Tashkent, Uzbekistan (UzDaily.com) — On 23 June 2025, President of Uzbekistan Shavkat Mirziyoyev signed the Law “On the Resolution and Liquidation of Banks.”

This new regulatory act, passed by the Legislative Chamber in its final reading in February and approved by the Senate in April, establishes the legal framework for the resolution and liquidation of banking institutions. Its provisions apply not only to individual banks but also to banking groups and holding structures that control their shares.

The Central Bank of the Republic of Uzbekistan has been designated as the authorized body responsible for implementing resolution procedures. A resolution may be initiated when three key conditions are met simultaneously: the bank is insolvent or faces a high risk of insolvency; the situation cannot be stabilized through measures taken by the Central Bank or other banks, or no effect is observed from such measures over a six-month period; and the bank is systemically significant, or the intended goals cannot be achieved through its forced liquidation if it lacks such significance.

As part of the resolution process, the Central Bank is granted the authority to appoint a special administrator to the troubled bank. Available instruments include transferring assets and liabilities to third parties, involving an intermediary bank, and potentially writing off or converting account balances.

Before initiating resolution, a mandatory assessment of the bank's assets and liabilities, including off-balance sheet items, must be conducted. This assessment is carried out on a competitive basis by independent experts selected by the Central Bank.

Based on an analysis of the bank’s financial condition, the assessor provides a report that must include a conclusion on the advisability of resolution. The document outlines the difference between the potential losses of shareholders and creditors in the event of liquidation and their actual losses during the resolution process.

If actual losses during resolution exceed those that would have been incurred through liquidation, shareholders and creditors are entitled to compensation. The amount of compensation must equal the difference between the two figures.

Resolution procedures will be financed through a specially established fund formed by a joint resolution of the Central Bank and the Deposit Guarantee Agency. The fund may be financed through borrowings, transfers from the state budget, grants, and other permissible sources.

The fund’s resources may be used not only to pay compensation but also to provide loans to resolved banks or intermediary banks, issue guarantees for their obligations, and offset differences in the value of transferred assets and liabilities.

The Central Bank is also authorized to temporarily suspend the performance of contractual obligations of a resolved bank for up to six weeks and, if necessary, impose restrictions on specific operations, cancel obligations, and modify their terms and conditions.

The adoption of this law is aimed at strengthening the stability of the banking system, minimizing systemic risks, and protecting the interests of depositors and participants in the financial market.