Uzbek Banking System
The banking sector suffers from its weak role in
Soviet times, when it was largely an adjunct of the 5-year plans,
though many people had savings accounts in the Savings Bank. What
personal savings people had were wiped out in 1991 due to hyperinflation.
Continued inflation since then has resulted in a large transfer
of wealth from creditors to debtors, further shaking confidence
in the sector. The level of financial intermediation is thus very
low and has fallen further since independence. All personal incomes
and outlays are transacted in cash and very few individuals maintain
savings accounts. The National Bank of Uzbekistan (NBU) tried unsuccessfully
to introduce a VISA card in the local soum currency last year.
On the whole, the banking system is still marked
by lack of openness, relatively high degrees of concentration, segmentation
and cross-ownership, and substantial non-performing loans. The Economist
places Uzbekistan with China at the bottom of its Emerging Market
Access Index, a measure of market openness based on trade and investment
barriers. On the other hand, there have been positive steps to reform
the sector since independence: the legal foundation has largely
been developed and banking supervision strengthened, an electronic
payments system introduced and internationally-accepted accounting
standards for banks adopted. Underway now are a WB-financed financial
institution building project and plans to privatize the largest
banks.
At present foreign banks can open offices only
in the form of subsidiary banks or as JVs. Minimum capital requirements
are $30m for the parent bank and $5m for the subsidiary bank. The
only foreign bank with fully established operations here is ABN
Amro, although the Turkish Ut Bank and the Korean Daewoo Bank operate,
servicing primarily their own nationals involved in JVs and trade
operations in Uzbekistan.
Reformation of Banking Sector in Uzbekistan
Banking Laws History
1993
Law on "Currency Regulation" and the
Resolution of Supreme Council of the Republic of Uzbekistan
on introduction of Law on "Monetary System of the Republic
of Uzbekistan" were adopted.
1994-1995
The Resolution is adopted "On Financial Measures
to Support Development of Banking System of the Republic of Uzbekistan".
The Resolution exempted commercial banks from several taxes.
1996
Laws were signed on "Banks and Banking Activity"
and on "Securities Market Operations".
1997
The Decree of the President of the Republic of
Uzbekistan was published on "Measures Stimulating Establishment
of Private Commercial Banks".
1999
The decree of the President of the Republic of
Uzbekistan has been published on "Measures for further development
of state commercial Narodniy (People) Bank ".
The Resolution has been adopted on "Measures
for further reforming of the banking system ".
2000
The Decree of the President of the Republic of
Uzbekistan has been issued on "Measures for further liberalization
and reforming of banking system". The Decree approved establishment
of a specialized Fund for preferential crediting proposed by
the commercial banks.
The following Decrees has been issued: "On
additional measures stimulating commercial banks participation in
development of SME", and "On further liberalization of
currency market and expansion of currency-exchange operations ".
2001
The following Resolutions of the Cabinet of Ministers
of Uzbekistan have been published "On activities for further
liberalization of the currency market", "On educational
loans for contract-based studying in higher educational institutions".
2002
The Law "On mutual funds" initiated creation
of the mutual funds. The Law "On guarantee of protection of
the personal bank accounts" has been adopted.
Banking System of the Republic
of Uzbekistan - Stages of the History
1991
In compliance with the Law of the Republic of Uzbekistan
on "Banks and Banking Activity" dated 15 February,
1991 the Central Bank of Uzbekistan have been established
on the basis of the regional office of former USSR State
Bank.
The major functions of the Central Bank
are regulation of monetary circulation in the republic, establishment
of commercial banks" system and development of payment system.
JSC "UzPromStroyBank"
and the National Bank for Foreign Economic Activity
obtained the license of the Central bank of Uzbekistan
for performing banking activities.
1993
JSC "UzTadbirkorBank"
and joint Uzbek-Turkish "UT-Bank" offered
their services in the financial market.
1994 - 1995
The number of private banks was growing. "ParvinaBank"
and "OlimBank" obtained the licenses
of the Central Bank ."AlokaBank",
"GallaBank", "Trust Bank",
"SavdogarBank" are all joined the "family"
of Uzbek commercial banks.
The European Bank for Reconstruction and
Development provided Uzbekistan with the first $60M credit
line to support the Small and Medium Business development. Laws
were adopted on "Central bank of the Republic of Uzbekistan"
and "Foreign Investments and Guarantees to the Foreign Investors".
1996
State joint-stock bank "Asaka"
and ABN AMRO bank obtained the licenses of the
Central Bank for performing banking activity.
1997
The Central Bank issued the licenses
to the "AviaBank", "UzDAEWOOBank",
"UzJilSberBank", and "Tashkent"
bank, the affiliate of the Central-Asian Bank for Cooperation and
Development
1998
Private Banks "Alp Jamal Bank",
"Turkistan", and "IsitkbolBank"
obtained the licenses of the Central Bank.
National Bank for Foreign Economic Activity
of Uzbekistan became the member of Association of Asian
Banks.
"Trust Bank" was awarded
with the Gold Medal of Association of Industrial Assistance
of France for the contribution in field of strategic
banking management.
In 1998 the increase in the total capital fund
of banks amounted 33 %, total assets increased by 37 %. The volume
of investment loans grew by 58 %. Over 85 % of assets were profit-making.
1999
Private joint-stock commercial banks "Adilet",
"KarvonBank" have opened their doors
to the first clients.
33 commercial banks with 800 branches have been
operating in the banking system.
The World Bank has approved issuance
of a $25M loan to the ongoing Project of financial institutions
development in Uzbekistan.
2000
License of the Central Bank of Uzbekistan
for performing banking activity has been issued to the private joint
stock "Business Bank", joint stock "HamkorBank",
"SogdianaBank", and private joint stock
bank "Tashabbus".
Tashkent hosted the 51st meeting of the Board of
Association of Financial Institutions for Development of Asia and
Pacific (AFIDAP). Uzbekistan signed the memorandum on mutual understanding
with AFIDAP.
"Thomson Bank Watch" included
National Bank for Foreign Economic Activity, "PahtaBank",
"UzPromStroyBank", and "AsakaBank"
in its ratings.
In 2000 the cumulative capital of the banks has
increased by 92 % and reached 276 billion sum, including capital
fund of 185 billion sum.
The deposits of individuals amounted more than
45 billion sum.
"PahtaBank" and "Deutschegenossenschaftsbank"
signed the contract on establishing the Euro 25M credit line without
government guarantees.
The number of operating private banks has reached
17.
2001
"Business Bank" introduced
the Western Union system.
Private "Capital Bank"
and "Davr Bank" obtained the license
for banking activity.
The Memorandum has been signed by the governments
of the Republic of Uzbekistan and the USA on further development
of bilateral cooperation and support of economic reforms in Uzbekistan.
$270,4M of loans from the foreign banks and international
financial organizations has been used.
The deposits of the individuals has increased by
46,1 billion sum and totaled 91,5 billion sum in 2001 .
2002
"Business Bank" became
the Western Union"s direct agent.
Peoples Bank introduced the Western
Union services.
The National Bank's system "Bank
- Client" got an award from AFIDAP.
"The Banker"
named "Asaka" bank the 947-th largest
bank worldwide.
"UzPromStroyBank" became
one of the first banks in the republic, operating on basis of the
uniform account.
"Trust Bank" became
a member of the International Syndicate of Issuers.
"Business Bank" was
named "The Best Bank-Underwriter of 2002"
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