RESOLUTION OF BOARD OF CENTRAL BANK OF THE REPUBLIC OF UZBEKISTAN

of October 11, 2003 No. 25/8

About approval of the Regulations on charge of percent in commercial banks

According to Article 3, of 7, of 17, of 51 Law of the Republic of Uzbekistan "About the Central bank of the Republic of Uzbekistan" the Board of the Central bank of the Republic of Uzbekistan decides:

1. Approve Regulations on charge of percent in commercial banks according to appendix.

2. Enact this resolution after ten days from the date of its state registration in the Ministry of Justice of the Republic of Uzbekistan.

3. From the date of entry into force of this resolution to declare invalid the Regulations on procedure for charge of percent on the credits and deposits of banks approved by the resolution of Board of the Central bank of November 2, 1998 No. 16/2 (рег. No. 558 of December 2, 1998)

Approved by the Resolution of Board of the Central bank of the Republic of Uzbekistan of October 11, 2003 No. 25/8

Regulations on charge of percent in commercial banks

I. General provisions

1. This Provision according to the laws of the Republic of Uzbekistan "About the Central bank of the Republic of Uzbekistan" (Sheets of Oliy Majlis of the Republic of Uzbekistan, 1995, No. 12, the Art. 247), "About banks and banking activity" (Sheets of Oliy Majlis of the Republic of Uzbekistan, 1996, Art. No. 5-6, 54) and "About financial accounting" (Sheets of Oliy Majlis of the Republic of Uzbekistan, 1996, No. 9, the Art. 142) determines procedure for charge by commercial banks of the Republic of Uzbekistan (further - banks) percent on the credits, deposits and borrowed funds, debt securities, and also on other financial instruments according to International accounting standards.

3. This Provision is not applied in the relation:

a) income from leasing transactions;

b) financial instruments concerning changes in their fair value or concerning profits or losses from their sale.

4. Banks according to article 28 of the Law of the Republic of Uzbekistan "About banks and banking activity" have the right independently, on contractual conditions with clients, to determine the sizes of interest rates, commission fees, frequency and payment due dates by assets and liabilities.

Classification of interest incomes and expenses in the profit and loss statement shall correspond to classification of financial instruments in the balance sheet.

II. Determinations

5. For the purpose of this provision the following concepts are used:

the accrual method of financial accounting is method in case of which transactions and events are recognized and reflected in accounting entries when they happen (but not in process of obtaining or payment of money or their equivalents), they and are represented in the financial reporting of those periods which they treat;

the actual interest rate is the interest rate used for discounting of flow of future cash receipts expected throughout the term of use of asset for equating with initial asset carrying amount;

the method of actual interest rate is method which leads to recognition of permanent rate of percent during service life of asset (obligation) by depreciation of discount or award on interest income (or expense) or by distribution of deferred interest payments (for example, received or paid annually, but not monthly);

fair value is the amount for which it is possible to exchange asset or to extinguish the obligation during transaction between the knowledgeable, wishing to make such transaction by the parties performed under general conditions;

financial statement elements - the primary groups used for representation of financial influence of transactions and other events by their group according to their economic characteristics. The elements which are directly connected with assessment of financial condition in the balance sheet are assets, obligations and the capital. The elements relating directly to activities assessment in the profit and loss statement are income and expenses;

income is gross receipt of economic benefits in the course of ordinary activities of bank for the period, leading to increase in the capital, other than at the expense of deposits of founders of equity. The income arises in the course of ordinary activities bank and is called the most different terms, including percent, profits, dividends, sales proceeds, the fees, royalty and the rent;

percentage (income) is a gained income for use of money, or their equivalents. Also percentage (income) includes depreciation amount of any discount, award or other difference between original book value of the debt security or the credit and the amounts of their repayment;

profits are income type which can arise or not arise in the course of regular activities of bank. Profits include, for example, profits on disposal of fixed assets. Determination of the income also includes unrealized profits, for example, the profits arising from revaluation (market) securities intended for trade;

expenses are reduction of economic benefits during the accounting period in the form of outflow or depletion of assets or in the form of increase in obligations that leads to capital reduction, the equity which is not connected with its distribution between founders;

percentage (expenses) - expenses for use of money, or their equivalents. Interest expenses include depreciation amount of any discount, award or other difference between original book value of the debt security or loan means and the amount of their repayment;

losses are expense type which can arise or not arise in the course of ordinary activities bank. Losses include, for example, losses from natural disasters, such as the fire or flood, also as well as losses on disposal of fixed assets. Determination of losses also includes unrealized losses, for example, the losses resulting from increase in the currency exchange rate concerning deposits of clients or borrowings of bank in this currency;

recognition is process of reflection and inclusion in balance or the profit and loss statement of that Article in the form of sum of money which answers determination of element and meets recognition criteria;

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