Uzbekistan: President outlines tasks to reform banking system

TASHKENT (TCA) — President of Uzbekistan Shavkat Mirziyoyev held a meeting on October 25 on the priority tasks of reforming the country’s banking system and increasing the investment activity of Uzbek banks, the president’s official website reported.

In recent years, 8.4 trillion soums have been allocated from the national budget to commercial banks to finance programs, 400 million US dollars to replenish working capital, and $1.7 billion to increase registered capital. In general, over the past two years, $3.3 billion of public funds have been assigned to shore up the capitalization of banks.

At the meeting, the president criticized the ineffective use of these funds, the poor level of banks to facilitate the implementation of promising projects and create new jobs, enhance the income of customers and the banks themselves.

For example, more than half of the credit resources of private banks is formed by deposits, whereas in state-owned banks the figure barely reaches 10 percent. More than 50 percent of the loan portfolio of public banks accounts for five major state-owned enterprises. Outdated software is still being used, resulting in the quality of banking services that hardly meet contemporary requirements.

In order to promote healthy competition in the sphere, the state’s presence in the activities of banks is being phased out. In particular, the percentage of loans issued under government programs is equated to the refinancing rate, while the fixation of rates will be completely liberalized from 2021. This will push banks to expand their customer base, search for new forms and methods of attracting resources and providing loans.

At the meeting, the Ministry of Finance and the Central Bank were instructed to complete, together with the World Bank, the elaboration of a strategy for the long-term development of the banking sector.

The head of state instructed the executives to strengthen the customer focus of banks, expand services for various categories of citizens, and simplify lending.

Mirziyoyev stressed the necessity of expanding the participation of the private sector in the banking sector through increasing its investment attractiveness.

“From now on, in the matter of attracting resources the banks are to ‘care for themselves’. Only in this way can they become a financial institution with a modern management system that meets market conditions,” the president said.

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Times of Central Asia