Tashkent, Uzbekistan (UzDaily.com) — During its third plenary session, the Senate of Uzbekistan reviewed and approved the Law “On Amendments and Additions to Certain Legislative Acts of the Republic of Uzbekistan in Connection with the Improvement of Microfinance Activities.”

Recent reforms in the microfinance sector have improved access to microfinance services for both individuals and entrepreneurs. However, existing limitations for non-banking credit organizations, such as restricted access to additional financial resources, hinder their expansion and ability to serve a wider range of consumers.

Moreover, the absence of a mechanism for microfinance organizations to gradually evolve into commercial banks necessitated a revision of legislation in this area.

The law introduces amendments to several acts, including the Laws “On the Central Bank of the Republic of Uzbekistan,” “On Banks and Banking Activities,” “On State Duties,” “On Licensing, Permits, and Notification Procedures,” and “On Non-Banking Credit Organizations and Microfinance Activities.”

The key innovation is the establishment of a legal framework for introducing the concept of a microfinance bank, which will be authorized to provide banking services under specific conditions. The law also enables the transformation of microfinance organizations into microfinance banks and their further development into commercial banks, as well as vice versa.

The law defines the concept of a microfinance bank, sets the minimum charter capital requirements, and outlines prudential standards that must be met. It also specifies the procedures for altering the operational scope of credit organizations.

Additionally, the law prohibits the use of trade names similar to existing banking or non-banking credit organizations within the country, ensuring clear differentiation.

The adoption of this law is expected to promote the use of microfinance services, support entrepreneurial initiatives across diverse population groups, and expand their accessibility in the regions.

Following discussions, the senators approved the law.