expanding the network of mini-banks and increasing the types of services provided by banks, improving the quality of customer service;

• strengthening commercial banks with highly qualified professional personnel, increasing the responsibility and culture of bank services.

2. The proposal of the Central Bank of the Republic of Uzbekistan and the Ministry of Finance on directing a part of the Central Bank's profit to be transferred to the state budget based on the results of 2006 to increase the authorized fund of the following banks and expand the investment resource base shall be approved:

• to "Microkreditbank" — 42 billion sum, including 32 billion sum to increase the authorized fund and 10 billion sum to open a credit line for financing investment projects of small business entities;

• to "Pakhtabank" — in the amount of 25 billion sum, including 15 billion sum to increase the authorized fund and 10 billion sum to open a credit line for the purpose of implementing investment projects for full processing of fruit and vegetable and livestock products;

• to "Ipotekabank" — 25 billion sum, including 15 billion sum to increase the authorized fund and 10 billion sum to open a credit line for the purpose of increasing the volume of mortgage loans.

It is recommended that commercial banks, after payment of all taxes and payments at the end of the year, direct at least 30 percent of bank profit to increase the bank's share capital.

See previous version.

3. Commercial banks shall be granted the right to reduce the taxable base for profit tax by an amount equal to the amount of income received from loans issued for more than three years for the implementation of investment projects for modernization of production, technical and technological re-equipment in priority sectors of the economy in accordance with approved targeted programs until January 1, 2012.

The Cabinet of Ministers of the Republic of Uzbekistan (Sh. Mirziyoyev) shall approve the Regulation on the procedure for granting these tax privileges within one month.
(The first paragraph of paragraph 3 as amended by Resolution No. PQ-1062 of the President of the Republic of Uzbekistan dated February 27, 2009 — Collection of Legislation of the Republic of Uzbekistan, 2009, Nos. 10-11, Article 107)

LexUZ Note
See: Regulation on the Procedure for Applying Privileges on Profit Tax by Commercial Banks Providing Loans for the Implementation of Investment Projects, approved by Resolution No. 174 of the Cabinet of Ministers dated August 15, 2007.

4. The following procedure shall be established and in accordance with it:

• primary public placement of shares of commercial banks on the stock exchange shall be carried out in an amount of not less than 25 percent of the volume of newly issued shares (private banks are exempt from this);

• shares of commercial banks shall be mandatorily included in the stock exchange listing and regular exchange quotations shall be published in the press.

See previous version.

(Paragraph 5 lost force based on Resolution No. PQ-1531 of the President of the Republic of Uzbekistan dated May 19, 2011 — Collection of Legislation of the Republic of Uzbekistan, 2011, Nos. 22-23, Article 225)

See previous version.

(Paragraph 6 lost force based on Decree No. PF-4116 of the President of the Republic of Uzbekistan dated June 17, 2009 — Collection of Legislation of the Republic of Uzbekistan, 2009, No. 25, Article 282)

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7. The term of validity of customs and tax privileges granted on the basis of Resolution No. 445 of the Cabinet of Ministers dated September 24, 2004 "On Measures to Further Develop the System of Settlements Based on Plastic Cards" for the import and use of plastic cards, payment terminals, software, ATMs, self-service information kiosks and other equipment, as well as necessary materials used in making payments via plastic cards shall be extended until January 1, 2010.

8. The Central Bank of the Republic of Uzbekistan, together with the Association of Banks of Uzbekistan, interested ministries and departments, commercial banks, shall develop and approve within one month a set of measures on the following:

• introduction of a national system for individual rating assessment of commercial banks, financial institutions, issuers and securities issued by them;

• obtaining creditworthiness ratings of commercial banks from international rating agencies.

9. The Central Bank of the Republic of Uzbekistan, together with the Ministry of Justice and other interested ministries and departments, shall submit proposals to the Cabinet of Ministers on changes and additions to legislative acts arising from this Resolution within one month.

10. Control over the execution of this Resolution shall be assigned to the Deputy Prime Minister of the Republic of Uzbekistan R. Azimov and the Chairman of the Central Bank of the Republic of Uzbekistan F. Mullajanov.

President of the Republic of Uzbekistan I. KARIMOV

Tashkent city,
July 12, 2007,
No. PQ-670
(Collection of Legislation of the Republic of Uzbekistan, 2007, Nos. 27-28, Article 284; 2009, Nos. 10-11, Article 107, No. 25, Article 282; 2011, Nos. 22-23, Article 225)