Strategy for the Reform of the Banking System of the Republic of Uzbekistan for 2020-2025 — CBU — UZ

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[OKOS:

1.07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.19.00.00 Banking System / 07.19.01.00 Central Bank, its structural divisions and institutions;

2.07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.19.00.00 Banking System / 07.19.02.00 Commercial Banks. Private Banks. Foreign Banks]

[TSZ:

Finance / Banks and other credit institutions. Credits]

Decree of the President of the Republic of Uzbekistan

On the Strategy for the Reform of the Banking System of the Republic of Uzbekistan for 2020-2025

As part of the consistent reform of the financial sector, a number of measures have been implemented, resulting in the creation of the necessary legal conditions for conducting advanced banking business and strengthening the competitive environment in this sector.

In particular, updated laws of the Republic of Uzbekistan “On the Central Bank of the Republic of Uzbekistan”, “On Banks and Banking Activity”, “On Currency Regulation”, and “On Payments and Payment Systems” were adopted, which correspond to international standards and create an attractive legal environment for attracting foreign investment into the financial sector.

At the same time, an analysis of the current situation in the banking sector indicates the existence of a number of systemic problems hindering the development of the banking sector in accordance with economic innovations and the needs of society, such as a high level of state intervention in the banking sector, insufficient quality of management and risk management in banks with state participation, and a low level of financial intermediation in the economy.

Additional measures should be taken to increase the accessibility of financial services, expand the penetration of banks into regions, and ensure the provision of the same type of services in all populated areas.

It is necessary to take urgent measures to widely introduce information technologies and financial technologies based on modern service solutions into the banking system, ensure information security at the required level, and reduce the human factor in providing financial services.

Based on the tasks set forth in the State Program for implementing the Strategy of Actions on Five Priority Areas of Development of the Republic of Uzbekistan for 2017-2021, approved by Decree No. PF-5953 of the President of the Republic of Uzbekistan dated March 2, 2020, in the “Year of Science, Education and Development of the Digital Economy”, as well as to fundamentally transform the banking sector in order to encourage the development of the private sector, increase the investment attractiveness of banks, and improve the accessibility and quality of banking services:

[OKOS:

1.07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.19.00.00 Banking System / 07.19.01.00 Central Bank, its structural divisions and institutions;

2.07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.19.00.00 Banking System / 07.19.02.00 Commercial Banks. Private Banks. Foreign Banks]

The following are established as the main directions for the reform of the banking sector in the Republic of Uzbekistan:

creating equal competitive conditions in the financial market, carrying out lending solely on the basis of market conditions, reducing banks' dependence on state resources, modernizing banking services, creating an effective infrastructure and automating the activities of banks, as well as increasing the efficiency of the banking system by gradually eliminating functions not inherent to banks;

improving the quality of the credit portfolio and risk management, adhering to moderate growth in lending volumes, conducting balanced macroeconomic policy, improving corporate governance and attracting managers with practical international experience, and ensuring the financial stability of the banking system by implementing technological solutions for assessing financial risks;

comprehensive transformation of commercial banks with state ownership, introducing modern banking standards, information technologies and software products, selling state share packages in banks through competitive auctions to investors with the necessary experience and knowledge, as well as reducing the state's share in the banking sector by simultaneously reforming commercial banks and enterprises with state ownership;

increasing state participation and implementing targeted measures in underserved and weak segments, widely introducing remote services for the population and small business, developing a network of low-cost service points, as well as improving the accessibility and quality of financial services by creating favorable conditions for the formation and development of non-bank credit organizations as a mutually complementary part of the republic's unified financial system.

[OKOS:

1.02.00.00.00 Fundamentals of State Administration / 02.08.00.00 General Issues of State Administration in the Field of Economy, Social and Cultural Construction / 02.08.01.00 State Programs, Concepts and Others;

2.07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.19.00.00 Banking System / 07.19.01.00 Central Bank, its structural divisions and institutions]

The following are approved:

the Strategy for the Reform of the Banking System of the Republic of Uzbekistan for 2020-2025 Appendix 1;

the “Roadmap” for the Reform of the Banking System of the Republic of Uzbekistan Appendix 2.

[OKOS:

1.03.00.00.00 Civil Legislation / 03.08.00.00 Property Rights and Other Real Rights / 03.08.05.00 Privatization and Transfer from State Ownership (see also 08.01.06.00) / 03.08.05.02 Privatization of Certain Industries and Objects;

2.07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.19.00.00 Banking System / 07.19.01.00 Central Bank, its structural divisions and institutions]

Target indicators for implementing the Strategy for the Reform of the Banking System of the Republic of Uzbekistan for 2020-2025, including the following, are established Appendix 3:

increasing the share of assets of banks without state ownership in the total volume of banking system assets from the current 15 percent to 60 percent by 2025;

increasing the share of banks' liabilities to the private sector in the total volume of banks' liabilities from the current 28 percent to 70 percent by the end of 2025;

attracting at least three strategic foreign investors with sufficient experience, knowledge, and reputation to the capital of at least three commercial banks with state ownership by 2025;

increasing the share of non-bank credit organizations in the total lending volume from the current 0.35 percent to 4 percent by 2025.

[OKOS:

1.07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.19.00.00 Banking System / 07.19.01.00 Central Bank, its structural divisions and institutions]

The proposals of the Ministry of Finance and the Central Bank of the Republic of Uzbekistan regarding the following are approved:

gradual privatization of state shares in “Ipoteka-Bank” JSC, “UzSanoatQurilishBank” JSC, “Asaka” JSC, “AloqaBank” JSC, “Qishloq Qurilish Bank” JSC, and “Turonbank” JSC with the assistance of international financial institutions, with the first stage involving institutional transformation (transformation of activities) and the second stage involving the sale of state share packages;

maintaining state shares in the charter capital of “National Bank for Foreign Economic Activity” JSC, “Agrobank” JSC, and “Microcreditbank” JSC to ensure the regional coverage of banking services and implement the mechanism for supporting investment projects (“project factory”) to meet the population's demand for financial services during the banking system reform period;

consolidating certain banks in accordance with legislation based on diagnostics of their activities and assessment of their financial condition, taking into account regulatory requirements and the economic feasibility of their reorganization.

[OKOS:

1.07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.19.00.00 Banking System / 07.19.01.00 Central Bank, its structural divisions and institutions;

2.07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.19.00.00 Banking System / 07.19.02.00 Commercial Banks. Private Banks. Foreign Banks]

A Project Office for the Transformation and Privatization of Commercial Banks with State Ownership is established under the Ministry of Finance of the Republic of Uzbekistan within the approved number of staff of the Ministry, and the following powers are granted to it:

to attract international consultants as advisors to the processes of transformation and privatization of commercial banks;

to conduct negotiations and conclude agreements with international financial institutions and capable foreign investors on issues of transformation and privatization of commercial banks.

It is established that the First Deputy Minister of Finance of the Republic of Uzbekistan heads the Project Office.

The Central Bank and the Ministry of Finance of the Republic of Uzbekistan shall take measures to conduct an assessment of the financial sector's status based on the International Monetary Fund and World Bank program (FSAP) no later than 2024.
Heads of ministries, departments, and local state authority bodies are prohibited from interfering in the activities of banks, including the management of entrepreneurial risks associated with the formation of credit portfolios and bank assets.

The Prosecutor General's Office of the Republic of Uzbekistan shall strengthen supervision over the implementation of the part of the legislation on banks and banking activity that prevents administrative interference by state bodies in bank activities.

[See previous](/docs/4811025?ONDATE=13.05.2020 00#6072478) edition.

