Annual Safeguard Monitoring Report€¦ · Annual Safeguard Monitoring Report 1st Annual Report...

Annual Safeguard Monitoring Report

1st Annual Report March – December 2017 March 2018

UZB: Small Business Finance Project

Prepared by JSICB Ipak Yuli Bank, JSCB Hamkorbank, JSCB Davr Bank, and JSILC

Uzbekleasing International Company for Ministry of Finance, Republic of Uzbekistan and the

Asian Development Bank.

CURRENCY EQUIVALENTS (as of 31 December 2017)

Currency unit – Uzbekistan Sum (UZS)

UZS1.00 = $0.0001231516 $1.00 = UZS8,120.070000

ABBREVIATIONS

ADB - Asian Development Bank CBU - Central Bank of Uzbekistan DVB - Davr Bank Joint-Stock Commercial Bank ESMS - Environmental and Social Management System FIL - Financial Intermediary Loan GAP - Gender Action Plan HKB - Hamkorbank Joint-Stock Commercial Bank IYB - Joint Stock Innovation Commercial Bank “Ipak Yuli” MOF - Ministry of Finance PFI - Participating Financial Institution

PIAL - Prohibited Investment Activities List SPS - Safeguard Policy Statement

TA - Technical Assistance ALC - Joint Venture “UzbekLeasing International A.O.”, JSC

NOTE

In this report, "$" refers to US dollars, unless otherwise stated. This annual safeguards monitoring report is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

______________________________________________________________________

1

Annual Safeguard Monitoring Report

Project Number: 42007-018

Reporting period: March - December 2017

Republic of Uzbekistan: Small Business Finance Project

(Financed by the ADB)

March 2018

Table of Contents

PART I - INTRODUCTION ................................................................................................................................. 2

1.1. SHORT DESCRIPTION OF THE PROGRAM ........................................................................................................... 2

1.2. SUMMARY OF ACTIVITIES AND PROJECT PROGRESS DURING THE PREVIOUS 10 MONTHS. .............................. 2

1.3 PROJECT ORGANIZATION AND ENVIRONMENTAL MANAGEMENT TEAM, INCLUDING ORGANIZATIONAL

RELATIONSHIPS WITH PFIS, SUB-BORROWERS ETC. ................................................................................................ 4

PART II – ENVIRONMENTAL ISSUES ............................................................................................................. 6

2.1. ENVIRONMENTAL ISSUES IN THE PREVIOUS 10 MONTHS .................................................................................. 6

2.2. EXPLANATIONS OF INSTANCES IN WHICH ENVIRONMENTAL STANDARDS OR GUIDELINES WERE EXCEEDED OR

ENVIRONMENTAL INCIDENTS HAPPENED ................................................................................................................... 7

2.3. REQUIRED RECOMMENDATIONS ........................................................................................................................ 7

PART III: COMPLIANCE WITH ADB’S SOCIAL PROTECTION REQUIREMENTS AND ADB’S PROHIBITED INVESTMENT ACTIVITIES LIST .............................................................................................. 8

3.1. PROVIDE AASSESSMENT ON THESE TWO SETS OF REQUIREMENTS ................................................................. 8

3.2. A BRIEF DESCRIPTION OF THE TAKEN MEASURES ............................................................................................. 8

3.3. PROVIDE SUMMARY OF ACTIONS TAKEN TO ENSURE COMPLIANCE OR CORRECTIVE ACTIONS TAKEN IN CASE

OF NON-COMPLIANCE ................................................................................................................................................ 8

PART IV: ESMS OPERATIONS (FOR PFIS WHICH ARE FINANCING B-CATEGORY SUB-PROJECTS) ......................................................................................................................................................... 9

4.1 SITE INSPECTIONS AND AUDITS – TO SUMMARIZE THE NUMBER AND TYPE OF SITE VISITS ............................. 10

4.2 NONCOMPLIANCE CASE – TO SUMMARIZE THE DETAILS, INCLUDING THE NUMBER OF NOTICES GIVEN OUT BY

THE PFIS OR BY THE LOCAL GOVERNMENT TO THE SUB-BORROWERS, HOW AND HOW MANY ISSUES COVERED. 10

4.3 CORRECTIVE ACTION PLANS – TO REPORT ON TIMELINESS OF PREPARATION AND COMPLETION .................. 10

4.4 CONSULTATION AND COMPLAINTS – TO REPORT ON ANY CONSULTATIONS UNDERTAKEN AND LIST ANY

COMPLAINTS RECEIVED AND HOW THEY WERE HANDLED OR RESOLVED. .............................................................. 11

PART V: CONCLUSION AND ACTION PLAN .............................................................................................. 12

