Deputy Chairman of the Central Bank, Abrorhuja Turdaliev, has announced the forthcoming establishment of microfinance banks in Uzbekistan during the "Fitch on Uzbekistan" conference on March 6.
Purpose and Structure
The Central Bank is currently in the process of drafting legislation for the establishment of microfinance banks, with plans to submit the bill to the Cabinet of Ministers for review by April. These microfinance banks will serve as intermediaries between traditional banks and microfinance companies.
Turdaliev emphasized the importance of establishing regional microfinance banks in Uzbekistan to enhance accessibility to financial services. Microfinance organizations will have the opportunity to transition into microfinance banks upon obtaining a license from the regulatory authority. Additionally, existing banks will be permitted to transform into microfinance banks if they fail to meet the increasing capital requirements of conventional banks.
Operational Focus
Microfinance banks will be mandated to allocate a minimum of 70% of their total loan portfolio to business financing. Turdaliev underscored the necessity of catering to micro-businesses, which often require personalized attention not typically offered by conventional banks.
The minimum authorized capital for microfinance banks will be set at UZS 50bn ($4mn), with a maximum limit of UZS 500bn ($40mn). The Central Bank aims to facilitate the emergence of district banks to enhance lending accessibility by leveraging their familiarity with local communities and their economic potential.
Regulatory Changes
Last year, the president approved a phased increase in the minimum authorized capital for banks. Starting from September 1, 2023, the capital requirement was raised to 200bn ($16mn), followed by increments to 350bn ($28mn) from April 1, 2024, and to 500bn ($40mn) from January 1, 2025.
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