DUSHANBE (Asia-Plus, Zarina Ergasheva) – Agroinvestbank, the third largest commercial bank in Tajikistan, has reportedly been granted 700 mln somoni (US $147 mln) in a recapitalization. In a report released at a news conference in Dushanbe, Minister of Finance, Safarali Najmiddinov, noted on January 25 that the government has saved Agroinvestbank from bankruptcy.

“Findings of independent audit have shown that the bank is in a hard financial situation because of 37 unpaid loans,” said the minister. “All this is consequences of bad cotton debts of the previous years; we consider them bad loans of the post-conflict period, when everything had been funded and nothing had been returned.”

The companies that had taken those loans are reportedly still working but they are not able to repay the loans. According to Najmiddinov, the majority of those companies are working in the sphere of cotton processing and textile manufacturing. Due their activities, production in the textile industry allegedly increased last year and following this, the country’s industrial production reportedly rose 40% in 2012.

The government has recapitalized Agroinvestbank with 700 mln somoni in order to support it, said the minister. The government has reportedly issued equities for a total amount of 500 mln somoni (for the period of eight years) for buying out those loans and contributed 200 mln somoni as a founder. “The share of the state in the bank is more than 51%, and therefore, Agroinvestbank is now under temporary administration of the government,” said Najmiddinov. “The bank may buy back its share; for this, it must return those loans.” He added that 280 mln somoni worth of equities would be issued this year to support solvency of the National Bank of Tajikistan.

Founded in 1992, Agroinvestbank, with headquarters in Dushanbe, has main branches in Khorog, Khujand, Kulob and Qurghon Teppa and 61 other branches across the country. The bank is focused on providing financial services to micro-, small- and medium-sized enterprises and to the agricultural sector. As of June 1, 2012, Agroinvestbank’s authorized capital stock amounted to 185 mln somoni.

Sixteen banks, including one state-run bank, nine commercial banks and branches of six foreign banks, now operate in Tajikistan.