5.1 CONCLUSIONS .................................................................................................................................................. 12

5.2 SUMMARY OF ACTIONS TAKEN DURING THE PREVIOUS REPORTING PERIOD ................................................... 12

5.3 ACTION PLAN FOR THE NEXT REPORTING PERIOD............................................................................................ 12

ANNEXES ............................................................................................................................................................ 2

ANNEX 1: CONSOLIDATED ANNUAL REPORTS BY PFIS ......................................................................... 2

ANNEX 2: PFI’S ANNUAL ENVIRONMENTAL AND SOCIAL PERFORMANCE REPORT FROM JSCB HAMKORBANK .................................................................................................................................................. 6

ANNEX 3: PFI’S ANNUAL ENVIRONMENTAL AND SOCIAL PERFORMANCE REPORT FROM JSC “UZBEK LEASING INTERNATIONAL A.O.” ................................................................................................... 2

ANNEX 4: PFI’S ANNUAL ENVIRONMENTAL AND SOCIAL PERFORMANCE REPORT FROM JSICB “IPAK YULI” ........................................................................................................................................................ 6

ANNEX 5: PFI’S ANNUAL ENVIRONMENTAL AND SOCIAL PERFORMANCE ANNUAL REPORT OF PJSCB “DAVR BANK” (AS OF MARCH 01, 2018) ..................................................................................... 41

PART I - INTRODUCTION

1.1. Short description of the program

1. The proposed financial intermediary loan (FIL) of $100 million provide US Dollar funding to

the participating financial institutions (PFIs) to finance investment and working capital loans to

small businesses. In addition, $0.5 million technical assistance (TA) support the selected PFIs

to improve their lending and outreach to small businesses, and enhance financial literacy of

small businesses. The impact will be improved contribution of small businesses to economic

growth and employment. The outcome will be increased sustainable provision of PFIs’ financing

to small businesses. The PFIs are expected to set examples for other financial institutions on

how to deepen their outreach, while retaining good asset quality and funding private enterprise

activities that generate jobs.

2. The output will be expanded capacity of the PFIs for financing to small businesses. At project

completion, at least 20% of the eligible sub-loans are expected to be made to women-owned

small businesses, and at least 60% of the eligible sub-loans are expected to be made to rural

small businesses outside the capital. The capacity development TA will complement this output

by focusing on measures for strengthening PFIs’ credit underwriting policies and procedures,

developing a credit scoring system as well as financial literacy training to small businesses. The

output will also include an established environmental and social management system (ESMS)

embedded in each PFI’s operations for adequate management of environmental and social

issues in compliance with the ADB’s Safeguard Policy Statement (2009) and national laws and

regulations.

1.2. Summary of activities and project progress during the previous 10 months.

3. In the course of project implementation, 42 subprojects were financed within 10 months. All

subprojects underwent preliminary environmental screening by the PFIs strictly following the

Environmental and Social Management System (ESMS) procedures of which all 42 projects are

classified as "B". Summary table of activities and project progress during the reporting period is

given in the Table 1.

4. For each sub-project, a State Environmental Expertise (SEE) was carried out on the basis of

a draft EIS (Environmental Impact Statement) and obtained approvals (Environmental

Conclusions) of the State Committee for Ecology and Environmental Protection. Control over

observance of the requirements of environmental legislation at the enterprises of each sub-

project is assigned to the regional department for ecology and environmental protection

(depending on which region and district the particular subproject belongs to).

3

5. Monitoring and reporting of the implementation of safeguards requirements and procedures within the established ESMS will be implemented and reports prepared by PFIs. The PFIs’ quarterly progress reports will include status of compliance with safeguards covenants. The PFIs will submit to MOF (the EA) annual ES performance reports (Attachment 11: Outline of an Environmental and Social Performance report) by the end of January every year. Based on the PFIs’ annual reports, TA Consultant - IESMS Environmental and Social Management System Specialist will submit to ADB Annual Safeguard Monitoring Report (Attachment 13: Annual Safeguard Monitoring Report) by mid-March of the following calendar year.

Table 1: Summary of activities and project progress during 10 months

PFIs ESMS approval

date

Number of sub-loans by environmental

categories

Sub-loan amount

(million USD $

B C Total 1 JSICB “Ipak Yuli” 24.05.2017

21 - 21 4.90

2 PJSCB “DAVR BANK” 15.05.2017

7 - 7 1,59

3 JSCB “Hamkorbank” 29.05.2017

14 - 14 3.01

4 JSC “Uzbek Leasing International A.O.”

12.05. 2017

- - - -

Total: 42 - 42 9.5

6. Most of the 42 subprojects financed within the Small Business Financed Project, including 18 subprojects (42%) belong to the textile production, which is one of the strategic directions of the economy of Uzbekistan. There is also a demand for financing of construction materials (14%) and food production (14%). Detailed information on the quantity of the total portfolio by sectors under Small Business Finance Project is given in table 2 below.

