Uzbekistan now guarantees deposits up to 200 million soums. What does this mean and expert opinions?

Spot spoke with economists, bankers, and industry representatives to find out how the new restrictions will impact the market, customer behavior, and trust in the financial system.

New rules for insuring bank deposits came into force in Uzbekistan on February 19 .

Now, the maximum amount guaranteed by the state to depositors in the event of a bank's bankruptcy is 200 million soums. If a deposit exceeds this limit, the remaining amount can only be recovered through the courts—and only if the bank has the funds to pay.

However, if deposits are placed in different banks, the guarantee applies separately to each one. For example, if you deposit 200 million soums in three banks, the state will compensate the entire amount—600 million soums.

If the funds were distributed among all the country's banks, and each of them went bankrupt, up to 7 billion soums could be received in guaranteed payments.

Since 2009, Uzbekistan has had a 100% deposit guarantee system in place—a measure introduced against the backdrop of the global financial crisis.

However, in subsequent years, most countries abandoned this practice. To date, only three countries retain an unlimited deposit guarantee: Uzbekistan, Belarus, and Turkmenistan.

By comparison, Azerbaijan guarantees up to $17,000, while Turkey and Russia guarantee up to $14,000. In Uzbekistan, the new limit is approximately $15,000–$16,000.

Spot spoke with economists, bankers, and industry representatives to find out how the new restrictions will impact the market, customer behavior, and trust in the financial system.

Doniyor Islamov ,

managing partner of an investment fund

Prospera Capital .

I believe the main purpose of introducing the limit is to limit the burden on the Deposit Guarantee Fund. Without a limit, the Fund effectively faces unlimited risk.

This is also in line with international practice: there are only a few countries in the world that do not have an upper limit on the amount of the guaranteed payment.

Based on international benchmarks, in Europe the limit is generally €100,000, in the US it is $250,000, and in neighboring countries – in Russia it is $15,000, in Kazakhstan it is from $20,000 to $40,000, depending on the currency.

It can be said that the Central Bank of Uzbekistan was guided by the limits established in neighboring countries, although the level of income and savings of the population in these countries is much higher than ours.

Thus, the Central Bank's assertion that the 200 million soum limit will cover 97% of all individual deposits appears entirely realistic.

Some of the population may feel their deposits are insufficiently protected. As a result, depositors may shift their investments to other assets (stocks, gold, real estate). This is despite Uzbekistan's already low deposit levels—the loan-to-deposit ratio is 170% (compared to 100% in European countries, 34% in Russia, and 51% in Kazakhstan). This could worsen somewhat.

A redistribution of liquidity within the banking system can be expected. People will begin to prefer more reliable banks over those offering high interest rates, and will also seek to spread their funds across different deposits to meet the limit.

In response, banks will likely offer more flexible deposit terms for both individuals and legal entities. Importantly, the new law also guarantees deposits for legal entities for the first time, with the same limits as for individuals.

If reliability is a depositor's priority, I wouldn't recommend opening a deposit with a bank offering a significantly higher interest rate than the market average. This could indicate a lack of liquidity or that the bank is actively issuing high-risk loans.

The second indicator worth paying attention to is the long-term credit rating from international rating agencies (S&P, Fitch, Moody's). First, it's worth checking whether the bank even has an international rating—its presence is already a signal of transparency. Next, it's important to look at the rating itself: Uzbekistan's country rating is BB- on the S&P and Fitch scale, and Ba3 on the Moody's scale. The closer a bank's rating is to the country rating, the more reliable it is.

If the deposit does not exceed the 200 million soum limit, there is no cause for concern—it remains fully guaranteed by the Fund. All banks in Uzbekistan participate in the guarantee system.

It's important to remember that one should avoid purchasing a significant amount of shares in a bank where the depositor or their close relatives have a deposit account, and vice versa—one should avoid opening a deposit account in a bank where they own a large stake. In this case, the client becomes a related party, and their deposit is no longer guaranteed.

If the deposit amount exceeds the limit, it is safer to distribute the deposits across several banks.

Those with significant amounts of money should consider creating a diversified investment portfolio—one that includes real estate, stocks, and bonds. The structure of such a portfolio depends on the investor's risk appetite, the amount, and the investment horizon.

Overall, this decision is a compromise between protecting the population's savings and the stability of the banking system. It limits risks for the state, but may also create certain inconveniences for some depositors.

Source: spot.uz