Financial Crime World

Financial Sector in Tajikistan: An Overview

The financial sector in Tajikistan has undergone significant changes in recent years. This article provides an overview of the key aspects of the financial sector, including banking service penetration, pensions, remittances, and inclusion-related financial products.

Banking Service Penetration

  • Growing Number of Banking Accounts: The number of banking accounts is increasing rapidly in Tajikistan.
  • Impact of Financial Crisis: The financial crisis associated with the fall in remittances and devaluation of the national currency has led to a decrease in the number of borrowers from microfinance organizations.
  • Currency Denomination: Individuals’ banking accounts are mostly denominated in somoni, while SMEs use foreign currency accounts more frequently.

Pensions

  • Law on Pension Support: Pensions are provided based on the law “About pension support of population of RT” (adopted June 25, 1993).
  • Number of Pensioners: As of end-2016, there were 642,000 pensioners or 7.6% of the population.
  • Average Pension: The average pension was TJS274/month ($35 or 23% of the average wage in the country).

Remittances

  • Loans and Remittances: Remittances are closely connected with loans since households use loans as a source of cash until they receive the next money transfer from abroad.
  • Channels for Remittances: Some 66% of remittances come through commercial banks, while the rest come through the largest microcredit deposit organizations.
  • Increase in Remittances: The amount of remittances received by the country in the first half of 2017 increased by 25% in comparison to the same period in 2016, due to the nominal appreciation of the Russian ruble and the return of the Russian Federation economy to positive growth rates.
  • Decrease in Interest Rates: Credit organizations are trying to decrease interest rates and offer products and services based on new technologies including mobile banking, online loans, and digital wallets.
  • Legal Base for Private Pension Funds: The government needs to develop a legal base for private pension funds.