Table 2: Quantity of the total portfolio by sectors under Small Business Finance Project

# PFI Number of Subprojects Total

Text

ile

Pro

duct

ion

of

const

ruct

ion

mate

rials

Food

and

beve

rages

Road

Const

ruct

ion

Agricu

lture

Chem

ical

indust

ry

Printin

g

and

publis

hin

g

Whole

sale

tr

ade

tourism

Pharm

ace

utic

al i

ndust

ry

1 JSICB “Ipak Yuli”

5 3 4 - 3 1 2 2 - 1 21

2 PJSCB “DAVR BANK”

9 2 1 - - - - 1 1 - 14

3 JSCB “Hamkorbank”

4 1 1 1 - - - - - - 7

4 JSC “Uzbek Leasing International A.O.”

- - - - - - - - - - -

Summary 18 6 6 1 3 1 2 3 1 1 42 % 42 14 14 2.8 7.1 2.8 4.6 7.1 2.8 2.8 100

1.3 Project organization and environmental management team, including organizational relationships with PFIs, sub-borrowers etc.

7. The Ministry of Finance (MOF) is the executing agency. The MOF is responsible for: (i) Executing subsidiary loan agreements with the PFIs; (ii) Monitoring PFIs’ performance and compliance with project agreements against design and monitoring framework; (DMF) targets; (iii) Ensuring timely disbursement of ADB loan funds to PFIs; (iv) Submitting project completion report to ADB within 6 months from project closing date.

8. Participating financial institutions (PFIs) - Hamkorbank, Ipak Yuli Bank, Davr Bank, and Uzbek Leasing International A.O., acting as implementing agencies (IA) to carry out the project in accordance with the loan and project agreements of the government of Uzbekistan.

9. In each PFI established a project implementation unit (PIU) under its existing structure to oversee the implementation of the credit line activities at the respective PFI. The project organization chart is given in Figure 1.

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Figure 1: Project Organization Chart

Note: ADB = Asian Development Bank; MOF = Ministry of Finance; PFI = participating financial institution;

PIU = project implementation unit

10. A PFI is responsible for: (i) Carry out credit origination and monitoring of eligible sub- borrowers in line with sound banking principles; (ii) Select subloans up to $300,000 in accordance with eligibility criteria set out in the project agreements; Monitor business outreach targets as agreed in the project agreements; (iii) Establish environmental and social management systems and ensure that subborrowers comply with ADB's Safeguard Policy Statement (SPS) and applicable environmental, health and safety and social laws and regulations of the Republic of Uzbekistan (iv) Manage financial reporting, accounting, and auditing of project-related activities; (v) Designate dedicated staff for project implementation unit; (vi)Implement Gender Action Plan (GAP); (vi) Submit to ADB annual audited financial statements that include an audit management letter and an audit opinion on the use of loan proceeds, and the statement of the imprest account; (vii) Submit to ADB quarterly progress reports using the format in Appendix 1 within 30 days from the end of each quarter, and respond to other information requests; (viii) Submit to ADB annual safeguards monitoring report in February each year.

PART II – ENVIRONMENTAL ISSUES

2.1. Environmental issues in the previous 10 months

11. During the project implementation period, within 10 months, PFIs did not face to significant

environmental problems for each sub-project.

12. On 6th November 2017, under the TA-9128 UZB: Strengthening Participating Financial Institutions an IESMS Environmental and Social Management System Specialist was hired under the project for 5 months, his responsibilities are the following: (i) assess PFIs' existing

environmental and social management system (ESMS) policies and how they are applied;(ii)

identify the gap between PFIs ESMS and ADB's SPS and Uzbek laws and regulations;(iii)

advise PFIs on the due diligence and mitigating measures required for sub-loans classified as category B for environment in line with the Safeguard Policy Statement and national regulations; (iv) review PFIs' annual environmental and social performance reports prior to submission to ADB, and consolidate PFIs' environmental and social performance reports into a safeguard

monitoring report for submission to ADB and the Ministry of Finance; and(v) regularly conduct

environmental audits for high-risk subprojects or any other subprojects, as needed; and (vi) conduct ESMS training for PFIs at least twice a year, and periodically report to, and address issues raised by, ADB. 13. On November the 23-24th of 2017, in Tashkent, under the financing of the Asian Development Bank, a 2-day-long training/workshop was held and was attended by all PFI representatives. The meeting considered all the issues regarding the screening and financing all sub-projects within the scope of the given project, as well as project implementation and monitoring issues.

