of April 25, 1996 No. 216-I
About banks and banking activity
The purpose of this Law is regulation of the relations in the field of banking activity.
The legislation on banks and banking activity consists of this Law and other acts of the legislation.
If the international treaty of the Republic of Uzbekistan establishes other rules, than those which are stipulated by the legislation the Republic of Uzbekistan about banks and banking activity then are applied rules of the international treaty.
In this Law the following basic concepts are applied:
the applicant - person authorized by the founder (founders) for representation of its interests in the Central bank of the Republic of Uzbekistan on creation of bank, either bank or the microfinancial organization which addressed to the Central bank of the Republic of Uzbekistan for the purpose of change of the activities according to this Law;
bank - the legal entity, being the commercial organization performing set of the transactions determined as banking activity by opening and maintaining bank accounts, implementation of payments, attraction of money in deposits (deposits), issuance of credits (loans) on its own behalf. If other is not provided by this Law, the provisions of this Law established concerning banks extend also to the banks performing Islamic banking activity
;banking group - merging of financial institutions, not being the legal entity in whom the main bank controls other financial institutions;
the bank account - the account opened by bank for the client according to the agreement under which the bank shall accept and enlist the money arriving into its account carry out orders of the client about transfer and issue of the corresponding money and carrying out other account transactions;
steady financial condition of bank - the condition of bank characterizing balance of financial flows, sufficiency of means for maintenance of solvency, liquidity and profitable activities and also accomplishment of all prudential standard rates by bank;
the indirect owner (acquirer) - the person holding shares (acquiring shares) bank by means of other person over whom exercises control;
Islamic banking activity - the banking activity performed according to the legislation on banks and banking activity, and also Islamic financial standards;
Islamic financial standards - the set of rules on Islamic finance accepted by the Central bank and (or) other authorized body according to rules of the international organizations establishing standards of implementation of Islamic financing and also the national legal system;
microfinancial bank - the bank performing the activities taking into account restrictions, the stipulated in Article 7 these Laws. If other is not provided by this Law, the provisions of this Law established concerning banks extend also to microfinancial banks, and also to the microfinancial banks performing Islamic banking activity;
key personnel - the employees of bank who are not board members whose positions allow them to have significant effect on activities of bank;
expected acquisition - the decision made by the potential acquirer on acquisition or increase in essential shareholding of bank;
the final beneficial owner - physical person which directly or indirectly owns the legal entity who is the potential acquirer or the direct or indirect shareholder of bank or controls it;
prudential supervision - the supervision exercised by the Central bank of the Republic of Uzbekistan behind activities of banks for the purpose of prevention and reducing specific risks of banking activity;
the regulatory capital - the capital of bank determined in the settlement way for the purpose of banking regulation and implementation of calculation of prudential standard rates;
systemically significant bank - bank on which activities banking system stability depends;
foreign bank - the legal entity, being bank by the legislation of foreign state in the territory of which it is registered;
essential ownership - immediate or indirect possession by person or persons acting jointly, at least than five percent of authorized fund (authorized capital) of the legal entity acquired as a result of one or several transactions.
Central Bank of the Republic of Uzbekistan (further - the Central bank) is the state body regulating the sphere of banking activity and performing powers on licensing, regulation and prudential supervision.
Treat the financial transactions performed by banks:
attraction of money in deposits (deposits);
implementation of payments, including without opening of bank accounts;
opening and maintaining bank accounts of physical persons and legal entities, including correspondent accounts of banks;
provision on the terms of recoverability, the paid nature and urgency of the credits on its own behalf at the expense of own and raised funds;
transactions with foreign currency in cash and non-cash forms;
trust management of money and other property under the contract with physical person or legal entity;
collection and cash servicing;
issue of guarantees and adoption of other obligations for the third parties providing execution of their obligations;
acquisition or alienation of right to claim based on the agreement of financing under concession of monetary claim (factoring);
release, purchase, sale, accounting and storage of securities, management of securities under the contract with the client, making of other transactions with them;
acquisition and sale of the affined precious metals, including account management of safe custody of metals and the depersonalized (nonphysical) accounts of metals;
purchase and sale of coins from precious metals;
implementation of transactions with derivative financial instruments (derivatives);
provision in lease of special rooms or the safes which are in them for document storage or values;
leasing provision;
issue of loans in forms, stipulated by the legislation;
rendering the consulting services connected with financial transactions;
portfolio management of assets;
release, use and repayment of electronic money;
issue of bank cards and payment processing, servicing of bank cards together with other organizations, including other financial institutions;
rendering services in state registration of the rights to real estate by means of electronic exchange of information with registering body;
implementation of Islamic financial transactions.
Banks perform also other financial transactions according to the legislation on banks and banking activity.
Treat Islamic financial transactions of bank:
financing of the client or attraction of money in investment deposits on the terms of profit distribution;
issue of money or attraction in investment deposits on the basis of the agency agreement;
financing of the client by means of sale of goods by installments;
financing of the client by means of implementation of advance payment for goods;
financing of the client by means of implementation of joint activities (partnership) or participation in the authorized capital of legal entities;
provision of property in Islamic lease (with repurchase right).
