Regulations on Measures and Sanctions Applied by the Central Bank to Commercial Banks for Violations of Banking Legislation and Regulatory Documents

Regulation of the Central Bank of the Republic of Uzbekistan, registered on 05.02.1999, registration number 622

Date of Entry into Force

05.02.1999

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16.09.2020 25.08.2019 13.02.2019 25.10.2017 08.09.2014 21.10.2013 07.05.2011 17.10.2008 28.03.2005 01.06.2000 05.02.1999

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Document lost force 16.09.2020

[OKOZ: 1. 07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.21.00.00 Banking Activity / 07.21.19.00 Liability for Violation of Legislative Documents on Banks and Banking Activity] [TSZ: 1. Finance / Banks and other credit institutions. Credits]

"APPROVED" By the Board of Directors of the Central Bank of the Republic of Uzbekistan December 26, 1998 (Protocol No. 24) No. 74

Regulation on Measures and Sanctions Applied by the Central Bank to Commercial Banks, Microcredit Organizations, and Pawnshops for Violations of the Requirements of Normative-Legal Documents Regulating the Activities of Banks and Other Credit Institutions

(regulation name in the edition of the Resolution of the Board of Directors of the Central Bank of the Republic of Uzbekistan No. 8/4 dated April 20, 2019 (registration number 622-9, May 23, 2019) — National Database of Legislative Acts of the Republic of Uzbekistan, May 24, 2019, No. 10/19/622-9/3178)

[Registered by the Ministry of Justice of the Republic of Uzbekistan on February 5, 1999, under No. 622]

This Regulation has lost its force based on the Resolution of the Board of Directors of the Central Bank of the Republic of Uzbekistan No. 13/9 dated September 4, 2020 "On Recognizing Certain Normative-Legal Documents Adopted by the Central Bank of the Republic of Uzbekistan as Having Lost Their Force" (registration number 3282, September 16, 2020).

I. General Provisions

1.1. This Regulation establishes the procedure for applying measures and sanctions by the Central Bank to commercial banks, microcredit organizations, and pawnshops for violations of normative-legal documents regulating the activities of banks and other credit institutions, in accordance with the Laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan," "On Banks and Banking Activity," and "On Microcredit Organizations." (Paragraph 1.1 in the edition of the Resolution of the Board of Directors of the Central Bank of the Republic of Uzbekistan No. 8/4 dated April 20, 2019 (registration number 622-9, May 23, 2019) — National Database of Legislative Acts of the Republic of Uzbekistan, May 24, 2019, No. 10/19/622-9/3178)

1.2. The Central Bank of the Republic of Uzbekistan may impose fines on banks that have violated current legislation, regulatory documents, and rules governing the implementation of banking operations, in accordance with this Regulation.

1.3. The amount of fines collected is credited to balance sheet account 45994 "Other Non-Interest Income" in accordance with the Chart of Accounts of the Central Bank of the Republic of Uzbekistan No. 289 dated December 25, 1999.

II. Penalties Applied to Banks for Violations of Mandatory Reserve Requirements and Established Economic Norms

2.1. In accordance with Articles 29, 51, and 53 of the Law of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan," if a bank violates the Central Bank's requirements for mandatory reserves regarding their composition and amount, or the instructions on deposit norms, the Central Bank collects the un-deposited amount from the bank and imposes a fine not exceeding twice the refinancing rate on the un-deposited amount.

2.2. In case of violation of established economic norms and banking legislation by banks and their branches, the Central Bank has the right to collect a fine of up to 0.1 percent of the minimum authorized capital for each violated norm, but the total amount of fines for all violated norms shall not exceed more than one percent of the amount indicated above, or restrict the execution of separate operations for up to six months.

2.3. If the norm for forming the Reserve Fund (for possible losses on loans) is not complied with during the reporting month, the Central Bank sends an instruction to the bank stating that corrective measures must be taken.

If the bank fails to execute the above instructions or if the formation of the Reserve Fund is not ensured over the last three months, i.e., a real threat to the interests of depositors and creditors arises, the Central Bank restricts the execution of credit operations for up to six months or establishes additional economic norms in accordance with Article 53 of the Law of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan."

2.4. If the amount of overdue debt on loans, including factoring and leasing operations, and credit placements exceeds 10 percent of the total amount, the Central Bank sends an instruction to the bank regarding the adoption of appropriate measures to reduce overdue debt.

If the bank fails to execute the instruction or if the amount of overdue debt on loans has increased over the last three months, i.e., a real threat to the interests of depositors and creditors has arisen, the Central Bank has the right to prohibit the execution of credit operations for this bank for up to six months.

III. Penalties for Violations of Rules on the Use of Centralized Credits and Refinancing Credits, and Margins

3.1. A fine equal to twice the additional income obtained by commercial banks by increasing the margin amount set by the Central Bank for centralized credit resources is collected.

