Approved by Board of the Central bank of the Republic of Uzbekistan on November 2, 1998 No. 421

Regulations on requirements to liquidity management of commercial bank

I. General provisions

This provision is developed in compliance with article 51 and 52 of the Law "About the Central Bank of the Republic of Uzbekistan". The provision states line item of the Central bank of the Republic of Uzbekistan (further the Central bank) concerning liquidity management, and also establishes the minimum requirements to condition of liquidity management of commercial banks.

According to the article 39 "Responsibility of Banks to the Clients" of the Law of the Republic of Uzbekistan "About banks and banking activity", accepting deposits, the bank assumes liabilities on their safety and timeliness of implementation of payments in compliance orders of the client. Confidence of the public that the bank will fulfill these obligations is the most important asset of bank allowing bank to attract new deposits. Each case of non-payment to the client allowed by bank undermines public confidence to bank and, finally, to bank system in general. The liquidity risk, with respect thereto, is one of the main risks which deposit institutions face. Inability to effectively trace liquid line item and to develop rather efficient plans for critical cases often leads banks to liquidity crisis, and at worst - to bankruptcy.

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