Over the past few weeks, significant measures have been taken to reform the banking sector of Uzbekistan in order to improve corporate governance in banks.
First of all, it should be noted the changes that have been made to the Regulation on corporate governance in commercial banks No. 472 dated June 24, 2000. If earlier the Chairman of the Management Board was to be elected with the consent of the Central Bank, now his/her candidacy shall be proposed by the Supervisory Board and approved by the General Meeting of Shareholders, by analogy with the procedure practiced in ordinary joint-stock companies.
In addition, as part of the planned new edition of the Law “On Banks and Banking Activities”, it is planned to improve the activities of boards in public banks. As noted in the results of the mission of the International Monetary Fund, which we wrote about the previous time, public banks could work more efficiently if state representatives were not included in boards. For example, the Chairman of the Board of the People’s Bank of Uzbekistan is Jamshid Kuchkarov, who also holds the position of Minister of Finance.
As emphasized, the activity of banks in such cases is not sufficiently effective, because state representatives in boards, whose consent is necessary by making almost any important decision, may not always be competent in certain issues, such as, for example, when developing a bank strategy or reacting to external market changes. Now it is proposed to elect all members of the boards in banks from among the relevant specialists.
In addition, the provision in the Corporate Governance Code on the mandatory presence of independent members in boards will be enshrined at the regulatory level, also in the new edition of the law.
At the same time, it should be noted that a large amount of work in the area has yet to be done, primarily in the matters of privatization and modernization of banks, since the share of the state in the banking sector nowadays is about 84%, which, compared to the developed countries, is a very large number.