Regulation on the Procedure for Commercial Banks to Issue Microcredits to Graduates of Vocational Colleges

Resolution of the Board of the Central Bank of the Republic of Uzbekistan, registered on 03.02.2016, registration number 2758

Effective Date

08.02.2016

All

16.07.2019

09.02.2018

28.11.2017

08.02.2016

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Russian Uzbek O’zb Uzbek|Russian

Document lost its force 16.07.2019

[ OQOZ: 1. 07.00.00.00 Legislation on finance and credit. Banking activities / 07.22.00.00 Lending / 07.22.06.00 Special types of lending / 07.22.06.02 Microcredit. Lending to small business entities] [ TSZ: 1. Finance / Banks and other credit institutions. Credits]

Resolution

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

On the approval of the Regulation on the procedure for commercial banks to issue microcredits to graduates of vocational colleges

[Registered by the Ministry of Justice of the Republic of Uzbekistan on February 3, 2016, under No. 2758]

This resolution lost its force based on the Resolution of the Board of the Central Bank of the Republic of Uzbekistan dated June 22, 2019, No. 14/12 "On recognizing as having lost force the Resolution "On the approval of the Regulation on the procedure for commercial banks to issue microcredits to graduates of vocational colleges" and amendments thereto" (registration number 2758-3, 16.07.2019).

In accordance with the Laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan", "On Banks and Banking Activities" and "On Microfinance", the Board of the Central Bank of the Republic of Uzbekistan resolves:

1. The Regulation on the procedure for commercial banks to issue microcredits to graduates of vocational colleges shall be approved in accordance with the Annex.

2. This resolution shall enter into force from the date of its official publication.

Chairman of the Central Bank F. MULLAJONOV

Tashkent city,

January 16, 2016,

No. 1/10

ANNEX

to the Resolution of the Board of the Central Bank of the Republic of Uzbekistan dated January 16, 2016, No. 1/10

REGULATION

on the procedure for commercial banks to issue microcredits to graduates of vocational colleges

This Regulation defines the procedure for commercial banks to issue microcredits in national currency to graduates of vocational colleges of the Republic of Uzbekistan, in accordance with the Laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan", "On Banks and Banking Activities", "On Microfinance", "On Guarantees of Freedom of Entrepreneurial Activity" and the Decree of the President of the Republic of Uzbekistan dated July 28, 2010, No. PF–4232 "On additional measures to involve graduates of educational institutions in entrepreneurial activities".

Chapter 1. General Provisions

1. Graduates of vocational colleges of the Republic of Uzbekistan who have completed their studies and for whom no more than 3 years have passed from the date of completion, and who are registered for entrepreneurial activity or own 50 percent or more of shares (stakes) in the authorized fund (authorized capital) of a legal entity, are considered lending subjects (hereinafter referred to as borrowers).

2. The procedure for issuing preferential microcredits by "Microcreditbank" JSCB and from credit lines of state targeted funds is determined by legislative acts.

3. Microcredits for entrepreneurial activities are issued by banks on the basis of principles of payment, timeliness, targeted use of funds, and repayment.

4. Microcredit:

for borrowers operating without forming a legal entity — up to 200 times the minimum monthly wage;

for borrowers operating with the formation of a legal entity — up to 300 times the minimum monthly wage, without the right to extend the repayment period.

5. Microcredit is issued to the borrower, taking into account the self-sufficiency of the project for which the credit is allocated:

for forming working capital to start an activity, for developing the technical and economic basis of an investment project — for a period of up to 12 months;

for replenishing working capital for organizing the cultivation and processing of agricultural products, as well as for purchasing equipment — for a period of up to 2 years;

for financing investment projects — for a period exceeding 3 years.

6. Microcredits are issued to borrowers for the following purposes:

purchasing seeds, mineral fertilizers, and chemical plant protection products, developing livestock breeding, rabbit farming, poultry farming, fish farming, and beekeeping, making payments for technical services provided for the cultivation and processing of agricultural products;

constructing lightweight greenhouses operating on alternative fuel sources, purchasing agricultural machinery and mechanisms used in fruit and vegetable growing;

direct production — manufacturing products, deep processing of raw materials and materials, developing handicrafts, organizing home-based work, producing and constructing building materials;

developing the service sector — providing household, medical, tourist-excursion, and hotel services to the population, providing services for repairing cars and other equipment, developing transport services;

establishing new orchards and vineyards, introducing advanced modern technologies, including drip irrigation technologies.

Microcredits are issued with a grace period of 6 months for the purposes specified in the second to fifth paragraphs of this clause, and with a grace period of 12 months for the purposes specified in the sixth paragraph.

7. The grace period for microcredit may be extended based on the agreement.

8. Microcredits are not issued for purposes not specified in clause 6 of this Regulation.

9. The interest rate for using microcredit is set at a level not exceeding the refinancing rate of the Central Bank. (The first paragraph of clause 9 as amended by the Resolution of the Board of the Central Bank of the Republic of Uzbekistan dated November 11, 2017, No. 31/10 (registration number 2758-1, 28.11.2017) — National Database of Legislation, 28.11.2017, 10/17/2758-1/0329-son)

The interest rate for microcredits may change depending on changes in the Central Bank's refinancing rate. If the Central Bank's refinancing rate is increased, the interest rate specified in the agreement remains unchanged.

