Approved by Board of the Central bank of the Republic of Uzbekistan of July 15, 2000 No. 476

Regulations on procedure for carrying out factoring transactions by commercial banks in the territory of the Republic of Uzbekistan

1. General provisions

1.2 This Provision determines procedure for carrying out transactions by financing of the clients by bank under concession of the right of monetary claim from the third parties with possibility of immediate compensation of the most part of payment, guarantees of complete debt repayment, expense reduction on account management (factoring).

1.3 Factoring is type of banking service on financing of the managing subjects suppliers (further in the text - the client) under concession them to bank financial agent of the right of receipt of payment on accepted by payers (further in the text - the payer), on unpaid them to payment requests for the delivered goods, the performed works or the rendered services, without the regress right.

1.4 Factoring transactions by banks are performed on the basis of contracts with clients in the location of their main on-demand deposit accounts.

1.5 Completion dates of monetary claim the payer to the financial agent on the basis of rendering factoring services shall not exceed 90 days. Banks shall take measures for debt collection at payers in the procedure established by the legislation according to unpaid obligations in this time.

1.6 Factoring transactions cannot be made on:

- to requirements imposed on state-financed organizations;

- to debt obligations of physical persons;

- to obligations of the companies announced by insolvent;

- to the unprofitable companies;

- to the companies having illiquid balance;

- to financing of the capital investments;

- to export consignment contracts;

- to compensation and barter deals;

- to work payment step by step or in advance;

- to purchase and sale agreements when the payer has the right to return products during the time caused by the agreement, and also on condition of after-sale service.

1.7 When carrying out factoring transaction the bank transfers money to the main on-demand deposit account of the client on payment requests, the payment right to claim on which is yielded to bank in the amount stipulated in the factoring agreement.

1.8 The difference between the amount transferred by bank, and the amount of payment request under the agreement represents discount of bank.

1.9 The compulsory provision of rendering factoring services is lack of overdue accounts payable at the payer.

1.10 The subsequent concession of the right of monetary claim is not allowed by bank if other is not provided by the agreement.

2. Procedure for the conclusion of the agreement

2.1 The client to the conclusion of the agreement submits to bank the following documents:

- the sale and purchase agreement which is drawn up in accordance with the established procedure and signed by the payer, performance of works and rendering services;

- the documents confirming leave of material values, performance of works and rendering services (commodity-transport delivery notes, copies of powers of attorney, acceptance acts of works, etc.);

- the list of open accounts the payer in other banks;

- the balance sheet (No. form 1) the payer for the last accounting period provided to the relevant state tax authorities, and also acts of reconciliations on debts more than 90 days, the report on financial results (No. form 2) - except for newly created legal entities, individual entrepreneurs, the Dehkan farms performing activities without formation of legal entity.

2.2 In the contract of bank with the client for factoring servicing are specified:

- buyers concerning whom the concession of monetary claim is performed;

- total amount of the yielded requirements;

- discount amount;

- duration of the agreement;

- claiming terms for breaches of agreement the parties;

- responsibility of the parties for breach of agreement;

- agreement cancelation conditions;

- other conditions, stipulated by the legislation.

2.3 In case of the conclusion of the agreement on rendering factoring services the client and bank - the financial agent shall notify the payer on this transaction in writing.

2.4 In case of insufficiency of means on the main on-demand deposit account of the payer for payment implementation the payer bank reports to bank - the financial agent about acceptance of payment request in card-index No. 2.

2.5 The agreement can be terminated on:

- to the mutual agreement of the parties;

- to initiative of the supplier if the bank violates terms of the contract;

- to initiative of bank if the supplier violates terms of the contract;

- to other conditions according to the legislation.

At the same time the parties in writing notify each other on cancellation of the agreement in the terms established in the agreement.

2.6 In case of unilateral agreement cancelation mutual claims are permitted in the procedure established by the legislation.

3. Rendering factoring services by commercial banks in foreign currency on export transactions

3.1 On export transactions factoring services are commercial banks only to the companies and the organizations having the on-demand deposit account in foreign currency served by them.

3.2 The income of banks when rendering factoring services in export transactions by them is understood as the discount representing difference between nominal value of the payment document in foreign currency and the amount of its concession to bank according to the agreement.

3.3 The compulsory provision of rendering factoring services in export transactions is absence at the company supplier of overdue receivables for the export contracts which are earlier entered into the Single electronic information system of the foreign trade transactions signed by the supplier with the corresponding foreign partner.

3.4 Commercial banks render factoring services only under the export contracts entered into the Single electronic information system of the foreign trade transactions in accordance with the established procedure and in the amount which is not exceeding the amount of the obtained bank guarantees of foreign corresponding banks or open irrevocable letters of credit under these contracts.

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