[OKOS:

1.07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.19.00.00 Banking System / 07.19.01.00 Central Bank, its structural divisions and institutions]

It is established that the relevant structural divisions of enterprises and organizations under the Central Bank's own subordination, which ensure its activities, are placed free of charge in the Central Bank, as well as in the premises and buildings of its Khorezm Regional, Viloyat, and Tashkent City Directorates.

(P. 71 introduced based on Decree No. PF-152 of the President of the Republic of Uzbekistan dated June 9, 2022 [Decree](/docs/6057609?ONDATE=10.06.2022 00#6059646), 10.06.2022, 06/22/152/0507)

The Ministry of Economy and Poverty Reduction of the Republic of Uzbekistan, together with the Ministry of Finance, shall take measures to strengthen the Council for the Management of the State Fund for Supporting Entrepreneurial Activity institutionally by including independent members in its composition within two months.
The Central Bank and the Ministry of Finance of the Republic of Uzbekistan, together with other interested ministries and departments, shall submit proposals to the Cabinet of Ministers within three months regarding amendments and additions to legislative acts arising from this Decree.
Appendices 1-3 of Resolution No. PQ-4300 of the President of the Republic of Uzbekistan dated April 29, 2019 “On Further Improving the Mechanisms for Attracting Direct Foreign Investments to the Republic's Economy” [Appendix 1](/docs/4312752?ONDATE=29.04.2019 00#4313889) are considered to have lost their force.
Control over the execution of this Decree is entrusted to the Prime Minister of the Republic of Uzbekistan A.N. Aripov and the Chairman of the Central Bank of the Republic of Uzbekistan M.B. Nurmatov.

President of the Republic of Uzbekistan Sh. MIRZIYOYEV

Tashkent city,

May 12, 2020,

No. PF-5992

Appendix 1 to Decree No. PF-5992 of the President of the Republic of Uzbekistan dated May 12, 2020 Decree

[OKOS:

2.07.00.00.00 Legislation on Finance and Credit. Banking Activity / 07.19.00.00 Banking System / 07.19.01.00 Central Bank, its structural divisions and institutions]

STRATEGY FOR THE REFORM OF THE BANKING SYSTEM OF THE REPUBLIC OF UZBEKISTAN FOR 2020-2025

The Strategy for the Reform of the Banking System of the Republic of Uzbekistan for 2020-2025 (hereinafter referred to as the Strategy) was developed in accordance with the State Program for implementing the Strategy of Actions on Five Priority Areas of Development of the Republic of Uzbekistan for 2017-2021, approved by Decree No. PF-5953 of the President of the Republic of Uzbekistan dated March 2, 2020, as well as taking into account the main conclusions and recommendations of the World Bank's study of the current state of the country's banking system.

The Strategy defines the goals, tasks, and priority areas for the development of the banking system, directions for the transformation and reform of the banking system for 2020-2025, and ways to search for possible solutions based on the experience of transforming the financial sectors of foreign countries and taking into global trends in the financial sector.

I. Current State of the Banking System

The banking system of the Republic of Uzbekistan currently consists of 31 commercial banks (hereinafter referred to as banks) providing traditional banking services - lending, deposit operations, accounting, and cash services.

During the period of independence of our country, banks were established for specific purposes and tasks, actively involving state-owned enterprises and state development programs in financing at preferential interest rates. As a result, the share of preferential loans in the total portfolio of the banking system exceeds 60 percent.

The state holds a dominant position in the banking sector - 13 out of 31 banks have state participation in their capital, accounting for more than 87 percent of the total capital of the banking system, and their assets account for more than 85 percent of total assets.

The active stage of banking sector reform, which began in 2017, was aimed at liberalizing the currency market, eliminating outdated restrictions on banking activities, freeing banks from functions not inherent to them, and increasing the accessibility of banking services.

A number of qualitative changes were implemented in the banking system in 2019. In particular:

the adoption of new editions of the laws of the Republic of Uzbekistan “On Banks and Banking Activity” and “On the Central Bank of the Republic of Uzbekistan” corresponding to modern standards and principles of banking;

reform of mechanisms for financing investment projects with the participation of the Reconstruction and Development Fund of the Republic of Uzbekistan;

abandonment of the practice of lending state programs at rates lower than the Central Bank's key rate and transition to market conditions for lending from 2021;

concentration of lending within the framework of state targeted programs for the development of entrepreneurship in 3 banks - Halk Bank JSC, “Agrobank” JSC, and “Microcreditbank” JSC;

organization of the mechanism for preferential financial support for entrepreneurial activities by the state through the State Fund for Supporting Entrepreneurial Activity;

introduction of a new system for providing the population with housing through mortgage lending based on market principles;

conducting an assessment of the prudential supervision mechanisms and procedures for commercial banks' activities in cooperation with the World Bank from the perspective of their compliance with the principles of the Basel Committee.

II. Difficulties and Problems in the Development of the Banking System

The dominant position of the state in the banking sector and the active involvement of banks as intermediaries for financing various state programs and enterprises have led to the following systemic risks and problems:

low indicators in the World Bank's “Doing Business” rating - Uzbekistan holds 67th place in the “Getting Credit” category of the rating;

lagging behind in the transformation processes of large commercial banks in accordance with modern network requirements, delays in implementing modern corporate governance standards, information technology products, asset and liability management, and modern methods of customer communication;

partial fulfillment of the traditional “development bank” function by banks with state participation, which lend to priority programs, sectors, and state-owned enterprises at rates below market rates. The availability of long-term preferential financing in foreign currency leads to a decrease in the income curve, which, in turn, causes long-term loans for state-owned enterprises to be cheaper than short-term loans, encouraging them to borrow in foreign currency rather than national currency;

high level of asset and liability dollarization, concentration of loans and deposits in large companies and specific sectors of the economy exposes banks to currency and credit risks, as well as liquidity risk. At the beginning of 2020, loans denominated in foreign currency accounted for 48 percent of the total loan volume, and deposits and funds in foreign currency accounted for 44 percent of the total deposit volume. 36 percent of the total volume of loans provided by banks with state ownership is accounted for by the 10 largest borrowers;

low level of financial accessibility due to the focus of bank business models on serving corporate clients and the slow development of non-bank financial institutions, innovations, and information systems. As a result, while in other countries loans to individuals and corporate clients are distributed equally, in our country loans to individuals account for 19 percent of the total credit portfolio, and loans to corporate clients account for 81 percent;

insufficient development of non-bank credit organizations, including microfinance institutions. As a result, effective mechanisms have not been created to cover the layer of entrepreneurs just starting their activities, allowing them to gradually attract bank loans and “grow” to a full-fledged business level.

III. Goals and Priority Areas of Reforms

The goal of the Strategy is to implement comprehensive changes in the banking system aimed at forming a modern banking system, increasing the investment attractiveness of banks, and introducing new standards of banking services.

The following are considered priority areas for the reform of the banking system of the Republic of Uzbekistan:

creating equal competitive conditions in the financial market, carrying out lending solely on the basis of market requirements, reducing banks' dependence on state resources, modernizing banking services, creating effective infrastructure and automating bank activities, as well as increasing the efficiency of the banking system by gradually eliminating functions not inherent to the main activity of banks;

Increasing the Efficiency of the Banking System

Increasing the efficiency of the banking system is considered the most important factor for economic development to ensure the growing need of business entities and the population for cheap and high-quality financial services.