14. With the project categorization aim, on November the 25-26th of 2017, TA Consultant -

IESMS Environmental and Social Management System Specialist hired within the scope of the

project by the ADB, together with the Environmental Specialists of Uzbek Leasing Bank, held

site visits for three sub-projects. During the visits, the Uzbek Leasing Bank representatives were

explained the main approaches to be used by them at the stage of screening and project

categorization.

15. During the site visits the following findings have been observed: quite often, the Safety Specialists of the PFIs assign the environmental categories without any analysis. These specialists mostly mechanically rely on the category assigned by „Uzbekgospriroda”. As a result of such an approach, quite often, the projects were given the categories higher than they really belonged to, in particular:

• JSICB “Ipak Yuli” simply assigned all sub-projects (21 sub-projects in total) category “B” in respect of resettlement despite the fact that no resettlement element was seen with any of the projects and all projects belonged to category “C” in respect of resettlement;

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• In the field of environmental protection, most of the PFIs directly use the category assigned by Uzbekgospriroda to the sub-projects, what does not reflect the reality either, as with the funds required from ADB, a company usually plans to finance only one stage of the production process, while Uzbekgospriroda has assigned the environmental category to the whole production cycle of the company.

2.2. Explanations of instances in which environmental standards or guidelines were exceeded or environmental incidents happened

18. No similar cases were fixed within the scope of any project in 2017.

2.3. Required recommendations

19. Based on the examples described in the chapter 2.1, the PFI ESMS Managers and specialists should be provided with additional trainings, where the project environmental and social categorization requirements will be discussed along other issues related to the project. 20. As mentioned above, 42 subprojects have been already financed within the scope of the Project. None of the PFIs have been started the monitoring of sub-projects yet. It is recommended to undertake on-job trainings during the site visits for PFIs for better understanding environmental and social monitoring and inspection requirements of ADB.

PART III: COMPLIANCE WITH ADB’s SOCIAL PROTECTION REQUIREMENTS AND ADB’s PROHIBITED INVESTMENT ACTIVITIES LIST

3.1. Provide aassessment on these two sets of requirements 21. During of the project implementation, PFI specialists conducted a preliminary analysis (screening) of each sub-project with respect to social safeguard and environmental measures. Prior to approval, subprojects were screened according to the prepared questionnaires. 22. All sub-projects that are financed under the Small Business Finance Project after social screening are belong to "C" category sub-projects. Within the scope of all sub-projects, additional equipment will be purchased for expanding the existing business and installing on their own territory.

23. During the social screening carried out by the PJSCB “DAVR BANK” and JSCB “Hamkorbank” for all subprojects, ADB's social protection requirements were met. Both PFIs assigned all sub-projects category “C” during social screening. According to the list of prohibited types of investment activities, a preliminary screenings of environmental and social measures were carried out.

24. The exception is the screening procedure conducted by JSICB "Ipak Yuli" specialist during social screening.

25. As the PFI reports evidence, the JSICB “Ipak Yuli” specialists identify the categories of the project in an incorrect manner in respect of involuntary resettlement. All 21 sub-projects already financed by the ADB are assigned category “B” by the PFI specialists. At the same time, no “Resettlement Action Plan” required for category “B” was developed within the scope of any project. After considering several sub-projects, it became clear that in the view of involuntary resettlement, they belong to category „C“.

3.2. A brief description of the taken measures

26. All requirements are implemented based on the ESMS documents. Implementation of

corrective actions were not required during this reporting period.

3.3. Provide summary of actions taken to ensure compliance or corrective actions taken in case of non-compliance

27. There are no non-compliances fixed at this stage.

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PART IV: ESMS OPERATIONS (for PFIs which are financing B-category sub-projects)

4.1. A brief description of the effectiveness of the ESMS within 10 months

28. According to paragraph B. “Disbursement” of Project Administration Manual (PAM) for Small Business Finance Project, dated June 2016, no withdrawal shall be made under the project for any PFI until such time as the PFI has: (a) established an ESMS in a manner satisfactory to ADB, which includes without limitation, (i) third party monitoring mechanism for sub-loans; (ii) guidelines for site visits of qualified subprojects; (iii) a tracking system of qualified subprojects; and (b) appointed designated staff who is capable and adequately trained in fully implementing the ESMS.