3.2. In cases where refinancing credits obtained by a commercial bank are not repaid within the established period, interest at twice the current refinancing rate of the Central Bank is collected from the bank.

If centralized targeted credits repaid by clients are not returned by the commercial bank, interest at twice the current refinancing rate of the Central Bank is collected from such bank for each day of delay.

3.3. If targeted refinancing credits are used for other purposes, a fine equal to twice the current refinancing rate of the Central Bank is collected from the bank on the amount of refinancing credits used for other purposes. The amount of refinancing credits used for other purposes must be collected in advance.

IV. Penalties for Violations of Payment Discipline

4.1. A commercial bank pays a fine of up to 0.1 percent of the minimum authorized capital for the formation of a debit balance in the representative account opened at the Central Bank of the Republic of Uzbekistan (CBRU). The fine is collected for the benefit of the Central Bank after the debit balance is fully closed, and its total amount must not exceed 1 percent of the minimum authorized capital.

4.2. For each case of return of electronic payment document (hereinafter referred to as EPD) transactions submitted incorrectly, commercial banks pay a fine to the Benefit of the Main Information Center (MIC) and Regional Information Centers (RIC) of the CB in the amount of 1 percent of the total amount of the transaction, but not more than 0.1 percent of the minimum authorized capital.

4.3. If the confirmation of adding or deducting funds received through EPD on the previous day is not submitted to the MIC (RIC) on time, the Territorial Main Departments (TMD) of the Central Bank collect a fine from the commercial bank at the rate of 3 percent for each delayed hour, but not more than 0.1 percent of the minimum authorized capital.

V. Penalties for Violations of the Procedure for Conducting Currency Operations

5.1. If the limits for open currency positions for individual foreign currencies and the total open currency position are exceeded, or if the relevant report is not submitted, the Central Bank may collect a fine from the commercial bank in the amount of 0.01 percent of the minimum authorized capital for each case of exceeding the limit, but not more than 0.1 percent of the minimum authorized capital, or restrict the commercial bank's operations for buying and selling foreign currency for up to six months, and also establish individual limits for open currency positions.

5.2. If the procedure for conducting currency exchange operations with individuals is violated, a fine is collected from commercial banks in the amount of 0.01 percent of the bank's minimum authorized capital for each case, but not more than 0.1 percent of the bank's minimum authorized capital. (Paragraph 5.2 in the edition of the Resolution of the Board of Directors of the Central Bank of the Republic of Uzbekistan No. 1/4 dated January 19, 2019 (registration number 622-8, February 12, 2019) — National Database of Legislative Acts of the Republic of Uzbekistan, February 13, 2019, No. 10/19/622-8/2605)

5.3. If foreign currency purchased by a commercial bank at the Uzbekistan Republic Currency Exchange is not put up for sale by the customer within the established period due to the bank's fault, a fine of 0.3 percent of the amount of foreign currency not used by the customer within the established period due to the bank's fault is collected from the bank for each day past the established period.

5.4. If foreign currency purchased by a commercial bank at the Uzbekistan Republic Currency Exchange is used for purposes other than intended, a fine of 10 percent of the amount of foreign currency used for other purposes is collected. The amount of foreign currency used for other purposes must be resold at the currency exchange.

5.7. If commercial banks fail to timely notify currency control authorities about currency operations conducted by customers with relevant signs, as a result of monitoring conducted on them, a fine is collected from commercial banks in the amount of 0.01 percent of the minimum authorized capital for each case, but not more than 0.1 percent of the authorized bank's minimum authorized capital.

5.8. A fine is collected from commercial banks in the amount of 0.01 percent of the minimum authorized capital for each case for violating the procedure for monitoring foreign trade operations, but not more than 0.1 percent of the commercial bank's minimum authorized capital.

5.10. If the procedure for conducting operations for buying and selling foreign currency in the off-exchange currency market is violated, a fine is collected from commercial banks in the amount of 0.01 percent of the minimum authorized capital for each case, but not more than 0.1 percent of the commercial bank's minimum authorized capital.

Violations of the procedure for conducting operations for buying and selling foreign currency in the off-exchange currency market include:

• Reviewing orders submitted by customers for buying foreign currency later than three working days;
• Inconsistency of the expert opinion on converting sums to foreign currency with established requirements;
• Submitting an order for buying foreign currency later than the day after the positive decision of the expert group is adopted;
• Absence of sufficient funds in national currency reserved for buying foreign currency;
• Transferring purchased currency funds to the customer's secondary (special) deposit account in foreign currency later than two working days after the transaction is executed and settlement is formalized;
• Allowing cases of withdrawing cash currency from the customer's secondary (special) deposit account in foreign currency (except for taking out for business trip expenses), transferring foreign currency to other currency accounts of business entities, as well as placing funds in deposits and calculating interest on account balances.