Therefore, the following measures are planned to be implemented within the framework of the Strategy:

1) expanding the volume and improving the quality of banking services by attracting advanced international experience and technologies;

2) improving management in banks by introducing advanced standards and practices of corporate governance, ensuring the accountability and transparency of the activities of bank governing bodies and their adequate disclosure of information;

3) increasing the commercialization of bank activities, ensuring the financial stability of the banking system, and increasing the effectiveness of monetary policy tools by abandoning subsidized lending;

4) increasing the role of commercial banks as financial intermediaries that mobilize funds for investment and direct them to finance the most effective sectors from financial and economic perspectives;

5) consistent liberalization of bank activities and harmonizing them with the best international practices to create the necessary conditions for attracting strategic foreign investors and ensuring the gradual integration of the financial system into international financial markets;

6) creating favorable conditions for the development of non-bank credit organizations, including developing competition in this segment, developing relevant prudential regulation norms, and facilitating access to financial services.

Ensuring the Financial Stability of the Banking System

The financial stability and resilience of the banking sector is the main condition for the successful implementation of planned reforms and strengthening the confidence of businesses and the population in the national banking system.

To achieve the strategic goals of increasing the financial stability of the banking sector, the following measures are planned to be implemented:

1) ensuring the stability of lending growth rates and improving the quality of the credit portfolio;

2) improving banking sector supervision and implementing modern risk management systems in banks;

3) ensuring the coordinated reform of enterprises with a state share in the banking system and the real sector of the economy, active commercial participation by banks in the transformation of the activities of state enterprises and organizations, and ensuring that changes in the real and financial sectors proceed in harmony;

4) increasing the minimum capital requirements for banks, including taking into account the Republic of Uzbekistan's accession to international economic organizations and the integration of the republic's banking system into the international financial system;

5) consistently developing a deposit protection system based on the best international practices.

The following measures within the specified framework will contribute to strengthening the financial stability of banks:

implementation of a comprehensive set of measures to improve the efficiency of managing enterprises with a state share, including the development of the most optimal methods for managing these enterprises, increasing their financial stability, and privatization;

independent assessment of the quality of assets of banks with a state share, and measures to improve the quality of their credit portfolios, including through practical assistance with non-performing loans;

development of the activities of credit bureaus, including the integration of their databases with the information systems of the housing and communal services complex, tax, and pension systems;

international integration of the financial sector based on the principles of introducing advanced international standards in banking, including corporate governance and customer service;

[See previous version].

improvement of out-of-court dispute resolution procedures, insolvency, legislation in the field of compulsory execution, and other measures to legally protect banks from dishonest actions of debtors.

(The thirteenth paragraph of the second subsection was edited by the Decree of the President of the Republic of Uzbekistan No. PF-109 dated July 12, 2023 — , 13.07.2023, 06/23/109/0469)

Reducing the state share in the banking sector

Privatization of commercial banks is an important factor in reforming the banking system.

To accomplish this task, the following are envisaged:

1) consistent elimination of administrative burdens by freeing credit institutions from functions not inherent to them, as well as from excessive loads;

2) creating the necessary conditions for the widespread introduction of modern information and communication technologies, automation of business processes of commercial banks, and expansion of remote banking services;

3) reducing the state share in a number of commercial banks by attracting strategic investors with sufficient experience, knowledge, and reputation in banking;

4) maintaining the state share in a number of banks in the medium-term perspective to meet the population's demand for financial services and support investment projects (the "project factory" mechanism) and ensure the territorial coverage of banking services during the banking system reform;

5) reducing burdens related to the submission of reports by improving supervisory loads, including information exchange between banks and regulatory and state bodies, and simplifying and automating the process of forming reports.

The main approach to privatizing large banks involves two stages, including institutional changes in 2020-2021 and the full sale of the state share to strategic investors in the subsequent period.

During the first stage, institutional transformation of banks involves cooperation with international financial institutions and deep analysis of the financial condition of banks, involving international consulting companies to identify existing problems and develop the appropriate transformation strategy.

Extensive cooperation with international financial institutions is based on introducing modern solutions in corporate governance, business strategy, and operations. In addition, their participation is considered a positive signal for potential strategic investors.

The corporate transformation of banks with a state share is carried out in four priority areas:

Improvement of corporate governance:

updating the composition of bank supervisory boards by including independent members with international experience in the banking sector, and clearly distributing powers and responsibilities between the management bodies of commercial banks;

establishing special committees under supervisory boards for effective control;

reviewing the organizational structure of bank management based on modern international practices and introducing the practice of setting "key performance indicators" to evaluate the quality of executive bodies' activities;

transition to international standards for financial reporting, ensuring adequate disclosure of information to minority shareholders, customers, and other interested parties;

Improvement and expansion of the quality and scope of banking services:

streamlining business processes and introducing international standards of management quality;

simplifying loan issuance processes by improving the risk management system;

offering a wide range of services to customers (financial advisory, investment banking, factoring, project financing, leasing, etc.);

Introduction of modern information technologies:

expanding the number and scope of remote banking services, including contactless payments;

widespread use of automated scoring systems, digital identification, and credit pipelines;

strengthening the information security of bank data and systems;

introduction of new concepts and technologies in the banking sector (fintech, marketplace, digital bank);

Enhancement of personnel potential:

improving the corporate strategy for personnel management;

introducing a system of continuous training for bank staff;

transition to modern payment systems based on the evaluation of the results of each employee's activities (KPI, bonus).

Particular attention is paid to the reorganization of the activities of the Bank-Finance Academy in enhancing the personnel potential of the banking system. In this regard, it is envisaged to organize a system of continuous education based on cooperation with leading foreign banks and consultants, ensuring a close connection between theory and practice.

The second stage — privatization of the state share — is carried out after the successful completion of the transformation of banks and involves the sale of bank shares to strategic investors with the necessary experience, knowledge, and reputation.

Taking the above into account, the transformation and privatization of the following banks are envisaged within the framework of this Strategy:

1) "Ipoteka-Bank" JSC and "UzSanoatQurilishBank" JSC with the assistance of the International Finance Corporation;

2) "AloqaBank" JSC with the assistance of the European Bank for Reconstruction and Development and the Asian Development Bank;

3) "Asaka" JSC with the assistance of the European Bank for Reconstruction and Development;

4) "Qishloq Qurilish Bank" JSC and "Turon Bank" JSC, considering the issue of their merger by involving international financial institutions and consulting organizations.

Within the framework of the implementation of this Strategy, the sale of state share packages in JSC "Halk Bank" and "Asia Alliance Bank" JSC to foreign strategic investors is envisaged.

In addition, it is envisaged to separate the accumulated pension system from the bank during the preparation for the privatization of JSC Halk Bank.

To meet the demand for financial services of all population groups and ensure the territorial coverage of banking services during the banking system reform, state participation is primarily retained in three banks — JSC "National Bank of the Republic of Uzbekistan for Foreign Economic Activity" (hereinafter – UzMilliyBank), "Agrobank" JSC, and "Mikrocreditbank" JSC.

The activities of UzMilliyBank are defined as a bank of systemic importance primarily focused on providing banking services to strategic enterprises and investment projects on market terms, as well as offering a wide range of banking products.

In addition, UzMilliyBank, taking into account international experience, engages in implementing a single mechanism for supporting the development, review, financing, and implementation of investment projects (the "project factory").

Taking into account the advantages of the branch networks of "Agrobank" JSC and "Mikrocreditbank" JSC in the regions, their activities are directed towards state credit support for small and medium-sized businesses and agricultural producers, providing services to individuals and supporting small business entities in regions, including remote districts where providing financial services is difficult.

