Tashkent, MAY 14 — President of Uzbekistan Shavkat Mirziyoyev signed a decree “On a Strategy for Reforming the Banking System of the Republic of Uzbekistan for 2020–2025”.

The main directions of reforming the banking sector in the Republic of Uzbekistan are:

increasing the efficiency of the banking system by creating equal competitive conditions in the financial market, lending exclusively on a market basis, reducing the dependence of banks on state resources, modernizing banking services, creating an effective infrastructure and automating the activities of banks, and phasing out non-core functions of banks;

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

reduction of the state share in the banking sector through the comprehensive transformation of commercial banks with a state share, the introduction of modern banking standards, information technologies and software products, the implementation of the state block of shares of banks on a competitive basis to investors with appropriate experience and knowledge, as well as the parallel reform of commercial banks and enterprises with a state share;

increasing the availability and quality of financial services through the concentration of state presence and targeted measures on underserved and vulnerable segments, the widespread introduction of remote services for the population and small businesses, the development of a network of low-cost service points, and the creation of favorable conditions for the establishment and development of non-bank credit organizations as complementary parts of the single financial system of the republic.

The document notes that the state’s shares in Ipoteka Bank, Uzpromstroybank, Asaka Bank, Alokabank, Qishloq Qurilish Bank and Turonbank will be privatized with the assistance of international financial institutions.

At the first stage, measures will be taken to institutionalize them (transformation of activities). At the second stage, it is planned to sell state shares.

The decree states that the state will retain its shares in the authorized capital of National Bank for Foreign Economic Affairs, Agrobank and Microcreditbank.

This decision was made in order to meet the needs of the population in financial services, to widely introduce the mechanism for supporting investment projects (the “factory of projects”), to ensure regional accessibility of banking services during the reform of the banking system.

The head of Uzbekistan instructed to create a Project Office for the transformation and privatization of commercial banks with a state share under the Ministry of Finance of the Republic of Uzbekistan, granting the right:

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

negotiations and conclusion of agreements with international financial institutions and potential foreign investors on the issues of transformation and privatization of commercial banks.

The project office is headed by the First Deputy Minister of Finance of the Republic of Uzbekistan.

The Central Bank and the Ministry of Finance of the Republic of Uzbekistan were instructed to take measures to conduct an assessment of the financial sector by the International Monetary Fund and the World Bank FSAP no later than 2024.

The implementation of the strategy will increase the share of assets of non-state banks in the total assets of the banking system from the current 15 percent to 60 percent by 2025 and the obligations of banks to the private sector in the total amount of liabilities from the current 28 percent to 70 percent by the end of 2025.

It is planned to increase the share of non-bank credit organizations in total lending from the current 0.35 percent to 4 percent by 2025.