5.11. For each case of violation of the procedure for conducting operations on foreign currency accounts of legal and physical persons, a fine of 0.01 percent of the minimum authorized capital is collected from the bank.

5.12. In case of repeated violations of the procedures indicated in Section V of this Regulation, after applying the relevant fines, the Central Bank sends an instruction to the commercial bank to take appropriate measures to eliminate deficiencies in work.

If the above instruction is not executed, the Central Bank has the right to suspend operations in foreign currency for up to six months.

5.13. Fines provided for in this Regulation are collected in the national currency of the Republic of Uzbekistan. (Paragraph 5.13 in the edition of the Resolution of the Board of Directors of the Central Bank of the Republic of Uzbekistan No. 1/4 dated January 19, 2019 (registration number 622-8, February 12, 2019) — National Database of Legislative Acts of the Republic of Uzbekistan, February 13, 2019, No. 10/19/622-8/2605)

VI. Penalties for Violations of the Procedure for Submitting Statistical Reports

6.1. If commercial banks fail to comply with the established forms and deadlines for submitting reports, or if report data is distorted, the Central Bank sends a warning letter to the bank.

If such violations are committed by the commercial bank multiple times, a fine of up to 0.1 percent of the minimum authorized capital is collected from the bank.

6.2. Fines are applied to guilty officials in accordance with the procedure established by legislation for disclosing bank secrecy of bank operations and funds of bank clients, commercial secrecy, and other information that may cause material or moral harm to their legitimate interests.

After the entry into force of this Regulation, the following:

Regulation No. 74 dated January 25, 1997 "On Measures and Sanctions Applied by the Central Bank to Commercial Banks for Violations of Banking Legislation and Regulatory Documents Regulating Banking Activity" loses its force.

VII. Sanctions for Non-Execution of Central Bank Instructions (Section VII name in the edition of the Resolution of the Board of Directors of the Central Bank of the Republic of Uzbekistan No. 1/4 dated January 19, 2019 (registration number 622-8, February 12, 2019) — National Database of Legislative Acts of the Republic of Uzbekistan, February 13, 2019, No. 10/19/622-8/2605)

See previous edition. (Paragraph 6.11 based on the Resolution of the Board of Directors of the Central Bank of the Republic of Uzbekistan No. 1/4 dated January 19, 2019 (registration number 622-8, February 12, 2019) has lost its force — National Database of Legislative Acts of the Republic of Uzbekistan, February 13, 2019, No. 10/19/622-8/2605)

6.22. If norms contradicting legislation are identified in the bank's internal documents (procedures), the Central Bank sends an instruction specifying the execution period for aligning the bank's internal documents (procedures) with legislation.

If the bank fails to execute the Central Bank's instruction to align its internal documents (procedures) with legislation within the established period, a fine of 0.1 percent of the bank's minimum authorized capital set by the Central Bank is collected from the bank.

If the Central Bank's instructions to align the bank's internal documents (procedures) with legislation are not executed even after fines are applied, the Central Bank has the right to suspend the execution of bank operations conducted in accordance with the bank's internal documents (procedures) contradicting legislation for up to one year.

VI2. Sanctions Applied for Violation of the Rights of Bank Service Consumers

6.23. If the rights of bank service consumers established by legislative acts are violated by commercial banks and other credit institutions, the Central Bank has the right to apply fines to them as follows:

• to a commercial bank — in the amount of up to 0.1 percent of the bank's minimum authorized capital;
• to a microcredit organization — in the amount of 0.1 percent of the microcredit organization's minimum authorized fund;
• to a pawnshop — in the amount of ten times the minimum monthly wage. (Section VI2 introduced based on the Resolution of the Board of Directors of the Central Bank of the Republic of Uzbekistan No. 8/4 dated April 20, 2019 (registration number 622-9, May 23, 2019) — National Database of Legislative Acts of the Republic of Uzbekistan, May 24, 2019, No. 10/19/622-9/3178)

SECTION

7.1. Measures and sanctions established in this Regulation are applied to credit institutions based on the order of the Central Bank in accordance with the decision of the Bank Supervision Committee of the Central Bank of the Republic of Uzbekistan. (Paragraph 7.1 in the edition of the Resolution of the Board of Directors of the Central Bank of the Republic of Uzbekistan No. 8/4 dated April 20, 2019 (registration number 622-9, May 23, 2019) — National Database of Legislative Acts of the Republic of Uzbekistan, May 24, 2019, No. 10/19/622-9/3178)

Deputy Chairman of the Central Bank M. JUMAGALIEV (National Database of Legislative Acts of the Republic of Uzbekistan, February 13, 2019, No. 10/19/622-8/2605, May 24, 2019, No. 10/19/622-9/3178)