In this regard, the following are envisaged to be implemented in these banks:

formation of professional supervisory boards, involving qualified specialists;

implementation of a system for comprehensive monitoring of the efficiency of operations and business results;

ensuring systematic cooperation with external auditors and state control bodies.

Based on the diagnostics of the activities and assessment of the financial condition of some banks with a state share, the issue of their reorganization in accordance with legislative acts is considered, proceeding from regulatory requirements and economic expediency.

Increasing the accessibility and quality of financial services

Increasing the accessibility of financial services involves expanding the opportunity for the population and business entities, including underserved segments (low-income individuals, rural residents, micro-enterprises, and small businesses), to use basic banking services (deposits, loans, and payment services).

To increase the accessibility of financial services, the following measures are envisaged:

1) development and implementation of a National Strategy for Increasing Financial Inclusion, which defines clear and coordinated directions for increasing financial inclusion, with the assistance of the World Bank;

2) concentrating state participation in underserved segments to direct subsidized credit programs to underserved and vulnerable groups, and limiting subsidies over time;

[See previous version].

3) development of microfinance organizations, leasing, factoring, and financial technology (fintech) companies, electronic money operators, and specialized credit intermediaries capable of developing an integrated and economically efficient financial intermediation and product system, including targeted solutions for these segments, to fill existing gaps.

(The fifth paragraph of the third section, fourth subsection was edited by the Decree of the President of the Republic of Uzbekistan No. PF-62 dated April 26, 2023 — , 27.04.2023, 06/23/62/0232)

The participation of banks in regions is ensured by streamlining the existing branch network by expanding the network of compact "bank service offices" that provide a set of basic banking services and do not require a large number of management staff in all regions, as well as by widespread introduction of "mobile banking" services.

The following measures are envisaged to increase the accessibility of financial services:

ensuring a competitive environment in the banking sector by creating equal conditions for the implementation of banking activities, regardless of the presence of a state share in the capital of some banks;

implementation of new business models by banks, including those based on "digital banking" principles;

application of international quality standards for banking services;

optimization of operational and capital costs of banks;

primarily, further increase of deposits of legal and physical persons in national currency, as well as attracting additional resources to the banking system through banks' access to international capital markets;

increasing the volume and quality of services provided to small and medium-sized business entities, including by providing services to business entities using information and communication technologies;

adoption of additional measures to develop mortgage lending in urban and rural areas by creating favorable conditions for expanding the range of relevant bank and non-bank products to meet the growing needs of the population in the mortgage market.

IV. Increasing the position of the banking system of the Republic of Uzbekistan in international ratings

Since the banking system occupies one of the main places in economic activity, the indicators of the development and efficiency of the banking system are, as a rule, included in various international ratings, one of the main of which is the World Bank's "Doing Business" rating.

To increase the accessibility of loans and Uzbekistan's position in this rating, 4 laws and 2 decrees of the President of the Republic of Uzbekistan were adopted in 2019-2020. According to them:

requirements for collateral property were harmonized with international practice to strengthen the legal protection of creditors;

the date of entry into the collateral register serves as the basis for determining the order of recovery and the creditor's priority right over other creditors and third parties;

a single procedure for directing recovery to property (property rights) was established;

procedures for establishing collateral and directing recovery to it were simplified;

[See previous version].

the right to conclude a settlement agreement was granted to the debtor and creditor at any stage of considering the insolvency case;

(The seventh paragraph of the fourth section was edited by the Decree of the President of the Republic of Uzbekistan No. PF-109 dated July 12, 2023 — , 13.07.2023, 06/23/109/0469)

the concept of creditors of one type was introduced.

The mentioned measures serve to harmonize national legislation with international practice, and improving the practice of their application serves to increase the country's rating.

At the same time, to achieve the target indicators of this Strategy in the World Bank rating, the following are envisaged:

Expansion of sources of credit information and introduction of new mechanisms and tools for reflecting information about real estate objects in the credit registry.
Introduction of amendments to legislative acts providing for the improvement of protection of creditors' rights secured by collateral during the process of compulsory recovery of the borrower's debt.

[See previous version].

Further improvement of the scoring system for borrowers in integration with the databases of the Privatization Agency, Tax Committee, Cadastre Agency, Compulsory Execution Bureau, Ministry of Justice, as well as utility service organizations, insurance companies, and other economic entities.

(The third paragraph was edited by the Decree of the President of the Republic of Uzbekistan No. PF-80 dated May 24, 2024 — , 25.05.2024, 06/24/80/0364)

V. Development of non-bank financial institutions

State Fund for Supporting Entrepreneurial Activity

The issue of improving the activities of the State Fund for Supporting Entrepreneurial Activity (hereinafter — the Fund) becomes urgent in the process of implementing tasks to increase the commercialization of the banking sector, attract private capital to it, and gradually privatize this sector.

Currently, the activities of the Fund are focused on financial support through interest rate subsidies and providing guarantees for loans.

Reform of the banking sector strengthens the need to improve the activities of the Fund. In particular, work is being carried out on introducing products that involve recovery under guarantees along with the borrower's collateral. In addition, a financial model is being developed to increase the stability of the Fund's activities and to gradually transition to tiered commissions for guarantees.

The corporate governance of the Fund is strengthened by the participation of independent members in its supervisory board, including specialists from the private sector and/or scientific community.

The Fund's financial reports undergo audit, and reports on budget execution are published to increase transparency and accountability.

The Fund's capacity in the field of monitoring and managing risks is strengthened, and a methodology for assessing the expediency and correctness of the loan issuance process by banks is being developed.

With the improvement of the Fund's risk management system, products for portfolio guaranteeing and collecting various intermediary payments based on expected losses in the portfolio are introduced.

Taking into account the further expansion of the volume of the Fund's operations and its increasing systemic importance for the stability of the banking sector, a mechanism for effective prudential supervision of its activities is being developed.

Recovery and Development Fund of the Republic of Uzbekistan

The Recovery and Development Fund of the Republic of Uzbekistan (hereinafter — RRF) occupies an important place in the republic's financial system. In 2019, measures were taken to restrict the distribution of its resources through the banking system by providing direct re-financing loans to the RRF by banks within the framework of investment projects and programs.

In this regard, in necessary cases, measures to further reform the RRF to increase the efficiency of its activities will continue, involving experts of international financial institutions and foreign consultants.

Non-bank credit organizations

Taking into account that increasing financial inclusion is a factor ensuring the successful implementation of plans for reforming the banking sector, this Strategy also envisages forming initiatives for the development of non-bank credit organizations (NCOs).

Despite the dominant position of banks, they do not cover certain layers of the population, and their activities may become even more focused on high-income large enterprises and individuals during and after privatization. This necessitates the development of NCO activities directed at serving small business and low-income population.

In this regard, to increase the role of NCOs in expanding access to financial services, the efforts of the Central Bank and other authorized bodies in the medium-term perspective envisage:

ensuring a favorable regulatory and legal basis aimed at facilitating the participation of parties by simplifying licensing procedures, proportionately regulating risk areas, and ensuring access to relevant infrastructure to encourage the sustainable development of NCOs;

expansion of product offers, forms, and types of non-bank financial services, including new solutions in the field of financial technologies;

improving the quality and convenience of prudential regulation by applying risk-oriented supervision, ensuring adequate regulation from the point of view of compliance with accounting rules and requirements, and ensuring cooperation with credit bureaus;

regulation of NCOs from the point of view of compliance with the rights of financial service consumers, including "responsible lending", adequate disclosure of information about the cost of services, and regulation of mechanisms for considering consumer complaints;

[See previous version].

regulation of NCO insolvency procedures with the aim of reducing creditors' losses.

