President Shavkat Mirziyoyev signed a decree on June 16 increasing the government’s stake in Uzbek banks by 500 million US dollars to be funded by the Reconstruction and Development Fund of Uzbekistan (FRDU). The decree is aimed at "maintaining the level of capitalization of banks, help stabilize the e financial stability of the banking system and expanding their participation in financing of projects and lending to entrepreneurship".
The decree specifies that this package should be used primarily to finance or co-finance the approved targeted socio-economic development programs of provinces in 2017-2018 and financial support to business entities.
The central bank is instructed to implement a mechanism that provides, in cases of liquidity shortage, banks with loans without security for a period of up to three months. These loans should be allocated exclusively to maintain the liquidity of banks in order to ensure the continuity of payments, and not allow the use of these funds for loans.
The central bank shall be also entitled to introduce a supervision regime over a bank in case of payment failure after receiving the Central Bank’s loans without security.