29. In this regard all PFIs have established ESMS (see table 1) and designated ESMS managers and coordinators. However, due to turnover of staff of PFIs, it is needed to conduct training for credit specialists of PFIs, who are reviewing ADB sub-loans. On 23-24rd November of 2017, within the scope of the project, in Tashkent, under the financing of the Asian Development Bank, a 2-day-long training/workshop was held and was attended by all PFI representatives. 30. According to paragraph C. “Monitoring and Reporting” of Project Administration Manual (PAM) for Small Business Finance Project, the PFIs are requested to submit to the ADB annual ES performance reports (Appendix 6 of ESMS linked document) by the end of March of every year. The submission dates of Annual ES Performance Reports for this reporting period of each PFI are given in the Table 3 below.

Table 3. Submission dates of Annual ESPRs

PFI Report Date of submission PJSCB “Davr Bank” Annual ES performance report 16.03.2018 JSC “Uzbek Leasing International A.O.”

Annual ES performance report 13.03.2018

JSICB “Ipak Yuli” Annual ES performance report 22.03.2018 JSCB “Hamkorbank” Annual ES performance report 28.03.2018

32. All sub-projects financed within the scope of the Small Business Finance Project underwent the following phases prior to financing:

• Screening, categorization, and review procedures: In 2017, total of 42 projects were approved within the scope of the project. The screenings are undertaken and relevant documents are prepared within the scope of all

projects. Submitted proposals have been screened against ADB’s “Prohibited Investment Activities List (PIAL)” and against Ineligible Loans as Regulated by the

Central Bank of Uzbekistan. PFI’s environmental and social managers completed the environmental and social screening checklists and identified the project category both, in social and environmental respects. In case the project was assigned environmental category “B”, environmental due diligence report was prepared by a credit officer based on the expert’s conclusion issued by Uzbekgospriroda. See Annex 1 for the detailed information about the project categorization.

• Monitoring and reporting systems:

In 2017, no environmental monitoring or inspection was held for any of the projects.

• Organizational structure and staffing including skills and competencies in environmental and social fields

The Ministry of Finance (MOF) is the executing agency. Participating financial institutions (PFIs) - Hamkorbank, Ipak Yuli Bank, Davr Bank, and Uzbek Leasing International A.O., acting as implementing agencies (IA) to carry out the project in accordance with the loan and project agreements of the government of Uzbekistan. In each PFI established a project implementation unit (PIU) under its existing structure to oversee the implementation of the credit line activities at the respective PFI.

• Capacity building and training plan Action plan for capacity building of PFIs in 2018 includes: (i) Improvement of the understanding of ADB environmental and social requirements; (ii) improvement of Environmental screening and categorization process; and (iii) Conducting environmental and social safeguards monitoring and inspection and preparing monitoring reports. As it was mentioned above, PFIs should start monitoring and inspections from 2018 and accordingly it is necessary to provide on-the-job trainings for PFI staff who are involved in this process.

The detailed schedule of trainings to be conducted in 2018 is presented in Table 4.

33. All 42 projects financed within the scope of the Project were subject to the above-listed stages.

4.2 Site inspections and audits – to summarize the number and type of site visits

34. No inspections or audits of any of the sites were held in 2017.

4.3 Noncompliance case – to summarize the details, including the number of notices given out by the PFIs or by the local government to the sub-borrowers, how and how many issues covered.

35. There were no non-compliances fixed in 2017.

4.4 Corrective action plans – to report on timeliness of preparation and completion

36. No corrective action plans were required.

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4.5 Consultation and complaints – to report on any consultations undertaken and list any complaints received and how they were handled or resolved.

37. GRM system was established under each PFI. The PFI offices of all four banks and their regional branches designated the receivers of complaints from people affected by the project/sub-projects. Complaints received by the headquarters offices first refer back to the appropriate FI branch office. All complaints are addressed first by the FI branch office in coordination with local khokimiyat. 38 .The FI branch offices/regional offices also monitor whether any complaints or resolutions have been received by the local khokimiyat. The grievance is addressed in accordance with the merits of the case and relevant legislation. A response to any complaint or inquiry should be provided within 15 calendar days after receipt. 39. In case if the branch office is unable to resolve the complaint, the ESMS Coordinator, in coordination with regional khokimiyat, should be responsible to resolve the problem and to inform the EA/PMU of any unresolved problems.

40. The PFI’s ESMS coordinator is responsible for coordinating actions to resolve complaints and follow up on activities as part of resolving the complaints, for recording all complaints, for forwarding them to appropriate staff for resolution; the status of resolution of complaints received, and for preparing a summary of the complaints received to be included in PFI’s annual report.