(The eighth paragraph of the third subsection was edited by the Decree of the President of the Republic of Uzbekistan No. PF-109 dated July 12, 2023 — , 13.07.2023, 06/23/109/0469)

VI. The role of the Central Bank and prudential supervision

In conditions where high growth rates of lending are maintained, as well as in the process of reforming and preparing the banking system for privatization, the presence of adequate prudential supervision by increasing the role of the Central Bank as a regulator of the banking system is considered an important condition for ensuring the stability of the financial system.

The Central Bank of the Republic of Uzbekistan, together with the World Bank, evaluated the mechanisms and procedures for prudential supervision of bank activities for compliance with the Basel Committee's "Core Principles for Effective Banking Supervision."

Based on the assessment results, the Central Bank will implement measures to improve the regulation and supervision of banks, including:

reviewing the regulatory and supervisory base to establish internationally recognized minimum standards and requirements for banks, ensuring a uniform transition from a banking sector dominated by the state to one where private investors play a significant role, and reforming it across the entire spectrum of the supervisory cycle in accordance with the laws of the Republic of Uzbekistan "On Banks and Banking Activity" and "On the Central Bank of the Republic of Uzbekistan";

reviewing the rules for licensing banks to ensure the entry of stable participants with clear, long-term, realistic strategic initiatives and viable business plans into the market to maintain the stability and integrity of the sector;

developing and approving regulatory and legal documents taking into account the recommendations of the Basel Committee on Banking Supervision;

curbing excessive growth of the credit portfolio by introducing capital buffers for systemically important banks;

developing requirements for the transparency of banks and the information regularly published by banks;

constant and systematic improvement of the capacity of employees involved in supervisory activities;

developing a mechanism for applying prompt corrective actions (early response measures), including envisaging preventive measures taken by banks themselves, to eliminate problems in a timely manner, before risks materialize;

expanding the role of information technologies in the supervisory process, information exchange, and report formation;

gradual reduction of functions not inherent to the main activity of banks, as well as their participation in the charter funds (charter capital) of legal entities engaged in activities not considered banking;

development of the regulatory base for consolidated supervision (including identification of banking groups, identification of groups, consolidated reporting, prudential coefficients on a consolidated basis);

strict compliance with capital adequacy and liquidity indicators, including ensuring the review of existing requirements and their alignment with the standards of the Basel Committee on Banking Supervision;

reviewing regulations on corporate governance, internal control, and risk management to align them with internationally recognized principles of corporate governance and other advanced practices for banks;

developing detailed requirements for a reliable stress-testing system in banks and applying its results in planning banks' capital adequacy and liquidity;

improving the reporting system by reducing unnecessary and outdated reporting requirements and automating the reporting formation process to ensure effective supervision;

transitioning to risk-based supervision (supervision directed at risk), which involves allocating supervisory resources to banks with the highest risk—large, systemically important banks, banks with high or deteriorating risk profiles, and/or banks with poor risk management quality and high internal risks;

introducing an appropriate system for regulating and rescuing banks and deposit insurance to protect societal interests such as the continuity of banking operations and financial stability;

developing guidelines for managing various risks (concentration and liquidity risk, credit, operational, currency risk, etc.) in accordance with international practice.

VII. The Role and Main Tasks of the Ministry of Finance

The Ministry of Finance of the Republic of Uzbekistan is assigned the responsibility to transform commercial banks with state share by assuming the role of shareholder in respect of the state share in commercial banks, introduce modern management methods to them, and perform the following tasks:

evaluate and monitor the fulfillment of target tasks and indicators set forth in the development strategy of commercial banks, including assessing the efficiency of the use of funds directed at capitalizing banks in accordance with government resolutions;

attract international consultants as advisors to strengthen the supervisory boards of commercial banks, as well as coordinate the mutual cooperation of commercial banks with international financial institutions and consulting companies in the framework of implementing reforms and preparing for privatization;

develop and establish criteria for the efficiency of executive (management) bodies directly related to financial efficiency, the quality of the investment and credit portfolio, as well as activity in the field of attracting deposits.

Within the framework of the powers assigned to it for the transformation of banks with state share, the Ministry of Finance ensures:

consistent implementation of measures for the timely and high-quality transformation of banks with state share and their privatization in accordance with the goals and tasks of this Strategy;

strengthening the composition of executive (management) bodies and supervisory boards of banks, including with independent members, increasing the requirements for corporate governance standards, and establishing criteria for financial efficiency and risk management quality;

collaborating with international financial institutions and consulting companies to involve them in the processes of reforming and preparing banks for privatization.

The following are considered tasks to be performed by the Ministry of Finance within the framework of implementing the Strategy:

continuously coordinate the development of transformation plans by the relevant banks in accordance with the rules of this Strategy and in cooperation with international financial institutions and consulting companies;

ensure the effective management and use of funds of the Accumulative Pension System;

take measures to ensure the organic implementation and coordination of the transformation process of banks and structural changes in basic sectors and enterprises with state participation.

VIII. Target Indicators of the Strategy and Monitoring of its Implementation

To ensure the timely achievement of the goals set for the reform of the banking sector and to evaluate the success of the efforts made, this Strategy includes the following target indicators:

1) increasing the share of assets of banks without state share in the total volume of banking system assets from the current 15 percent to 60 percent by 2025;

2) increasing the share of liabilities to the private sector in the total volume of banks' liabilities from the current 28 percent to 70 percent by the end of 2025;

3) by 2025, attract at least three strategic foreign investors possessing the necessary experience, knowledge, and reputation for the capital of at least three banks with state share;

4) increasing the share of non-bank credit institutions in the total volume of lending from the current 0.35 percent to 4 percent by 2025.

Systematic monitoring of the implementation of the Strategy, overall coordination, and prompt consideration and resolution of problematic issues hindering the reform of the banking system are carried out by the Ministry of Finance of the Republic of Uzbekistan and the Central Bank.

Appendix No. 2 to the Decree of the President of the Republic of Uzbekistan dated May 12, 2020, No. PF-5992

"ROADMAP" for the Reform of the Banking System of the Republic of Uzbekistan for 2020–2025

[See previous](/docs/4811025?ONDATE=28.12.2024 00#7310950) edition.

