Regulation on the Procedure for Microcredit Issuance by Commercial Banks to Individual Entrepreneurs and Family Business Entities Operating Without Establishing a Newly Registered Legal Entity

Resolution of the Board of the Central Bank of the Republic of Uzbekistan, registered on 12.05.2017, registration number 2883

Date of Entry into Force

15.05.2017

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16.07.2019

28.11.2017

15.05.2017

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Document lost its force 16.07.2019

[
OKOZ:
1.
07.00.00.00 Legislation on Finance and Credit. Bank Activity / 07.22.00.00 Lending / 07.22.06.00 Specific Types of Lending / 07.22.06.02 Microcredit. Lending of Small Business Entities]
[
TSZ:
1.
Finance / Banks and other credit institutions. Credits]

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

On Approval of the Regulation on the Procedure for Microcredit Issuance by Commercial Banks to Individual Entrepreneurs and Family Business Entities Operating Without Establishing a Newly Registered Legal Entity

[Registered by the Ministry of Justice of the Republic of Uzbekistan on May 12, 2017, registration number 2883]

This resolution has lost its force based on the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 14/13 dated June 22, 2019 "On Approval of the Regulation on the Procedure for Microcredit Issuance by Commercial Banks to Individual Entrepreneurs and Family Business Entities Operating Without Establishing a Newly Registered Legal Entity and on Declaring Invalid the Resolution on Amendments to It" (registration number 2883-2, dated 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 Activity", "On Microfinance", and the Resolution of the President of the Republic of Uzbekistan No. PQ-2844 dated March 17, 2017 "On Further Simplification of Measures for the System of Microcredit Issuance to Business Entities and Broad Layers of the Population", the Board of the Central Bank of the Republic of Uzbekistan has decided:

1. Approve the Regulation on the Procedure for Microcredit Issuance by Commercial Banks to Individual Entrepreneurs and Family Business Entities Operating Without Establishing a Newly Registered Legal Entity in accordance with the Appendix.

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

Head of the Central Bank F. MULLAJONOV

Tashkent city,

April 8, 2017,

No. 7/3

APPENDIX

to the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 7/3 dated April 8, 2017

REGULATION

on the Procedure for Microcredit Issuance by Commercial Banks to Individual Entrepreneurs and Family Business Entities Operating Without Establishing a Newly Registered Legal Entity

This Regulation establishes the procedure for microcredit issuance by commercial banks to individual entrepreneurs and family business entities operating without establishing a newly registered legal entity, in accordance with the Laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan", "On Banks and Banking Activity", "On Microfinance", and the Resolution of the President of the Republic of Uzbekistan No. PQ-2844 dated March 17, 2017 "On Further Simplification of Measures for the System of Microcredit Issuance to Business Entities and Broad Layers of the Population".

Chapter 1. General Provisions

1. A microcredit is issued by commercial banks to individual entrepreneurs and family business entities operating without establishing a newly registered legal entity (hereinafter referred to as the borrower) on a repayable, term-bound, secured, targeted use of funds, and repayable basis for the purpose of conducting business activity for a period of six months from the date of state registration, in an amount of up to 100 times the minimum wage.

2. A microcredit is issued to the borrower for the purposes specified in the List of Activities That Private Entrepreneurs May Engage In Without Establishing a Legal Entity, approved by Resolution No. 6 of the Cabinet of Ministers of the Republic of Uzbekistan dated January 7, 2011 (excluding the trade and public catering sectors), for a term of three years with a one-year grace period.

3. The interest rate amount for microcredits is determined at a level not higher than the Central Bank's refinancing rate.
   (The first sentence of paragraph 3 was edited by the Resolution of the Board of the Central Bank of the Republic of Uzbekistan No. 31/11 dated November 11, 2017 (registration number 2883-1, dated 28.11.2017) — National Database of Legislative Acts, dated 28.11.2017, No. 10/17/2883-1/0330)

The interest rate amount 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 contract remains unchanged.

4. Repayment of the principal debt for a microcredit issued with a grace period begins from the month following the end of the grace period. During the grace period, only interest is calculated and paid on the microcredit.

