Uzbekistan has seen significant growth in lending, reflecting strong domestic demand and improved access to financing. stated the governor of the Central Bank Timur Ishmetov at a conference of the International Monetary Fund (IMF) on May 2.
“If we look at recent months, we have seen quite a strong growth in lending. This, of course, reflects strong domestic demand, as well as improved access to financing for both households and businesses,” he noted.
According to the governor, the Central Bank will pursuit its policies of stronger financial intermediation, but with increased risk control. “Our goal is to further promote the development of financial intermediation, but at the same time closely monitor and manage risks. We will adhere to this strategy,” he emphasized.
Financial sector and fintech
“First, we will continue to support the expansion of the financial sector. We have a huge potential for growth. Now it is almost entirely represented by the banking system, so we intend to encourage the development of non-bank lending, microfinance organizations and, of course, local stock markets,” Timur Ishmetov said.
We will also be prioritizing the fintech industry. “Fintech is actively developing in our country, and although it opens up many opportunities, it also carries certain risks. Therefore, it is important to intervene now to create a favorable environment for the growth of fintech while simultaneously introducing a supervisory system,” he said.
According to him, a regulatory “sandbox” is already in effect in Uzbekistan, and the Central Bank is working with several fintech companies to implement joint products. “In the coming months, we hope to announce a large-scale program to support these companies and will continue to work with them,” he added.
The Central Bank also wants to step up the use of capital markets: “We strive to give companies and bank clients the opportunity to attract financing through capital markets, primarily through training. Until it becomes common practice to issue bonds to raise funds."
Tighter supervision and Basel III
The second area of the strategy will be tighter regulation. "We already announced at the beginning of the year that we would be stricter. Tighter standards have been adopted, for example, on the debt-to-income ratio, on LTV limits and on large unsecured liabilities," Ishmetov added.
"In the near future, we will adopt new rules for so-called "large borrowers." Their definition will be defined, and both the central bank and the government will issue separate standards for such borrowers," he said.
In the medium term, the Central Bank will complete work to bring regulation in line with international standards, including Basel III and International Financial Reporting Standards. It also announced the publication of the results of the first financial sector review (FSAP), conducted with the IMF and the World Bank, and a roadmap for implementing the recommendations.
"The point was to conduct a diagnostic of our financial sector - to identify weak points and understand where to move next. We plan to publish the results to show the market that we are not afraid to admit our vulnerabilities. It is important to understand where exactly the problems are. We are currently developing a roadmap for implementing the recommendations of the IMF and the World Bank and will also publish it," Ishmetov said. According to him, this is about work for the next 3-5 years to improve the financial sector and improve the quality of regulation.