41. During this reporting period no complaints were received.

PART V: CONCLUSION AND ACTION PLAN

5.1 Conclusions

42. Despite the fact that some sub-projects are financed, none of the PFIs have started the environmental monitoring or inspection. 43. The PFIs work with inaccuracy at the stage of the project categorization (See chapter 2.1);

44. The lack of qualified personnel is seen at large PFIs in the first instance.

5.2 Summary of actions taken during the previous reporting period

45. In 2017, the implementation of the sub-projects did not enter an active phase. 41 out of the 42 approved subprojects have been financed, and the finances for the last remained sub-project will be transferred in January of 2018. The total funds of all subprojects amounted to 10 million making 10% of the credit allocated within the scope of the project. 46. On 23-24rd November of 2017, within the scope of the project, in Tashkent, under the financing of the Asian Development Bank, a 2-day-long training/workshop was held and was attended by all PFI representatives. The meeting considered all the issues regarding the screening and financing all sub-projects within the scope of the given project, as well as project implementation and monitoring issues.

47. With the project categorization aim, on 25-26th November of 2017, the TA Consultant hired by ADB, together with the Environmental Specialists of Uzbek Leasing Bank, held site visits for three sub-projects. During the site visits, the PFI representatives were explained the main approaches to use by them at the stage of screening/identifying the project category.

5.3 Action plan for the next reporting period

48. In 2018, the PFIs will implement their activities in two main directions: (i) the process of screening of the subproject proposals will continue and (ii) the social and environmental monitoring and inspection of the financed subprojects will be done. 49. In order to implement abovementioned activities, each PFI must have the duly qualified staff. An environmental specialist hired by the PMO should help monitor PFIs’ training, also providing assistance to PFIs in the implementation of ESMS, including the preparation of Annual Environmental and Social (ES) performance reports of the PFIs and ensure on-time compilation of the annual report on ESMS. If necessary, provide assistance to PFIs and beneficiaries of environmental and social issues.

50. The table 4 below shows the action plans of the PFIs in 2018.

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Table 4: Action plan for PFIs for the next reporting period

PFIs Issues Actions required Responsibility Time

JSICB «Ipak Yuli»

Improvement of the understanding of ADB environmental and social requirements

ESMS trainings

TA Consultant - IESMS Specialist/PFI safeguards manager

Q1, 2018

Environmental screening and categorization process

1. PIAL checklist; 2. Environmental screening checklist; 3. Social Safeguard Screening Checklist; 4. IEE report (follow Governments requirements); 5. Due diligence

PFI safeguards manager/sub-borrower

After receiving the new sub-project

Changes of responsible staff under PFI

ESMS trainings for new staff

PFI safeguards manager

Upon request

Monitoring and Inspection

Monitoring projects implementation and commissioning process

Sub-borrower/PFI

sub-borrower – permanently; PFI – Minimum once per 6 months.

Reporting 1. Project performance monitoring; 2. Preparation of Environmental and Social Safeguards Quarterly Reports; 3. Annual Environmental and Social Performance Reports of the PFIs

Sub-borrower/PFI

1. quarterly 2. quarterly 3. by the end of March of every year.

JSCB «Hamkorbank»


ESMS trainings


Q1, 2018








Upon request



Sub-borrower/PFI



Sub-borrower/PFI


PJSCB “DAVR BANK


ESMS trainings


Q1, 2018








Upon request



Sub-borrower/PFI


Reporting 1. Project performance monitoring; 2. Preparation of Environmental and Social Safeguards Quarterly Reports; 3. Annual Environmental and Social Performance

Sub-borrower/PFI


15

Reports of the PFIs

“UzbekLeasing International A.O.”, JSC “


ESMS trainings


Q1, 2018








Upon request



Sub-borrower/PFI



Sub-borrower/PFI


ANNEXES

Annex 1: Consolidated annual reports by PFIs

51. As it can be observed from the reports presented by the PFIs, the engagement of the small businesses in the project is quite significant. The project clearly promotes the development of traditional industrial branches in the country. Most of the presented project proposals are about the light industry.

52. It took too long PFIs to develop the reports, and we think it is the lack of their experience to blame. As already mentioned, the large banks/PFIs with their branches all over the country, clearly lack duly qualified personnel.

53. Thus, compliance with the policies and procedures of the ESMS will lead to long-term of economic and environmental sustainability and increased profitability for SME representatives.