The banks performing Islamic banking activity can perform according to the commonly accepted international banking practice and other Islamic financial transactions which are not contradicting the legislation of the Republic of Uzbekistan.
The Islamic financial transactions provided by parts one and the second this Article shall be performed according to Islamic financial standards.
In the Republic of Uzbekistan the legal entities created according to the procedure, established by this Law and having the corresponding license granted by the Central bank have the right to perform banking activity.
Banking activity in the Republic of Uzbekistan is performed on the basis of the license for the right of implementation of banking activity and (or) the license for the right of implementation of Islamic banking activity (further - the corresponding license (the corresponding licenses) on banking activity). These licenses are granted without restriction of effective period, and transfer of licenses or the rights according to them is forbidden to other persons.
Perform set of the following financial transactions specified in:
paragraphs the second - the twenty second part one of article 5 of this Law having the right only the bank having the license for the right of implementation of banking activity;
paragraphs the second, the third and fourth, sixth - the thirteenth, fifteenth - twenty third part one of article 5 of this Law having the right only the bank having the license for the right of implementation of Islamic banking activity;
parts one of article 5 of this Law, have the right the bank having the corresponding license (the corresponding licenses) on banking activity.
The banking activity performed without the corresponding license (the corresponding licenses) on banking activity is considered illegal and involves responsibility. Income gained as a result of such activities is subject to withdrawal in the Government budget of the Republic of Uzbekistan.
Activities which implementation according to the legislation requires receipt of separate licenses or permissions are performed by banks after receipt of the relevant documents.
Contribution (deposit) is made money, in total corresponding to the following conditions:
are subject to return upon the demand of the client or after term with percent or other income either without those or on the conditions approved between the investor or his authorized representative and bank accepting money, except for the money (investment deposits (deposits)) raised on the basis of the financial transactions specified in the paragraphs second and third part one of article 5-1 of this Law which are not providing the obligation of complete return of the deposit amount (deposit) according to Islamic financial standards;
do not treat subordinated debt, rights of possession or services, including insurance services;
are supported in writing by the relevant document of the bank accepting money.
In deposits (deposits) only banks have the right to be engaged in activities for attraction of money.
Banks have no right to be engaged directly in the productive, trading, insurance and other activity which is not connected with implementation of financial transactions, stipulated by the legislation about banks and banking activity.
The restriction specified in part one of this Article does not extend to cases:
sales or provisions in lease of the specialized equipment and the software to it used in systems of clearing settlements on the basis of bank cards;
sales of own assets;
release, realization and distribution of checkbooks;
implementation of activities for the organization of the conclusion of the insurance contract on behalf of insurance companies - residents of the Republic of Uzbekistan;
provisions in lease to legal entities in whom the bank is founder, own property according to the agreement of property hiring (lease).
Microfinancial banks, in addition to the restrictions specified in part one of this Article perform the activities taking into account the following:
the size of the money raised from one physical person in deposits does not exceed the size of the guaranteed contribution determined by the legislation on guarantees of protection of deposits in banks;
the maximum extent of risk on one borrower or group of the interconnected borrowers does not exceed five billion sum;
the share of the credits issued for implementation of the business activity and activities of self-employed persons directed to income acquisition constitutes at least seventy percent from credit portfolio and (or) portfolio of financing of the rendered Islamic financial transactions;
opening of correspondent and other foreign bank accounts, issue of guarantees according to obligations of foreign citizens and legal entities and rendering services in the foreign trade transactions of clients are prohibited;
investments are performed only in the highly liquid debt securities determined by the Central bank within requirements to liquidity management of banks.
Banks are forbidden to create legal entities and (or) to acquire shares or shares in authorized funds (authorized capital) of legal entities, except for:
the legal entities performing credit, insurance factoring and leasing transactions on professional basis;
legal entities, being part of infrastructure of the financial market or rendering to banks information and consulting services;
the legal entities performing professional activity in the security market;
the affiliated organizations of bank abroad created for the purpose of release and placement of securities under guarantee of this bank;
legal entities whose exclusive activities is collection;
the legal entities rendering services in ensuring interaction between participants of calculations for banking activities including calculations for transactions with bank cards;
stock and currency exchanges;
credit bureaus;
joint-stock companies in the secondary security market in the amount of no more than twenty percent from the placed shares included in listing of stock exchange.
Acquisition by bank of shares or shares in authorized fund (authorized capital) of one legal entity according to part four of this Article shall not exceed fifteen percent of the regulatory capital of bank of the first level. This restriction also extends to ownership of bank of shares or shares in authorized fund (authorized capital) of the specified legal entities, including in cases of their creation.
Acquisition of shares or shares in authorized fund (authorized capital) of legal entities in total shall not exceed fifty percent of the regulatory capital of bank of the first level.
If ownership of bank of shares or shares in authorized fund (authorized capital) of legal entities exceeds the amounts specified in parts five and the sixth this Article, the bank shall sell the exceeding part within one year.
The bank is forbidden to participate in authorized fund (authorized capital) of the legal entity owning one or more percent of the authorized capital of this bank.
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