Microsoft Word Microfinance development in Uzbekistan Eng doc

2. Increasing the population’s deposits (individual deposits) 
MFOs' operations structure implies that in the case of borrowing, small individual 
deposits will make up a significant part of the related liabilities. Banking institutions’ records 
show that this very category of clients is usually not able to assess the financial status of 
credit organization independently and in the case of MFOs making deposits is fraught with 
risk of losing the money of socially vulnerable groups.
If deposits in commercial banks are insured then common sense must stipulate that 
deposits in other organizations licensed by a supervising body must be insured as well. 
For the protection of minor depositors’ interests, MFO membership in an individual 
deposits insurance system may be provided. In accordance with the Law “On Guarantees for 
Individual Bank Deposits”, a special fund was established in Uzbekistan to ensure 
compensation for citizens’ deposits in the case that the Central Bank withdraws a bank’s 
license. The compensation shall be paid in the full amount of the deposit up to the amount of 
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Banks are imposed a function to regulate cash circulation in the Republic of Uzbekistan. 

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one hundred times the minimum wage, and 90% of the deposit amount provided the deposit 
does not exceed 250 times the minimum wage.
MFOs with a Central Bank license to raise individual deposits can participate in the 
deposit guarantee system by making compulsory contributions to the aforementioned fund. 
The amount of quarterly calendar contributions is 0.5% of total deposits but payments stop 
when total contributions reach 5% of total deposits. Thus, the amount of contributions will 
not be so large as to impact the financial status and liquidity of MFOs.
The participation of Uzbek MFOs in the insurance system of individual deposits will 
enhance depositors’ trust and raise the resource base for activities. The compensation 
amount set by the law as 250 minimum monthly wages will secure the depth necessary to 
cover MFOs’ clients given the small amount of deposits. To achieve the indicated objectives 
it is necessary to amend the Law “On Guarantees of Individual Bank Deposits” or include a 
separate article (section) on microfinancing in the law.