RESOLUTION OF BOARD OF CENTRAL BANK OF THE REPUBLIC OF UZBEKISTAN

of September 10, 2011 No. 26/1

About modification and amendments in the Procedure for classification of quality of assets, forming and use of the reserves created by commercial banks on covering of possible losses on them

According to the laws of the Republic of Uzbekistan "About the Central bank of the Republic of Uzbekistan" (Sheets of Oliy Majlis of the Republic of Uzbekistan, 1995, N 12, the Art. 247), "About banks and banking activity" (Sheets of Oliy Majlis of the Republic of Uzbekistan, 1996, N 5-6, Art. 54) and the resolution of the President of the Republic of Uzbekistan of November 26, 2010 N PP-1438 "About the priority directions of further reforming and increase in stability of financial bank system of the republic in 20112015 years and achievements of high international rating rates" (2010, N 48, the Art. 442) the Board of the Central bank of the Republic of Uzbekistan decides collection of the legislation of the Republic of Uzbekistan:

1. Make changes and additions to the Procedure for classification of quality of assets, forming and uses of the reserves created by commercial banks, on covering of possible losses on them, approved by Board of the Central bank of the Republic of Uzbekistan on November 9, 1998 N 242 (рег. N 632 of February 11, 1999), according to appendix.

2. This resolution becomes effective after ten days from the date of its state registration in the Ministry of Justice of the Republic of Uzbekistan.

Appendix

to the resolution of Board of the Central bank of the Republic of Uzbekistan of September 10, 2011 No. 26/1

Changes and additions made to the Procedure for classification of quality of assets, forming and uses of the reserves created by commercial banks on covering of possible losses on them

1. In Item 1.7:

a) add subitem 1.7.4 with the paragraph the second the following content:

"Payments on the credit are distributed on all effective period of the credit agreement and paid by installments. The sizes and frequency of payments are established by the credit agreement";

b) add with subitem 1.7.10 of the following content:

"1.7.10. Deposits of required reserves for covering of possible losses on bank assets - the deposits of commercial banks reserved in the Central bank for covering of possible losses on bank assets".

2. In Item 2.5:

a) from subitem 2.5.2 of the word "The credit (asset) on which unpaid interests turn into the new credit (asset) (are capitalized), it shall be classified, at least, as "standard". The credits which were delayed, but only during the short period of time (up to 30 days) can be considered as "standard". However, the status of prosrochennost shall not be major factor in case of assessment of classification of asset" to exclude;

b) from paragraph one of subitem 2.5.3 the last offer to exclude;

c) add subitem 2.5.4 with the paragraph the fifth the following content:

"c) there are outstanding payments on percent and principal debt according to the repayment schedule";

d) paragraphs two and third subitem 2.5.5 to replace with paragraphs the second - the eighth the following content:

"In the presence of at least the asset is classified by one of the following problems or characteristics as "hopeless":

repayment date of intermediate payments according to the schedule of the agreement it is overdue for 180 days and more;

the asset is outstanding in the time established by the agreement;

the assets which are in process of legal proceedings;

the prolonged assets because of bad financial position and insolvency of the borrower;

the property collected at the borrower and the leasing recipient unrealized bank in three-months time, from the date of acceptance on balance of bank by application of the rights to the pledged property which is not used for the bank purposes.

In the presence of the facts or signs specifying that the asset will not be returned in the time established by the agreement this asset is also classified as "hopeless";

the fourth to consider the paragraph the paragraph the ninth.

3. Add with Section 5-1 of the following content:

"5-1. Money transfer on deposits of required reserves for covering of possible losses on bank assets

5-1.1. Commercial banks shall provide money transfer from correspondent account into the deposit account of required reserves for covering of possible losses on bank assets opened in the Central bank (further - deposits of required reserves) on the amount equal to the size of means of the created special reserves for covering of possible losses on bank assets.

5-1.2. The amount of means obligatory for transfer into deposits of required reserves is calculated following the results of 10, the 20th days of every month and on monthly results proceeding from the amount of the created reserves for covering of possible losses on bank assets.

By results of calculations, within three working days commercial banks shall transfer the missing amount from the size of special reserves on deposits of required reserves or based on their reasonable address the Central bank returns the excessive amounts to commercial banks.

5-1.3. Central Bank based on the analysis of credit portfolio has the right to give instructions, obligatory for execution, to commercial banks on creation of additional reserves for covering of possible losses on bank assets.

5-1.4. In case of non-execution by commercial banks of the requirements specified in subitems 5-1.2 and 5-1.3 of this provision, the Central bank collects necessary for transfer to deposits of required reserves of means, from correspondent accounts of banks in the Central bank and applies adequate measures and sanctions against bank according to article 53 of the Law of the Republic of Uzbekistan "About the Central bank of the Republic of Uzbekistan".

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