Table 3: Information on all loans

Name of Sub-project

Type of

loan (large

corporate/

SME/trade

finance)

Tenor

of loan

(mont

hs)

Value

of

exposu

r e

(thousa

nd US$)

Industry

Sector

Safeguard

category

Any

outstan

ding

environ

mental

and IR

and IP

issues

during

reporting

period

and

actions

taken to

address

the

issues

Sub-

project

using ADB

funds

(yes/no)

ENV IR IP

JSCB «Hamkorbank»

LLC “Rolling Time” SME 70 Food and beverages

B C N/A No Yes

LLC “Luxury Furniture

Business”

SME 300 Textile B C N/A No Yes

3

LLC “Juita Gulshana Invest”

SME 300 Textile B C N/A No Yes

LLC “Azalea Garment” SME 154,39 Textile B C N/A No Yes

LLC “Sino Industrial Tashkent”

SME 300 Road Constructio

n

B C N/A No Yes

LLC “Macro Production” SME 300 Production of

construction materials

B C N/A No Yes

LLC “Bek Mega Textile” SME 170,5 Textile B C N/A No Yes

JSICB “Ipak Yuli”

МЧЖ"J-UNITED GROUP"

SME 23,13

300

Auxilary business activities service

B C n/a No Yes

ХУЖАОБОД FAYZ-M ХУСУСИЙ КОРХОНАСИ

SME 39,23 298,73 Textile B C n/a No Yes


SME 47,87 143 Textile B C n/a No Yes

АЛ-KHАКIM SME 40,63 299 Apparel B C n/a No Yes

OOO"GLOBAL STEEL" SME 30,37 300

Wholesale trade

B C n/a No Yes

ООО "GREEN TRADE EXPORT"

SME 27,70 220

Wholesale trade

B C n/a No Yes

MChJ "JURABEK LABORATORIES" QK

SME 32,53 150

Pharmaceutical

industry

B C n/a No Yes

OOO "SOFIYUN TORG" SME 60,47 150

Consumer goods

B C n/a No Yes

MChJ "SILVER VITA" SME 24,30 300

Food industry

B C n/a No Yes

"ARGUMENTI I FAKTI UZBEKISTAN" ООО

SME 24,30 300

Publishing company

B C n/a No Yes

OXALIK OLTIN BOGI MEVASI MCHJ

SME 81,70 295

Food industry

B C n/a No Yes

OOO "GLOBAL TRADE" SME 31,90 220

Non-metal mineral industry

B C n/a No Yes

POLIFLEKS MChJ SME 31,90 210

Printing and

publishing

B C n/a No Yes

ООО "O`ZJIHOZBUTLASH"

SME 31,90 132

Metal product

B C n/a No Yes

manufacturing

"ARK EKO TEKSTIL" МЧЖ ХК

SME 48,67 250 Textile B C n/a No Yes

ООО "TTMZ" SME 31,90 300 Textile B C n/a No Yes

MCHJ "ASIAN INTER IMPEX"

SME 31,90 300

Chemical industry

B C n/a No Yes

МЧЖ "INTER AGRO STAR"

SME 51,17 299,3 Agriculture B C n/a No Yes

"O'' ''ZBEKISTON" MCHJ SME 58,83 200 Agriculture B C n/a No Yes

MUSHTARI-OQDARYO MCHJ

SME 63,33 78 Agriculture B C n/a No Yes

MCHJ "TOXIR" SME 32,97 150

Food industry

B C n/a No Yes

“UzbekLeasing International A.O.”, JSC

None of the projects was financed by the said bank in 2017.

PJSCB «DAVR BANK»

"GLORY FOOD" LTD

SME

60

145.5

confectionery

B

C

no

Yes

"Xo'jaobod Fazo" LTD

SME

18

250

Knitting factory

B

C

no

Yes

"XAIT TEKS INVEST" LTD

SME

12

150

Cotton industry

B

C

no

Yes

AL'YORTEKS LTD

SME

48

300

Cotton industry

B

C

no

Yes

"COTTON GRAND TEXTILE" LTD

SME

18

295.37

Cotton industry

B

C

no

Yes

"BARAKA HAMKOR LUX " LTD

SME

18

100

Trade

B

C

no

Yes

"NEW LINE PRODUCTION SHO`RSUV" LTD

Construction industry

5

SME 60 246.5 B C no Yes

“NAMUNA” LTD

SME

36

137.36

Sewing factory

B

C

no

Yes

“Chin Ilhom”

PE

SME

60

263.5

Towels

production

B

C

no

Yes

"GREAT VOYAGE" LTD

SME

36

600

tourism

B

C

no

Yes

"APITEKS" LTD SME 18 210.4 Textile B C no Yes

"YUKSAK QURILISH SAVDO" " LTD

SME

48

300


B

C

no

Yes

"RUZMATJON OTA " LTD

SME

18

250

Textile

B

C

no

Yes

ADM TEKSTIL LTD

SME

24

300

Textile

B

C

no

Yes

Annex 2: PFI’s ANNUAL ENVIRONMENTAL AND SOCIAL PERFORMANCE REPORT from JSCB Hamkorbank

1. Please provide responses to the questions below. Please include additional sheets or

attachments as required to provide details on questions that have been answered Yes. The PFI is required to submit the annual performance report to RRA.