No.	Measures	Implementation Mechanism	Form of Implementation	Implementation Period	Responsible Parties
I. Restructuring of the Banking Sector
1.	Transformation of the activities of JSC "National Bank for Foreign Economic Activities of Uzbekistan" (UzMilliyBank).	1. Inclusion of independent members in the Bank's Supervisory Board. 2. Approval of personnel policy and key performance indicators (KPI) system. 3. Diagnosis of the current situation and assessment of asset quality (AQR) with the involvement of international audit companies. 4. Approval of the Bank transformation program for 2021-2023 with the involvement of consultants.	Resolution of the General Meeting of Shareholders Resolution of the Supervisory Board Report on the results of the diagnosis Resolution of the Supervisory Board	August 2020 August 2020 December 2020 December 2020	UzMilliyBank (Mirsatov), Ministry of Finance (Nasritdinholdzhaev)
2.	Establishment of a structural unit of UzMilliyBank for supporting investment projects ("Project Factory").	1. Development of the "Project Factory" concept and business plan with the involvement of foreign consultants. 2. Organization of the activities of the "Project Factory".	"Project Factory" concept Package of measures	October 2020 December 2020	UzMilliyBank (Mirsatov)
3.	Transformation of the activities of ATB "Agrobank" and ATB "Mikrokreditbank".	1. Diagnosis of the current situation and assessment of asset quality (AQR) with the involvement of international audit companies. 2. Development of transformation and bank services accessibility programs with the participation of international consulting companies. 3. Attraction of high-qualified experts with international experience in the banking sector to the governing bodies of banks to assist in implementing bank transformation programs.	Report on the results of the diagnosis Resolution of the Supervisory Board Resolution of the Governing Bodies	December 2020 December 2020 December 2020	ATB "Agrobank" (Mamatqulov), ATB "Mikrokreditbank" (Butaev), Ministry of Finance (Nasritdinholdzhaev)
4.	Transfer of management of funds of the Individual Accumulative Pension System (IAPS) to the Ministry of Finance.	Submission of a draft regulatory legal document providing for: Transfer of management of IAPS funds to the Ministry of Finance; Introduction of regulations for investing IAPS funds in highly liquid and low-risk assets.	Regulatory legal document	September 2020	Ministry of Finance (Nasritdinholdzhaev), Halk Bank JSC (Salomov)
5.	Privatization of the state share in JSC "Poytakht Bank" and ATB "Uzagroekspbank".	1. Diagnosis of bank activities and assessment of their financial condition 2. Transfer of share packages in commercial banks to the Agency for Management of State Assets. 3. Privatization of the state share	Conclusion on the results of diagnostics Transfer of share packages to the Agency for Management of State Assets Sale and purchase agreements	June 2020 October 2021 2021-2022	Agency for Management of State Assets (Ortikov), UTTSZ (Vafaev), Tashkent City Khokimiyat (Artikholdzhaev), Ministry of Finance (Nasritdinholdzhaev) Agency for Management of State Assets (Ortikov).
6.	Gradual release of banks from assets and functions not inherent in their activities.	1. Detailed analysis of functions performed by banks that are not inherent in their activities (tax agent, assistance to HUZMSH, debt accounting, etc.). 2. Development of a regulatory document on the gradual cancellation of functions not inherent in bank activities. 3. Inventory of property of banks with state participation and identification of assets not inherent in their activities, as well as taking measures to sell them.	Analytical materials Regulatory legal document Resolutions of bank supervisory boards	July 2020 September 2020 depending on adoption	Central Bank (Zakhidov), Ministry of Finance (Nasritdinholdzhaev), Agency for Management of State Assets (Bekenev)
7.	Development of the National Strategy for Increasing the Accessibility of Financial Services.	1. Conducting a project study in cooperation with the World Bank. 2. Discussion of the draft National Strategy for Increasing the Accessibility of Financial Services with the community of specialists, researchers, and experts. 3. Submission of the revised Strategy draft for approval.	World Bank mission report Draft Strategy Draft Resolution of the President of the Republic of Uzbekistan	June 2020 June-August 2020 September 2020	Central Bank (Zakhidov), Ministry of Finance (Nasritdinholdzhaev)
8.	Gradual increase of the minimum amount of banks' authorized capital to 500 billion sums by 2025.	Development of a draft Law of the Republic of Uzbekistan "On Amendments and Additions to the Law of the Republic of Uzbekistan "On Banks and Banking Activity" with a schedule for increasing the minimum amount of banks' authorized capital.	Draft Law of the Republic of Uzbekistan	October 2022	Central Bank (Nurmuratov)
II. Sale of State Shares in Banks and Improvement of Corporate Governance Systems in Banks
9.	Transformation of ATIB "Ipoteka Bank" and sale of the state share in it.	1. Attraction of credit lines from the International Finance Corporation and signing an agreement on terms for transforming the bank. 2. Approval of the long-term development strategy of the bank. 3. Formation of a new composition of the Supervisory Board with the participation of independent members. 4. Preparation work with the participation of IFC, identification of potential investors. 5. Privatization of the state share.	Credit agreement Resolution of the General Meeting of Shareholders Resolution of the General Meeting of Shareholders Package of measures Sale and purchase agreement	May-June 2020 July-August 2020 June-August 2020 2021-2022 2022	ATIB "Ipoteka-bank" (Atabaev), Ministry of Finance (Nasritdinholdzhaev), Agency for Management of State Assets (Bekenev), UTTSZ (Vafaev)
10.	Transformation of ATB "Asaka" and sale of the state share in it.	1. Carrying out an assessment (due diligence) of the bank by an international audit company. 2. Signing an agreement between ATB "Asaka" and the European Bank for Reconstruction and Development (EBRD) on institutional transformation to support the future privatization of the bank. 3. Development of a bank transformation program ("roadmap"). 4. Implementation of the transformation program and preparation of a plan for the privatization of the bank. 5. Privatization of the state share.	Audit company conclusion Agreement with EBRD Resolution of the Supervisory Board Package of measures Sale and purchase agreement	June 2020 September 2020 September-December 2020 2021-2022 2025	ATB "Asaka" (Saidullaev), Ministry of Finance (Nasritdinholdzhaev), Agency for Management of State Assets (Bekenev), UTTSZ (Vafaev)
11.	Transformation of ATB "Uzsanoatqurilishbank" and sale of the state share in it.	1. Development and approval of a "roadmap" for the transformation and pre-privatization preparation of the bank with the participation of IFC and EBRD. 2. Implementation of the bank transformation process and preparation for the privatization of the bank in cooperation with IFC and EBRD. 3. Privatization of the state share.	Resolution of the Supervisory Board Agreement with IFC and EBRD Sale and purchase agreement	November 2020 2020-2022 2022-2025	ATB "Uzsanoatqurilishbank" (Anaklichev), Agency for Strategic Reforms (Vafaev), Agency for Management of State Assets (Bekenev), UTTSZ (Vafaev)
12.	Transformation of ATB "Aloqabank" and sale of the state share in it.	1. Analysis of the current situation, activities, processes, and procedures of ATB "Aloqabank" within the framework of the agreement on cost-sharing for EBRD advisory services. 2. Development of a package of measures ("roadmap") for the transformation and pre-privatization preparation of the bank together with EBRD and OTB. 3. Implementation of the package of measures for the transformation and pre-privatization preparation of ATB "Aloqabank" in accordance with the "roadmap". 4. Privatization of the state share.	Conclusion on the results of diagnostics Shareholder meeting resolutions	May-August 2020 September-December 2020 During 2021-2022 2022-2025	ATB "Aloqa bank" (Irisbekova), Ministry of Finance (Nasritdinholdzhaev), Agency for Management of State Assets (Bekenev), UTTSZ (Vafaev)
15.	Transformation of ATB "Turonbank".	1. Completion of bank diagnosis by IFC experts. 2. Development of a bank transformation program in cooperation with international consultants.	Consultant conclusion Resolution of the Supervisory Board	May 2020 September 2020	ATB "Turonbank" (Mirzaev), Ministry of Finance (Nasritdinholdzhaev), Agency for Management of State Assets (Bekenev), UTTSZ (Vafaev)
16.	Transformation of ATB "Qishloq Qurilish Bank" and sale of the state share in it.	1. Completion of bank diagnosis by international consultants. 2. Development of a bank transformation program in cooperation with international consultants.	Consultant conclusion Resolution of the Supervisory Board	May 2020 September 2020	ATB "Qishloq Qurilish Bank" (Muratov), Ministry of Finance (Nasritdinholdzhaev)
17.	Consideration of the issue of merging ATB "Turonbank" and ATB "Qishloq Qurilish Bank".	1. Review of the results of bank activity diagnosis and assessment of their financial condition. 2. Approval of the bank restructuring plan.	Conclusion on the results of diagnostics Resolutions of the General Meeting of Shareholders	June 2020 September 2020	Ministry of Finance (Nasritdinholdzhaev), Agency for Management of State Assets (Bekenev), UTTSZ (Vafaev)
18.	Attraction of independent members to the composition of supervisory boards of commercial banks with state participation.	1. Development of criteria and incentive mechanisms for selecting independent members of supervisory boards, including members with international experience in the banking sector. 2. Filling supervisory boards with independent members.	Resolutions of the General Meeting of Shareholders Resolutions of the General Meeting of Shareholders	June 2020 December 2020	Ministry of Finance (Nasritdinholdzhaev)
III. Improvement of the Legislative Base
19.	Creation of the legal basis for the development of Non-Bank Credit Organizations.	1. Development of a draft Law "On Non-Bank Credit Organizations" in cooperation with the World Bank. 2. Discussion of the draft Law with the community of specialists, researchers, and experts. 3. Submission of the revised project to the Cabinet of Ministers.	Draft Law of the Republic of Uzbekistan	July 2020 August 2020 September 2020	Central Bank (Zakhidov), Ministry of Justice (Davletov)
20.	Introduction of new business models of non-bank financing.	Creation of a legal basis for: Launching the activities of companies providing high-tech financial services ("fintech" companies); Launching the activities of retail lending subjects; Study of issues of introducing mechanisms for direct lending of individuals, crowdfunding, and other alternative instruments.	Regulatory legal document Written information note	September 2020 September 2020	Central Bank (Zakhidov)
21.	Development of a bank sanitation mechanism.	1. Attraction of World Bank experts and study of foreign experience in organizing a bank sanitation mechanism. 2. Development of a draft Law "On Bank Sanitation" in cooperation with HMI experts. 3. Discussion of the draft Law with the community of specialists, researchers, and experts. 4. Submission of the project to the Cabinet of Ministers.	Consultants' report Draft Law	April 2021 September 2021 depending on preparation 2022	Central Bank (Zakhidov), Ministry of Finance (Nasritdinholdzhaev), Ministry of Justice (Davletov)
22.	Simplification of legislation on bank operations in the securities market.	Introduction of amendments to current legislation providing for: Activation of banks' operations in the securities market; Reduction of administrative barriers for the issuance and placement of corporate bonds by commercial banks and other instruments, while strengthening control; Creation of a legal basis for the issuance of banks' securities to the international capital market.	Regulatory legal document	October 2020	Central Bank (Nurmuratov), Ministry of Finance (Nasritdinholdzhaev)
IV. State Cooperation in the Field of Further Development of the Financial Sector
23.	Adoption of "IFRS Standards for Corporate Governance in State Enterprises" for state banks.	1. Study of international experience on the introduction of IFRS standards for corporate governance in state enterprises. 2. Introduction of IFRS standards for corporate governance in banks with state participation, including: mechanisms for organizing a professional supervisory board with a transparent process of candidate nomination; mechanisms for controlling bank activities; information disclosure policy in banks; cooperation with external auditors and state control bodies; development of a policy for incentivizing members of Supervisory Boards, attracting and supporting qualified specialists.	Written information note Regulatory legal document	October 2020	Ministry of Finance (Nasritdinholdzhaev), Agency for Management of State Assets (Bekenev)
24.	Expansion and strengthening of the State Fund for Supporting Entrepreneurship (SFSE).	1. Attraction of international experts to develop a plan for expanding and strengthening the activities of the SFSE. 2. Increasing the efficiency of SFSE activities through: strengthening its management structure and increasing the transparency of its operations; conducting audits, improving risk management practices; developing a financing model and standardizing the methodology for selecting partner banks; introduction of information and communication systems; introduction of recovery mechanisms for guarantees in addition to collateral.	Consultants' report Regulatory legal document	September 2020 November 2020	Ministry of Economic Development (Kochkorov), Ministry of Finance (Nasritdinholdzhaev), Agency for Development of Entrepreneurship
25.	Measures to reduce the level of dollarization in the economy.	Adoption of incentive and regulatory measures to reduce the level of dollarization in the structure of banks' assets and liabilities, including: creation of macroeconomic conditions to reduce the share of foreign currency in banks' assets and liabilities; introduction of restrictions on types of loans issued in foreign currency.	Package of measures	November 2020	Central Bank (Zakhidov), commercial banks
26.	Optimization of the growth of banks' credit portfolios and reduction of concentration risks of loans.	1. Flexible application of macroeconomic and regulatory measures to optimize the growth rate of banks' credit portfolios. 2. Regulation of the debt burden of large debtors in the banking system, including restrictions on lending to the largest debtors with excessive debt burden and setting the permissible level of debt burden.	Package of measures Regulatory legal document	During 2020-2021 December 2020	Central Bank (Zakhidov), commercial banks
27.	Development of the system for protecting population deposits.	Consideration of the issue of implementing the "Basic Principles for Effective Deposit Protection Systems" approved by the Basel Committee on Banking Supervision and the International Association of Deposit Insurers.	Draft written information note	February 2021	Central Bank (Zakhidov), Ministry of Finance (Nasritdinholdzhaev)
28.	Improvement of the activities of credit bureaus.	Expansion of the volume of services and database provided by credit bureaus through the submission of the following information: income tax collected from individuals and taxes paid by legal entities; existence of debt in payment of housing and communal services; court decisions, liquidation and establishment of enterprises, etc.	Package of measures	August 2020	Central Bank (Zakhidov), CCB (Musaev), Ministry of Finance (Nasritdinholdzhaev), ministries and departments
29.	Review of normative and supervisory bases by introducing internationally recognized minimum standards and requirements for banks.	1. Application of the Basel Committee's corporate governance principles to the new edition of the Regulation on Corporate Governance in Banks. 2. Development of detailed requirements for conducting stress tests in banks, including the use of stress test results in capital and liquidity planning. 3. Setting differentiated capital requirements based on internal processes for assessing capital adequacy (ICAAP), stress tests, and risk characteristics of banks.	Resolution of the Central Bank Board Resolution of the Central Bank Board Resolution of the Central Bank Board	June 2020 2021 2022	Central Bank (Zakhidov)
30.	Review of the licensing procedure for banks to ensure market entry of stable participants with a clear and long-term strategic initiative.	Development and approval of the Regulation "On the Procedure and Conditions for Granting Permission for Banking Activity".	Resolution of the Central Bank Board	June 2020	Central Bank (Zakhidov)
31.	Development and approval of regulatory legal documents taking into account the recommendations of the Basel Committee on Banking Supervision.	1. Amendments and additions to the Regulation "On Requirements for the Adequacy of Capital of Commercial Banks" in accordance with Basel III recommendations (capital elements, risk coverage, calculation methodology). 2. Amendments and additions to the Regulation "On Classification of Asset Quality in Commercial Banks and Procedure for Formation, Use and Write-off of Reserves for Possible Losses on Assets" in accordance with the recommendations of the Basel Committee and International Financial Reporting Standards (IFRS 9). 3. Development of a regulatory base for consolidated supervision (banking groups, consolidated reporting, determination of prudential norms on a consolidated basis).	Resolution of the Central Bank Board Resolution of the Central Bank Board Resolution of the Central Bank Board	December 2020 2021 2022	Central Bank (Zakhidov)
32.	Increasing the customer orientation of banks with state participation.	1. Expansion of the volume of bank services targeted at a wide range of the population and business entities, including standardization of low-cost bank services and products. 2. Introduction of a system for evaluating the quality of bank services based on the Customer Satisfaction Index (CSI) and Customer Loyalty Index (NPS).	Package of measures Resolution of the Central Bank Board	June 2020 September 2020	Commercial banks Central Bank (Zakhidov)
V. Implementation of Information Technology in Banking Activities
33.	Conducting ICT audits of commercial banks.	Attraction of qualified companies to conduct ICT audits for the purpose of assessing automated banking systems operating in commercial banks.	Conclusion on the results of the audit	July 2020	Commercial banks, Central Bank (Abdugafarov), Ministry of Finance (Nasritdinholdzhaev)
34.	Introduction of new digital products to improve the quality and speed of banking services.	Attraction of leading IT companies offering products tested on international standards to the domestic market.	Commercial contracts	By the end of 2020	Commercial banks
35.	Improvement of lending mechanisms in banks with state participation to improve the quality of assessing potential risks and optimizing the decision-making process.	Introduction of an effective mechanism for making decisions on the allocation of loans through: formation of high-qualified underwriter groups; optimization of service processes and introduction of modular ("uniform") credit products and increasing their share in the bank's credit portfolio to expand fast and low-cost retail banking services; further improvement of banks' scoring systems.	Resolutions of the Supervisory Boards of Commercial Banks	By the end of 2020	Commercial banks, Ministry of Finance (Nasritdinholdzhaev)
36.	Automation of lending processes with the introduction of modern systems for identifying debtors.	Granting commercial banks the right to use the biometric database of the State Personalization Center under the Cabinet of Ministers for the purpose of customer identification.	Package of measures	December 2020	SPC (Turakhodjaev) MIA (Bobojonov), Central Bank (Abdugafarov)
37.	Automation of business processes to improve the quality of services provided by banks, increase operational efficiency, and form reliable data to assess their real financial condition.	1. Attraction of international consulting companies to check the efficiency of banks' information systems, their compliance with current requirements, and their potential for introducing modern products. 2. Development of a comprehensive package of measures for the modernization of banks' information systems together with attracted international consulting companies. 3. Introduction of an automated system for collecting, processing, and analyzing information based on "Big Data". 4. Automation and optimization of administrative and operational processes through the implementation of "RegTech" and "SupTech" technologies.	Consultant report Draft "Roadmap" Resolution of the Central Bank Board	June 2020 December 2020 2020-2021 2020-2021	Ministry of Finance (Nasritdinholdzhaev), Central Bank (Zakhidov), commercial banks
38.	Ensuring the wide use of information technology in the operational activities of banks to increase the share of remote banking services.	1. Ensuring the ability of business entities to use payment services around the clock by connecting all commercial banks to the interbank instant payment system operating in 24/7 mode. 2. Increasing the volume of remote banking payments to 90 percent.	Package of measures	May 2020 2020-2022	Central Bank (Abdugafarov), commercial banks
VI. Personnel Training and Qualification Improvement

