Central Bank allows banks to transport valuables independently and adapts cash rules to Islamic banking

Amendments to banks' cash operations

The Central Bank of Uzbekistan has amended the regulation on the organization of cash operations and the collection of valuables in commercial banks, the regulator's press service reported (Spot.uz). The Ministry of Justice registered the decision of Central Bank head Timur Ishmetov on October 9.

What changes for cash desks and Islamic banking

Under the amendments, bank cash desks, alongside interest accrued on deposits, may now pay the public 'other income'. The Central Bank explains that the document has been brought into line with legislation on Islamic banking: for the same purpose, the wording on the disbursement of 'deposits and accrued interest' has been replaced with 'funds'. Islamic financial transactions provide for the payment of profit, mark-up and other forms of income instead of interest, so the rules on cash disbursements at cash desks now apply to them as well.

New procedure for transporting valuables

The procedure for transporting cash and other valuables between banks and their branches has also been revised. Interregional transportation of foreign currency in cash and valuables is carried out on the basis of orders from the regulator, while within a region it is done by decisions of the branches of the collection service Uzinkass. All Central Bank orders will be generated automatically in the Elektron farmoyishlar ('Electronic orders') program, and the bank branches sending and receiving valuables will receive them online. Banks that have established their own cash collection services in accordance with the established requirements will be able to transport valuables between their branches independently. Escort of vehicles during interregional transportation will be provided under a contract with the Road Traffic Safety Service of the Public Security Department of the Ministry of Internal Affairs.

Context and significance

Earlier, Spot reported that in Uzbekistan it was proposed to legislate the possibility of early loan repayment. The amendments matter for two groups: customers of Islamic banks, who will be able to receive profit and mark-up on deposits at cash desks rather than only interest, and the banks themselves, which gain the ability to conduct cash collection between branches independently. In practical terms, this means a transition to electronic document flow for Central Bank orders and contract-based escort of transportation by the MIA, which banks will need to integrate into their operational processes.