Uzbekistan has introduced a new legal framework that allows farmers and agricultural enterprises to use their lease rights to farmland as collateral when obtaining bank loans.

 

The regulation establishes the procedure for pledging lease rights to agricultural land as loan security. It enables lessees to use their leasehold interests to access credit resources more easily, strengthening investment potential and improving productivity in the agricultural sector.

 

Under the new rules, lease rights to agricultural land may be pledged to banks or other financial institutions as collateral without the consent of the lessor, provided that such an arrangement is permitted by law or by the lease agreement. The regulation sets out the mechanisms for formalizing pledges, the satisfaction of creditor claims, and the sale of pledged lease rights through open auction in cases of default.

 

At the same time, the regulation clearly defines cases where the pledge of lease rights is not permitted. Lease rights cannot be used as collateral if the land:

is subleased;

is under a lease agreement that has expired, been terminated, or is under dispute (including court proceedings, investigation, or inquiry);

is subject to contractual restrictions prohibiting pledge;

has unregistered lease rights or unregistered amendments to such rights;

contains unauthorized or illegally occupied plots; or

falls under other restrictions established by law.

 

The pledge is provided to the lending institution based on the lease term and the market value of the land plot. Importantly, the term of the land lease must exceed the loan term by at least five years, ensuring stability and minimizing credit risks for lenders.

 

Commercial banks and microfinance institutions are expected to adapt their internal procedures to reflect this new mechanism, facilitating access to financing for agricultural producers.

 

The reform aligns with Uzbekistan’s broader strategy to enhance land productivity, attract investment into the agricultural sector, and create favorable conditions for sustainable rural development.