08 January 2021

Results of the year

Along with the reforms initiated by the president and the state in all spheres of life, the mortgage lending market was no exception. In particular, the Decree of the President of the Republic of Uzbekistan No. 5715 of May 13, 2019 was adopted - "On additional measures for the development and expansion of the mortgage lending market", where a "road map" with specific measures to reform the industry was approved.

During the research and analysis, it was revealed that the main obstacle to the development of the mortgage lending market was the lack of long-term available resources in the country's financial market. In this regard, a number of drastic measures were taken to expand and develop the mortgage lending market. As part of the activities prescribed in the decree, the introduction of the "Mortgage Market Sector Development Program" was envisaged developed jointly by the Asian Development Bank and the Ministry of Finance, where the cornerstone and structure-forming element of the program is the creation of the Company for Refinancing Mortgages of Uzbekistan (UzKRI).

UzKRI was founded by the Ministry of Finance of the Republic of Uzbekistan on November 4, 2019 and was registered as a joint-stock company. In a short period of time, from its foundation until receiving the first funds from the ADB on October 13, 2020, UZKRI has done a significant amount of work. In particular, it recruited a highly qualified staff, developed and implemented a full range of internal policies and procedures for operation, met all the requirements of the regulator and was registered in the Central Bank register as a non-bank credit institution, agreed upon and approved the company's chart of accounts with the regulator, signed an agreement on refinancing ADB funds with the Ministry of Finance, underwent a comprehensive analysis and study by ADB and was approved as the implementing agency for the project, increased its share capital by 4 times, including in the composition of shareholders, along with the Ministry of Finance, 12 of the largest commercial banks of Uzbekistan, of which 4 banks are private commercial banks.

The company's mission is to make housing affordable for a wide range of the population by pursuing and fulfilling the following goals:

• Development of the mortgage market by providing the banking system with long-term financial resources;
• Development of the local capital market through the issuance of debt securities;
• Promotion of international practices and standards of mortgage lending in the market.

Actively pursuing its main mission, providing long-term accessible resources to the banking sector, in such a short period of time, UzKRI, together with ADB, conducted a comprehensive study and analysis of 8 commercial banks. Of these 8 commercial banks, 7 commercial banks were allocated resources for 303 billion soums.

Despite the fact that the first resources were provided to commercial banks starting from October 13, 2020, 48 billion soums of which have already been spent and affordable mortgage loans have been provided to qualified segments of the population, namely 223 families, giving them the opportunity to purchase housing at affordable prices. It is important to note that with the resources of UzKRI, you can purchase real estate on a mortgage and from the secondary market, this circumstance provides an opportunity to make mortgages even more affordable, which is confirmed by the data, 97% of all mortgage loans from the company's resources were issued for the purchase of housing from the secondary market. Also, since October of this year, 2 loans have been issued for real estate renovation.

It is worth noting that UZKRI supports the social activity of the female part of the country's population. At this stage of lending, women borrowers make up 27% of all borrowers and co-borrowers, which is an important indicator.

In the near and medium term, UZKRI intends to achieve the following goals and objectives:

• In the first months of 2021, in order to cover a larger population, the company intends to additionally attract commercial banks and provide resources to all participating commercial banks that have passed a comprehensive analysis of the company and the ADB.
• Work to improve the mortgage lending system, introduce modern methods and tools for the development of the mortgage market, increase liquidity and reduce risks in the mortgage lending and mortgage-backed securities market;
• Improving the methodological and regulatory framework in the field of mortgage lending and refinancing, by attracting foreign experts, as well as with the participation of local specialists. In particular, in 2021, develop and implement a mechanism for encumbering claims on mortgage loans in the financial market as a basis for the appearance of mortgage-backed securities on the market.
• Start issuing securities, primarily corporate bonds, achieve their acceptance by the central bank for repo transactions, in the medium term, start issuing mortgage-backed securities and placing them among investors;
• Start attracting financial resources in the local and international loan capital markets, including funds from international development financial institutions and other financial organizations, with their subsequent use for refinancing mortgage loans;

All of the above tasks and goals are tasks and goals only at the beginning of UZKRI's activities, the company is not going to limit itself to these goals and intends to become an integral part of the country's financial system, moreover, the company is determined to lead the mortgage direction of the country's financial life by becoming a multifunctional universal mortgage company.