Tashkent, Uzbekistan (UzDaily.com) -- Effective corporate governance plays a key role in ensuring the proper functioning of the banking sector. The quality of the organization of banking is an important factor in achieving economic well-being, because the stability of banks is the foundation of financial stability.

In order to improve management in banks, the Central Bank approved a new version of the Regulation “On corporate governance in commercial banks” (No. 3254 from 30 June 2020), which was developed on the basis of the principles of the Basel Committee and other internationally recognized norms.

This Regulation complies with the requirements of the Laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan" and "On banks and banking activities", as well as the Decree of the President of the Republic of Uzbekistan dated May 12, 2020 No. UP-5992 "On the Strategy for reforming the banking system of the Republic of Uzbekistan for 2020-2025 years ".

In particular, the document envisages the introduction of advanced standards and experience in corporate governance, ensuring accountability and transparency in the activities of banks’ management bodies, as well as increasing the efficiency of the management decision-making process.

The Regulation defines the powers and tasks of the governing bodies, including the supervisory board, its committees and the bank’s board, the necessary measures to prevent conflicts of interest, ensure the disclosure of information, implement the rules of ethics for employees, as well as the system of notification of unfair behavior.

In the new version of the Regulation, in contrast to the previous version, in order to ensure the efficient functioning of the Supervisory Board, the functions of the committees created under it (for audit, risk management and remuneration) are detailed, and their role in bank management is determined. This, in turn, will help ensure transparent areas of government responsibility as well as proper accountability in line with international practice.

It should be noted that the definition of the mechanisms of the remuneration system, the procedure for preventing and eliminating conflicts of interest, and the system for notification of unfair behavior will increase the responsibility of both the executive body and the bank’s employees to perform their official duties.

The Regulation "On Corporate Governance in Commercial Banks" will enter into force on 1 October 2020.