39.	Enhancing the potential of Central Bank staff.	1. Annually, at least 150 specialists of the Central Bank to improve their qualifications at foreign training centers (centers of the National Bank of Switzerland, the Bank of Russia, the Bank of Poland, the Bank of Korea, the United Vienna Institute, etc.). 2. Implement at least 15 distance learning formats, including online courses, of leading universities and training centers (University of California, Yale University, Moscow State Institute of International Relations, Sberbank Corporate Center). 3. Organize internships for at least 30 specialists at central banks of foreign countries (Georgia, Ukraine, Switzerland, Czech Republic, Armenia, Russia, South Korea, etc.). 4. To improve the qualifications of banking sector specialists, organize at least 10 (one per month) training sessions and seminars at the Corporate Training Center of the Central Bank involving foreign experts (experts from IFIs, MDBs, EBRD, ADB, VISA and Mastercard companies, auditing and consulting companies, etc.).	Development of staff training plans Development of staff training plans Bilateral agreements Curriculum of the Corporate Training Center	Annually During 2020 During 2020 June 2020	Central Bank (Zakhidov)
40.	Enhancing the potential of commercial bank staff.	1. In 2020, commercial banks to organize 10 (one per month) corporate skill classes (master-classes) and trainings on the most important areas of bank activities (project finance, risk management, information technology, etc.). 2. In 2020, to organize 6 training seminars for specialists of commercial banks on international principles of corporate governance, risk management, IFRS, and other areas in collaboration with foreign partners at the Corporate Training Center of the Central Bank. 3. Regularly send at least 3-4 employees of commercial banks for study in the "Master of Business Administration" (MBA) programs of foreign and local higher education institutions.	Curriculum of the Corporate Training Center Corporate personnel training programs Corporate personnel training programs	During 2020 During 2020 Annually	Central Bank (Zakhidov), commercial banks
41.	Development of the Bank-Finance Academy (BFA).	1. Establish cooperation with training centers of Gazprombank, Sberbank of the Russian Federation, the Strategic Research Center under MSU, and other partners. 2. Introduce a "Master of Business Administration" (MBA) program with an annual quota of at least 200 students. 3. Organize training for bachelor's students majoring in "Banking" (gradually increasing the share of bachelors from 5 percent in 2020 to 70 percent by 2024). 4. Develop 10 professional programs to improve the qualifications of banking sector personnel in the most in-demand areas (risk management, corporate governance, project analysis, etc.).	Agreements on cooperation Curriculum Curriculum Qualification improvement courses	May - December 2020 2022 September 2020 December 2020	Uzmilliybank (Mirsoatov)

