The National Bank of Tajikistan (NBT)’s minimum capital requirements for newly established banks has been revised downwards to 50 million somoni (TJS).

The NBT Board has made a decision to reduce the minimum capital requirements for the newly established banks from 80 million somoni to 50 million somoni.

According to the NBT press center, this decision was made on January 4 for the purpose of creating a health competition in the country’s market of banking services and improving access of the population to financial services as well as increasing investment to improve the banking sector.  

Recall, President Emomali Rahmon ordered Tajik central bank to revise the minimum capital requirements for newly established banks downwards to TJS 50 million on December 22 while addressing the joint session of both chambers of the parliament.   

Speaking at the session, the president, in particular, noted that a poor banking system has seriously hampered economic development of the country.

Total amount of deposits in credit organizations of the country fell 5 percent (464 million somoni) to nearly 9 billion somoni in a year to November 30, 2017, the head of state noted.    

Meanwhile, a report by the World Bank, Tajikistan: Heightened Vulnerabilities, Despite Sustained Growth, notes that unresolved banking sector issues have translated into negative spillovers to the economy with total lending contracting by 4 percent year on year in somoni terms (14 percent in U.S. dollar terms) in the first half of 2017.

Similarly, the volume of outstanding deposits fell by 2 percent in somoni terms and 13 percent in U.S. dollar terms, the report said, noting that limits and the inability of banks to meet their operational obligations due to liquidity shortages and continued insolvency constrained deposit withdrawal.

In the first half of the last year, non-performing loans (NPLs) reportedly remained at more than 50 percent of total loans on average.