Kobulov bahtiyor

1.2. Functions of the commercial banks
It is advisable to begin the consideration of the economic essence of the bank with the most important moment for its understanding - its commercial nature. Uzbek and Chinese laws classify the bank as a commercial organization engaged in independent economic activity, the main purpose of which is to make a profit.
This goal, firstly, forms the market essence of the bank. It is thanks to her that the banking business has occupied its unique niche in the division of labor between economic entities. The bank is not a charitable organization, and the attitude towards it should be based on entrepreneurial principles.
Secondly, the goal itself determined the economic status of the bank. Credit organizations provide the company with financial intermediary services and provide payment turnover on a commercial basis.
According to the article 3 of the Law of China on Commercial Banks and the article 5 of the law “Banking activities” of the Republic of Uzbekistan may have following financial functions:

Functions of Chinese Banks: Absorb public deposits Issue short-term, medium-term and long-term loans; Arrange settlement of both domestic and overseas accounts Handle the discount of negotiable instruments; Issue financial bonds; Issue, cash and sell government bonds as agents; Buy and sell government bonds as agents; Do inter-bank lending and borrowing; Buy and sell per se or as agents foreign exchanges Provide letter of credit (L/C) service and guarantee; Handle receipts and payments and insurance businesses as agents; Provide safe boxes.

Functions of Uzbek Banks: attraction of funds to deposits (deposits); making payments, including without opening bank accounts; opening and maintaining bank accounts of individuals and legal entities, including correspondent accounts of banks; provision of loans on the terms of repayment, payment and urgency on its own behalf at the expense of its own and borrowed funds; transactions with foreign currency in cash and non-cash forms; trust management of property under an agreement with an individual or legal entity; collection and cash service; issuance of guarantees and acceptance of other obligations for third parties providing for the fulfillment of their obligations; acquisition of the right to demand from third parties the performance of obligations in cash (factoring); issuance, purchase, sale, accounting and storage of securities, management of securities under an agreement with the client, performing other operations with them; purchase and sale of refined precious metals, including maintaining accounts of responsible storage of metals and depersonalized (non-physical) accounts of metals; purchase and sale of precious metal coins; performing operations with derivative financial instruments (derivatives); leasing of special premises or safes located in them for storing documents or valuables; leasing provision; issuance of loans in the forms provided for by law; provision of consulting services related to financial transactions; asset portfolio management; issuance, use and repayment of electronic money; issuing bank cards and processing payments, servicing bank cards together with other organizations, including other financial institutions.

As we can see the banks of both states may have wide range of the activities according to the law of the states. But, the legislation of Uzbekistan prohibits following activities to the banks: banks are not entitled to directly engage in production, trade, insurance and other activities not related to the implementation of financial transactions provided for by the legislation on banks and banking activities. So, let’s analyze the what are production, trade, insurance and other activities in the legislation of Uzbekistan.

According to the law on “Labor protection” of Uzbekistan
production activity — a set of actions carried out in the production of products, processing of raw materials, performance of works, provision of services.
According to the rules of trade in Uzbekistan retail trade is the implementation of activities in the field of trade involving the sale of goods individually or in small quantities for cash to the population for final consumption, without the right to use it for commercial purposes.
According to the law on “Insurance activity” of Uzbekistan insurance activity is the activity of professional participants of the insurance market related to the implementation of insurance and reinsurance.
Banks in Uzbekistan do not directly engage to those activities but via subsidiary business company they can run those activities. Moreover, those prohibitions do not engage Banks if:
sales or leasing of specialized equipment and software for it used in non-cash payment systems based on bank cards;
sales of own assets;
issuance, sale and distribution of checkbooks;
implementation of activities for the organization of the conclusion of an insurance contract on behalf of insurance organizations — residents of the Republic of Uzbekistan;
leasing of own property to legal entities in which the bank is the founder in accordance with the property lease (lease) agreement.
Banks are prohibited from creating legal entities and (or) acquiring shares or shares in the authorized funds (authorized capitals) of legal entities, with the exception of:
legal entities that carry out credit, insurance and leasing operations on a professional basis;
legal entities that are part of the financial market infrastructure or provide information and consulting services to banks;
legal entities engaged in professional activity in the securities market;
subsidiaries of the bank abroad established for the purpose of issuing and placing securities under the guarantee of this bank;
legal entities whose exclusive activity is collection;
legal entities providing services to ensure interaction between participants in settlements on banking transactions, including settlements on transactions with bank cards;
stock and currency exchanges;
credit bureaus;
joint-stock companies on the secondary securities market in the amount of no more than twenty percent of the outstanding shares listed on the stock exchange.