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LAW OF THE REPUBLIC OF UZBEKISTAN

of April 20, 2022 No. ZRU-765

About non-bank credit institutions and microfinancial activities

(as amended on 20-09-2024)

Accepted by Legislative house on December 28, 2021

Approved by the Senate on March 17, 2022

Chapter 1. General provisions

Article 1. Purpose of this Law

The purpose of this Law is relations management in sphere of activity of non-bank credit institutions and microfinancial activities.

Article 2. Legislation on non-bank credit institutions and microfinancial activities

The legislation on non-bank credit institutions and microfinancial activities 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 non-bank credit institutions and microfinancial activities then are applied rules of the international treaty.

Article 3. Non-bank credit institutions

Non-bank credit institutions are the following credit institutions performing separate types of financial transactions of banks which admissible combinations are determined by this Law:

the microfinancial organization - the legal entity performing microfinancial activities, and also rendering other services provided by this Law;

pawnshop - the legal entity performing activities for issue of short-term microloans to physical persons on the security in the form of pledge of the personal estate (thing) intended for private consumption;

the organization for refinancing of mortgage - the legal entity performing activities for attraction of financial resources and the direction them on refinancing of mortgage loans.

Article 4. Activities of non-bank credit institutions

The microfinancial organizations have the right:

perform microfinancial activities;

perform functions of the payment agent (subagent) or the agent of banks, insurance and other financial organizations;

render the consulting and information services connected with the activities performed by them;

grant to subjects of entrepreneurship the loans, leasing, guarantees, to render factoring services and services of Islamic financing in the amount of, exceeding the microcredit amount.

Services of Islamic financing are understood as the financial services rendered according to the procedure, developed by the Central bank of the Republic of Uzbekistan (further - the Central bank) according to rules of the international organizations establishing standards of implementation of Islamic financing.

Pawnshops have the right:

issue to physical persons short-term (up to one year) microloans on the security in the form of pledge of the personal estate (thing) intended for private consumption;

accept from physical persons on temporary storage the personal estate (things) intended for private consumption.

The organizations for refinancing of mortgage have the right:

1) to perform refinancing of mortgage loans in the way:

a) provisions of financial resources to banks under the mortgage loans issued by them or subject to issue;

b) acquisitions of right of the requirement for the mortgage loans issued by banks;

c) investments of money in the mortgage securities issued by banks;

2) to render the consulting and information services connected with refinancing of mortgage loans.

Non-bank credit institutions have the right to render services remotely (electronic services), to acquire government securities of the Republic of Uzbekistan, share in authorized fund (authorized capital) of legal entities and their debt securities, to deposit in bank free money as deposits (deposits), and also to have other rights according to the legislation.

Article 5. Microfinancial activities

Activities of legal entities for rendering the following services are recognized microfinancial activities:

provision of microloan - the money issued to the borrower - to physical person in the amount of, not exceeding hundred million sum, on the terms of the paid nature, urgency and recoverability;

provision of the microcredit - the money issued to the borrower - to the subject of entrepreneurship or self-employed person in the amount of, not exceeding three hundred million sum, on the terms of the paid nature, urgency and recoverability, and also their use on particular purposes in the cases provided by the agreement;

loan granting and guarantees, rendering services of Islamic financing to physical persons in the amount of, not exceeding the microloan amount;

provision of leasing and guarantees, rendering factoring services and services of Islamic financing to subjects of entrepreneurship in the amount of, not exceeding the microcredit amount.

Banks, microfinancial and payment institutes, and also pawnshops regarding issue of microloans have the right to perform microfinancial activities.

Article 6. Restrictions of activities of non-bank credit institutions

Non-bank credit institutions have no right:

it is direct to perform production, insurance, and also trading activity, except for the microfinancial organizations rendering services of Islamic financing, and other activities which are not provided by this Law;

attract deposits (deposits) from physical persons and legal entities;

attract loans from participants (shareholders) - physical persons in the amount of, exceeding the deposit amount in authorized capital (authorized capital) or share par value, being at them in property, except for attraction of loans in the form of bonds.

Article 7. Requirements to activities of non-bank credit institutions

The non-bank credit institution when implementing the activities shall:

observe requirements of the legislation on non-bank credit institutions and microfinancial activities, and also the legislation on counteraction of legalization of income gained from criminal activities, to financing of terrorism and financing of distribution of weapons of mass destruction;

provide authorized capital (authorized capital) it is not lower than the size, this Law established in part three of Article 17;

provide compliance of leading employees to requirements, the stipulated in Clause 16 these Laws.

The pawnshop, in addition to the requirements established in part one of this Article shall provide compliance of the cash room to requirements of the Central bank.

Article 8. Sources of means of activities of non-bank credit institutions

Sources of means of activities of non-bank credit institutions are their own means, the credits of banks, grants, and also borrowed funds raised from the participants (shareholders).

The microfinancial organizations in case of observance of prudential standard rates, stipulated in Clause 26 these Laws, and also the organizations for refinancing of mortgage, in addition to the means specified in part one of this Article having the right to perform activities for the account:

means from placement of corporate bonds;

means of the Government budget of the Republic of Uzbekistan and state funds;

loans of the international financial institutions, foreign government financial organizations, non-state non-profit organizations, including foreign;

loans of legal entities, including foreign;

the means from securities placement corresponding to Islamic financing - for the microfinancial organizations;

means from placement of mortgage securities - for the organizations for refinancing of mortgage.

Article 9. Independence of non-bank credit institutions

Non-bank credit institutions are independent in decision making, connected with their activities.

State bodies and their officials are forbidden to interfere with activities of non-bank credit institutions, to require different payments and fees, except as specified, provided by this Law.

Article 10. Associations and other associations of non-bank credit institutions

Non-bank credit institutions for the purpose of protection of the common interests and implementation of joint programs can create associations and other associations if their creation does not contradict requirements of the legislation.

Associations and other associations of non-bank credit institutions in ten-day time after their registration by authorized state body or decision making about liquidation notify on it the Central bank.

Article 11. Implementation by payment institutes of activities of the microfinancial organizations

Activities of the microfinancial organization have the right to perform also payment institutes after passing of the accounting registration in the Central bank (further - accounting registration) which is carried out by means of entering of data on payment institute into the register of the organizations performing activities of the microfinancial organization.

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