10. For microcredits issued with a grace period, repayment of the principal debt begins from the month following the end of the grace period. During the grace period, only interest on the microcredit is calculated and paid.

11. Microcredits are not issued to borrowers operating at a loss or having an illiquid balance, and measures are taken to recover previously issued microcredits prematurely in the prescribed manner.

Chapter 2. Application for Microcredit and Formalization of Microcredit

12. Borrowers submit an application to the bank to obtain microcredit. The application must be formalized in accordance with the requirements specified in Article 11 of the Law of the Republic of Uzbekistan "On Microfinance".

13. The following documents are attached to the application:

a business plan indicating the forecast of cash receipts (cash flow) to the borrower's bank account;

the borrower's balance sheet (Form No. 1) for the last reporting period submitted to the relevant state tax inspectorate, reconciliation acts for debts exceeding 90 days, and a report on financial results (Form No. 2), with the exception of newly established legal entities, individual entrepreneurs, and dehkan farms operating without forming a legal entity;

a copy of the vocational college diploma belonging to the borrower; (The fourth paragraph of clause 13 as amended by the Resolution of the Board of the Central Bank of the Republic of Uzbekistan dated January 27, 2018, No. 3/9 (registration number 2758-2, 08.02.2018) — National Database of Legislation, 09.02.2018, 10/18/2758-2/0678-son)

one of the relevant types of credit collateral.

14. Borrowers may submit applications electronically through an information system.

15. To ensure the fulfillment of obligations by the borrower, one of the following types of credit collateral is provided:

pledge of property and securities;

bank or insurance organization guarantee;

third-party surety;

an insurance policy on the insurance of the risk of non-repayment of the microcredit received by the borrower in favor of the bank;

other types of collateral provided for by legislative acts.

16. Property acquired through microcredit may serve as collateral for this microcredit in the amount of 80 percent of its value.

17. The bank must review the application within three business days of receipt and make a decision to issue microcredit or to refuse to issue microcredit with justification.

18. When the application is reviewed by the bank, the following analyses are carried out:

determining the sufficiency of the applicant's (borrower's) income;

consistency of the information stated in the application;

availability of the applicant's (borrower's) ability to timely fulfill obligations to the bank.

If the issuance of microcredit is refused with justification, the bank must inform the applicant (borrower) in writing.

19. If a decision to issue microcredit is made based on the results of the application review, a written agreement is concluded between the bank and the borrower, and the type of credit collateral provided by the borrower is formalized in the manner prescribed by legislative acts.

20. The agreement concluded between the bank and the borrower must be formalized in accordance with Article 14 of the Law of the Republic of Uzbekistan "On Microfinance".

Chapter 3. Issuance and Repayment of Microcredits

21. After the agreement is concluded and the credit collateral is formalized, a loan account is opened for the borrower by the bank in the manner prescribed by legislative acts.

22. Microcredit is issued to the borrower in non-cash form by bank transfer.

23. Microcredits allocated to borrowers are accounted for in the corresponding balance sheet accounts of the "Chart of Accounts for Accounting in Commercial Banks of the Republic of Uzbekistan" (registration number 773-17, August 13, 2004).

24. Repayment schedules for microcredit are attached to the agreement in the form of a table.

25. If the borrower's funds are insufficient to pay the accrued interest and the remaining credit balance on the microcredit, the debt is recovered in the manner prescribed by the "Instruction on the procedure for debiting funds from bank accounts of economic entities" (registration number 2342, March 15, 2012). In this case, first the accrued interest on the credit is repaid, and then the principal debt on the credit.

Chapter 4. Monitoring

26. Banks conduct continuous monitoring during the period of microcredit utilization. Monitoring should be aimed at assisting the borrower in fulfilling the terms of the agreement.

27. During the monitoring process, the borrower's financial and economic activities, fulfillment of obligations under the concluded agreement, production volume, non-production expenses and losses, profit, dynamics of working capital, and reserves of goods and materials, as well as other important circumstances, are analyzed.

28. During monitoring, all positive and negative circumstances related to the borrower's activities, as well as the condition of the collateral, are systematically recorded in a special file opened for the borrower at the bank.

29. For microcredits issued to finance construction, during the monitoring process, the bank examines the volume of work performed and other important issues within the terms and conditions specified in the agreement.

30. If cases of non-use of microcredit for the designated purposes are identified, the bank has the right to refuse to issue further credit to the borrower or to prematurely recover the credit amount and accrued interest, and to impose a fine based on the terms specified in the agreement.

31. If the borrower refuses to repay the principal debt and accrued interest on the microcredit based on the agreement, or to transfer the collateral property to the bank's disposal based on the terms of the pledge agreement, the bank takes measures prescribed by legislative acts.

32. If the borrower's collateral is insufficient to repay the principal debt and accrued interest on the microcredit, the bank may direct recovery of this debt to the borrower's liquid property in accordance with the "Procedure for directing recovery to the liquid property of debtors if debts on bank loans are not repaid on time", approved by Resolution No. 422 of the Cabinet of Ministers dated December 4, 2002.

Chapter 5. Final Provision

33. Persons guilty of violating the requirements of this Regulation shall be held liable in the manner prescribed by legislative acts. (Collection of Legislation of the Republic of Uzbekistan, 2016, No. 5, Article 43; National Database of Legislation, 28.11.2017, 10/17/2758-1/0329-son; 09.02.2018, 10/18/2758-2/0678-son)