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Banking system situation in the first half of 2020
On July 16, 2020 the expanded meeting of the National Bank of Tajikistan was held to summarize the results of the country's banking system for the first half of 2020 and to define next tasks for the second half of the year under the leadership of the NBT First Deputy Chairman Jamoliddin Nuraliev with participation of heads of credit institutions. The Deputy Chairmen of the National Bank of Tajikistan Hokim Kholikzoda, Hamidullo Mashrabzoda and Mohbonu Nakatzoda also have attended the meeting.
Opening the meeting, First Deputy Chairman of the National Bank of Tajikistan Jamoliddin Nuraliev has noted that despite the impact of the COVID-19 pandemic and external factors on the country's economy, the National Bank of Tajikistan in the first half of 2020 consistently implemented a balanced monetary and foreign exchange policy aimed at maintaining a stable level of prices, ensuring financial stability and promoting the sound growth of economy including banking system development. Mr. Jamoliddin Nuraliev has stressed that the implementation of balanced monetary policy by using modern instruments is currently yielding desired results as evidenced by the positive macroeconomic indicators. In particular, in the first half of 2020, the Gross Domestic Product (GDP) reached TJS 32.4 billion and its real growth has made 3.5%.
There are 73 credit financial institutions operating in the republic as of June 30, 2020 including 17 traditional banks, 1 Islamic bank, 20 microcredit deposit organizations, 6 microcredit organizations and 29 microlending funds. As noted the First Deputy Chairman of the National Bank of Tajikistan Jamoliddin Nuraliev despite the current situation, current liquidity ratio of credit financial institutions for the reporting period has reached 65.18% exceeding the established standard by 35.18%. Along with this, the total assets of credit financial institutions for the specified period amounted to TJS 22.5 billion having increased by 4.8% against the same date of last year. The capital adequacy ratio, which is one of the main indicators of financial stability of banking system at the end of June, 2020 amounted to 19.7%, exceeding the established standard by 7.7 %.
Regarding the country's monetary policy, the First Deputy Chairman of the National Bank of Tajikistan Jamoliddin Nuraliev has noted that the total balance of loan portfolio amounted to TJS 9.8 billion, having increased by 9.5% or TJS 852 million in compare to the same date of last year. During the reporting period, the total volume of loans issued amounted to TJS 3,959.3 million.
In accordance with instructions and recommendations of the Government of the Republic of Tajikistan on preventing the impact of the infectious disease COVID-19 and in order to develop timely measures by the National Bank of Tajikistan, to maintain liquidity of credit financial institutions, possible increase of the impact of coronavirus (COVID-19) pandemic and reduce additional costs of loans to the economy sectors, the required reserve ratio of credit financial institutions for deposits and similar liabilities until December 31, 2020, in national currency was temporarily reduced by 2 percentage points and in foreign currency by 4 percentage points and was set at 1 and 5 percentage points respectively. This measure has enabled to improve the situation of credit financial institutions and to provide additional liquidity for the banking system in the amount of TJS 241.7 million, said Jamoliddin Nuraliev.
At the same time, in order to support the country's economy and implement a stimulating monetary policy during the pandemic, the National Bank of Tajikistan has reduced the refinancing rate by 1.0 percentage points and set it at 11.75% per annum.
The First Deputy Chairman of the National Bank of Tajikistan Jamoliddin Nuraliev also has added that along with the implementation of these measures, during this period, it was made the intervention for the amount of USD 104.3 million at the expense of international reserves to meet the demand of the interbank market in US dollars and to provide the population with essential commodities.
In order to support the country's economy in the difficult conditions of the global economy, for the first half of 2020 it was attracted USD 300.8 million from international financial institutions. In particular, through the International Monetary Fund, it was attracted investments for USD 189.5 million, the World Bank – USD 11.3 million, the Asian Development Bank – USD 50 million, the Eurasian Development Bank – USD 50 million and in the future it is planned to attract grants from the Asian Development Bank in the amount of USD 52.5 million and from the World Bank in the amount of USD 16 million, which is very important for development of the country's economy and its banking system, - has underlined Jamoliddin Nuraliev.
As the result of negotiations carried out within the interaction of the National Bank of Tajikistan with international financial institutions for this period, the International Monetary Fund wrote off the NBT's debt in the amount of USD 11 million in 2020.
Mr.Jamoliddin Nuraliev, First Deputy Chairman of the National Bank of Tajikistan, also has added that despite the impact of the COVID-19 pandemic on the country's economy, the country's sovereign credit rating has been maintained at the level of previous years (B3 by Moody’s), which is an important achievement.
During his address Jamoliddin Nuraliev also has raised issues related to credit policy of credit institutions, which is their fundamental function, increasing loan portfolio, availability of NPL loans in the loan portfolio, attraction of deposits to the system, improving corporate governance, preventing nepotism in the management of credit institutions, increasing financial literacy, improvement of employees’ professional knowledge and skills, ensuring transparency in work, regulation and control of the internal exchange market, compliance with the requirements of legislation on AML/CTF, ensuring conditions for access to correspondent accounts of banks in Western countries, eliminating shortcomings, achieving the basis of actual materials for each credit institution separately.
Then the heads of key subdivisions of the National Bank of Tajikistan have made detailed presentations on the banking system’s situation, financial stability of banking system, exchange rate policy, financial monitoring and implementation of legislative norms in the field of AML/CFT/PWMDP, situation of the payment system, information systems and protection of financial services consumer rights.
During the presentations, the following issues were considered: capital of banking system, assets and liabilities of banking system, profitability and financial stability of banking system, risk concentration, quality of the loan portfolio, dynamics of the US dollar exchange rate against the somoni, change of the exchange rate of main trading partners currencies in relation to US dollar, compliance with legislation requirements in the field of AML/CFT/ PWMDP, banking system of the country, payment system situation, payment card market conditions, infrastructure and dynamics of growth of payment cards, situation of the automated information systems of credit institutions, ensuring protection of information and main risks, reception and consideration of citizens' appeals in order to protect the rights of users of banking system services, settlement of appeals within the limits of available opportunities and competence.
During the discussion of the issues considered, heads of the country's credit institutions have expressed their views and noted that they would make efforts to achieve positive results and to increase the prestige of the country's banking system.
After making the detailed analysis of credit institutions activities, the First Deputy Chairman of the National Bank of Tajikistan Jamoliddin Nuraliev has summed up the situation of the country's banking system in the first half of 2020 and said that the National Bank of Tajikistan jointly with the country's credit institutions will direct all efforts to increase public confidence in the banking system, to ensure the efficiency of corporate governance system, to improve the quality of services, introducing new products, developing measures on increasing non-cash payments, reducing NPL loans and preventing credit risk, carrying out work on attraction of largest capital amounts to the banking system and strengthening the capital base of banks to achieve better results.
In conclusion of the meeting, the NBT First Deputy Chairman Jamoliddin Nuraliev once again has stressed that despite the difficult situation of the global economy, which will directly affect the economy of Tajikistan, we must achieve noticeable results through efforts to earn the trust of population, increase a prestige of banking system and to preserve it sustainability.