Uzbekistan has adopted a law aimed at expanding entrepreneurs' access to financial services by introducing amendments to several legislative acts and facilitating the development of alternative financing tools, particularly factoring.
The legislation introduces legal provisions to enable broader use of factoring — a financial transaction where businesses sell their receivables to a third party — and strengthens the role of the Central Bank in overseeing financial innovations and non-bank credit organizations.
Under the revised law on currency regulation, currency transactions between residents are now permitted in cases where the counterparty is a non-resident, or where credit organizations are engaged in financing through the waiver of monetary claims to another party. This provision did not exist previously and now opens the door for new forms of business financing.
An amendment to the law on the Central Bank expands the bank's authority to regulate and oversee the security, cybersecurity, and IT audits of electronic factoring platforms operated by non-bank institutions. The Central Bank’s internal audit service will now report both to the bank's management and the Audit Committee — previously, it was accountable solely to the Audit Committee.
The bank is now empowered to issue permits for operating guarantee and factoring organizations. Organizations are also required to notify the Central Bank when opening or closing factoring branches or when acquiring a 10–20% stake in a non-bank credit institution, even if acquired indirectly or jointly with related parties.
Factoring in the Civil Code
The Civil Code includes general provisions for factoring, recognizing the waiver of a monetary claim as effective against third parties once registered in the pledge register. In case of multiple claims on the same receivable, priority will be based on the order of registration.
Additional requirements introduced through amendments to the law on licensing, permitting and notification procedures stipulate that entities intending to operate as guarantee or factoring organizations must obtain proper authorization. Notifications are also required for significant ownership changes in non-bank credit organizations.
Factoring services offer several advantages for entrepreneurs:
- No need for traditional collateral, as receivables serve as security.
- Continued cash flow and working capital availability.
- No requirement for targeted use of funds.
President Shavkat Mirziyoyev, speaking during an open dialogue with entrepreneurs in 2024, described factoring as the most accessible financing tool for businesses. He emphasized its potential to unlock an estimated UZS 20 trillion ($1.5bn) in additional turnover financing and $1bn for exporters.
According to the International Finance Corporation (IFC), the potential demand for factoring services in Uzbekistan is around $10bn. Currently, these services are primarily offered by banks and microfinance institutions. The new law lays the groundwork for specialized factoring organizations to enter the market.
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