DEPOSIT AND SAVINGS
INSURANCE FUND OF TAJIKISTAN

DEPOSIT INSURANCE
FUND OF TAJIKISTAN

Workshop on Bank Resolution

May 30, 2025

On May 26 and 30, a training session was conducted at the World Bank’s office in Tajikistan. This session was part of the World Bank’s technical assistance project titled “Strengthening the Financial Sector in Tajikistan – Phase II,” specifically focusing on its crisis management component. International consultant Rossen Nikolov facilitated the training for staff from the National Bank of Tajikistan and the Deposit Insurance Fund of Tajikistan.

The workshop aimed to enhance the implementation of the project, concentrating on methods for resolving issues faced by credit institutions. The resolution mechanism is designed to restructure troubled institutions, thereby minimizing negative impacts on the financial and economic system.

During the training session, the provisions of current legislation, the mechanisms and methodologies employed to assess the value of assets and liabilities within troubled credit institutions during the resolution process were examined. Additionally, the methods of verifying cost-effective due diligence, a so-called lesser test cost procedure associated with the Fund’s involvement in financing correspondent banks (i.e., bridge bank), as well as the relevant collaboration between the Fund and the National Bank of Tajikistan, have been explored.

Background:

In 2018, amendments to Tajikistan’s Law on the National Bank introduced a new financial crisis resolution framework. This framework aligns with international best practices while being tailored to Tajikistan’s financial context. Supported by the International Monetary Fund, it incorporates globally accepted standards for addressing issues faced by troubled banks.

Amendments to the Law on Deposit Insurance expanded the Fund’s role in resolving problems for its member credit institutions, including providing initial capital for bridge banks. However, a comprehensive operationalized procedure for the Fund’s involvement in the resolution process was absent. To address this gap, the Fund obtained a World Bank technical assistance project that focuses on knowledge transfer and capacity building, enabling the Fund to effectively manage its expanded responsibilities.