Chapter 2. Placing an Order for Obtaining a Microcredit and Formalizing the Microcredit

5. Borrowers submit an order to the commercial bank for obtaining a microcredit. The order must be formalized in accordance with the requirements specified in Article 11 of the Law of the Republic of Uzbekistan "On Microfinance".

6. The following documents are attached to the order:

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

one of the types of relevant credit collateral.

7. When submitting the relevant documents specified in paragraph 6 of this Regulation, the borrower presents their identity document and provides a copy thereof.

8. Borrowers may submit the order in electronic form through the information system.

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

pledge of property and securities;

guarantee of a bank or insurance organization;

guarantee of a third party;

insurance policy regarding the insurance of the risk of non-repayment of the microcredit obtained by the borrower for the benefit of the bank;

other types of collateral provided for by legislation.

10. Goods obtained for the microcredit issued in an amount of up to 20 times the minimum wage for the purpose of conducting business activity are taken into account as collateral for the credit.

Guarantees issued by bodies of local self-government of citizens within the scope of powers specified in Article 11 of the Law of the Republic of Uzbekistan "On Bodies of Local Self-Government of Citizens" for microcredits in an amount of up to 60 times the minimum wage for the purpose of conducting business activity are taken into account as credit collateral.

11. The bank must review the order within three working days after receiving it and make a decision to issue a microcredit or to reasonably refuse to issue a microcredit.

12. When the order is being reviewed by the bank, the following analyses are carried out:

determining the sufficiency of the income of the order placer (borrower);

checking for consistency of the information stated in the order;

assessing the borrower's (order placer's) ability to fulfill obligations to the bank on time.

If the issuance of a microcredit is reasonably refused, the bank must inform the order placer (borrower) of this in writing.

13. If a decision is made to issue a microcredit based on the results of the order review, a written contract is concluded between the bank and the borrower, and the type of credit collateral submitted by the borrower is formalized in the manner prescribed by legislation.

14. The contract 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

15. After the contract is concluded and the credit collateral is formalized, the bank opens a credit account for the borrower in the manner prescribed by legislation.

16. The microcredit is issued to the borrower by non-cash money transfer.

17. Microcredits issued 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, dated August 13, 2004).

18. The schedule for microcredit repayment is attached to the contract in the form of a table.

19. If the borrower does not have sufficient funds to pay the calculated interest and the remaining credit balance, the debt is recovered in the manner prescribed by the "Guidelines on the Procedure for Deducting Funds from Bank Accounts of Business Entities" (registration number 2342, dated March 15, 2012). In this case, interest calculated on the credit is repaid first, followed by the principal debt on the credit.

Chapter 4. Monitoring

20. Throughout the entire period of using the microcredit, commercial banks conduct direct on-site continuous monitoring to determine the effective and targeted use of the microcredit with the participation of an employee of the bodies of local self-government of citizens. Monitoring should be aimed at providing assistance to the borrower in fulfilling the terms of the contract.

Based on the monitoring results, the commercial bank, together with the employee of the bodies of local self-government of citizens, draws up an appropriate act with the participation of the borrower.

During monitoring, all circumstances related to the borrower's activity, as well as the status of the submitted pledge collateral, are systematically recorded in a special file opened at the commercial bank for the borrower.

21. If it is established that the microcredit was not used for the specified purposes, the commercial bank has the right to recover the part of the credit used for other purposes from the borrower in advance in the manner prescribed by the credit contract.

22. In cases where the borrower refuses to repay the principal debt and interest calculated on it based on the contract, or refuses to transfer the pledged property to the bank's disposal based on the terms of the pledge contract, the bank takes measures prescribed by legislation.

Chapter 5. Final Provisions

23. Persons guilty of violating the requirements of this Regulation are held liable in the manner prescribed by legislation.
    (Compilation of Legislation of the Republic of Uzbekistan, 2017, No. 19, Article 351; National Database of Legislative Acts, dated 28.11.2017, No. 10/17/2883-1/0330)