Note: Depending on the results of the implementation of transformation measures and processes regarding the privatization deadlines of commercial banks, relevant amendments may be made in agreement with international financial institutions.

(Attachment 2 in the edition of Decree No. PF-70 of the President of the Republic of Uzbekistan dated April 21, 2025 [/docs/7488166?ONDATE=22.04.2025 00#7492003], dated 22.04.2025, No. 06/25/70/0375)

Appendix 3 to Decree No. PF-5992 of the President of the Republic of Uzbekistan dated May 12, 2020 [/docs/4811025]

Target indicators for the implementation of the Strategy for the Reform of the Banking System of the Republic of Uzbekistan for 2020 – 2025


No.	Name of Indicator	Current Status	Target:
For 2021	For 2023	For 2025
1.	Share of assets of private banks (without state participation) in the total volume of assets of the banking sector	15 percent	17 – 20 percent	35 – 40 percent	60 percent
2.	Share of liabilities of banks to the private sector in the total volume of liabilities	28 percent	30 – 40 percent	60 percent	70 percent
3.	Attraction of strategic foreign investors with sufficient experience, knowledge, and reputation	-	-	3	3
4.	Ratio of deposits to bank liabilities	41 percent	41 – 45 percent	45 – 50 percent	50 – 60 percent
5.	Share of assets of non-bank credit organizations in the total volume of assets of credit institutions	0.35 percent	0.5 – 0.7 percent	1 – 1.5 percent	4 percent
6.	Share of liabilities in foreign currency in the total volume of liabilities	58 percent	50 – 55 percent	45 – 50 percent	40 – 45 percent
7.	Ratio of bank assets to GDP	53 percent	53-54 percent	54-55 percent	More than 55 percent
8.	Ratio of bank deposits to GDP	18 percent	19 – 21 percent	22 – 24 percent	25 – 27 percent

(National Database of Legislation, May 13, 2020, No. 06/20/5992/0581; October 18, 2021, No. 06/21/6325/0972; December 30, 2021, No. 06/21/42/1224; March 18, 2022, No. 06/22/89/0227; June 10, 2022, No. 06/22/152/0507; April 27, 2023, No. 06/23/62/0232; July 7, 2023, No. 06/23/108/0460; July 13, 2023, No. 06/23/109/0469; May 25, 2024, No. 06/24/80/0364; December 28, 2024, No. 06/24/227/1089; April 22, 2025, No. 06/25/70/0375)

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