Name of the Financial

Institution

JSCB Hamkorbank

Completed by (name): Avazbek Fazliev

Position in

organization:

Head of sector for environmental assessment and monitoring

Date:01.01.2018

Portfolio Information

Report Covering Period:

From: To:

01.01.2017 01.01.2018

2. For the reporting period, please provide the following information about your portfolio where applicable:

A. Business Lines

Product

line

Description Total exposure

outstanding for

most recent

FY end

(US$)

Average loan

(or transaction)

size

(US$)

Microfinance Loans or other financial products for individuals

3 179 271,55

1725,99

Small Loans or other financial products 1 889 525,66 18 708,17

7

business for individuals

Long term: Transactions with tenor greater than 12 months

Microfinance Any lending, leasing or other financial assistance to any corporate or legal entity other than an individual, with individual transactions less than $50,000

140 282 834,35

5 557,73

Small business

Any lending, leasing or other financial assistance to any corporate or legal entity other than an individual, with individual transactions less than $300,000

46 212 351,96

115 632,61

Other

Other (if applicable)

Please describe

{Note: Please attach environmental and social audit or due diligence reports and environmental and social monitoring reports for each Project Company, if available}

B. If engaged in long-term in Business sector, please provide information on all loans with: (i) tenor longer than 12 months; and (ii) maximum $5000,000 loan size.

Name of

Subpro-ject

Type of loan

SME/trade

finance)

Tenor of loan

(months

)

Value of exposure

(US$)

Industry

Sector*

Safeguard category

Any outstanding environmental and IR

and IP issues during

reporting period and

actions taken to

address the issues

Subpro-ject using ADB funds

(yes/no)

Env IR IP

"GLORY FOOD" LTD

SME

60

145509,00

confectionery

B

C

no

Yes

"Xo'jaobod Fazo" LTD

SME

18

250000,00

Knitting factory

B

C

no

Yes

"XAIT TEKS INVEST" LTD

SME

12

150000,00

Cotton industry

B

C

no

Yes

AL'YORTEKS LTD

SME

48

300000,00

Cotton industry

B

C

no

Yes

"COTTON GRAND TEXTILE" LTD

SME

18

295370,00

Cotton industry

B

C

no

Yes

"BARAKA HAMKOR LUX " LTD

SME

18

100000,00

Trade

B

C

no

Yes

"NEW LINE PRODUCTION SHO`RSUV" LTD

SME

60

246500,00


B

C

no

Yes

9

“NAMUNA” LTD

SME

36

137360,00

Sewing factory

B

C

no

Yes

“Chin Ilhom”

PE

SME

60

263500,00

Towels production

B

C

no

Yes

"GREAT VOYAGE" LTD

SME

36

60000,00

tourism

B

C

no

Yes

"APITEKS" LTD

SME

18

210401,00

Textile

B

C

no

Yes

"YUKSAK QURILISH SAVDO" " LTD

SME

48

300000,00


B

C

no

Yes

"RUZMATJON OTA " LTD

SME

18

250000,00

Textile

B

C

no

Yes

ADM TEKSTIL LTD

SME

24

300000,00

Textile

B

C

no

Yes

*Please use the sectors listed in the earlier table or any standard classification. Note: Env = Environment, IR = Involuntary Resettlement, IP = Indigenous Peoples.

C. Environmental and Social Management System (ESMS) D. Requirement: (1) for existing subprojects: attachments of monitoring reports or

report on discharge permits; and

(2) FOR NEWLY APPROVED SUBPROJECTS: ATTACHMENTS OF ZVOS APPROVAL. Policies & Processes Yes/No

Has your organization developed and If yes, please attach a copy of the

implemented an ESMS? Yes ESMS to this report.

If there is an ESMS already in place, have there been any updates to the ESMS or policy and procedures adopted by your organization during the reporting period?

Yes

If yes, please provide a copy of the updates including dates and reasons for the same.

Has senior management signed off on the updated policy/procedure?

Yes

If yes, please provide the date and internal communication indicating the same.

Has your organization appointed staff tasked to implement the ESMS?

Yes

Coordinator for compliance with environmental regulations – A.Fazliev - Head of sector for environmental assessment and monitoring. He has 15 years experience in banking and MSME finance, bachelor’s degree.

Please give details of any transactions rejected due to environmental and/or social concerns.

No

Please state any difficulties and/or constraints related to the implementation of the ESMS.

Yes

Obtaining a statement of environmental impact on some projects for new customers. Sometimes, it is necessary to wait for up to 30 days to receive the statement of environmental impact

Please describe how you ensure that your subproject companies and their subprojects are operated in compliance with the national laws and regulations and applicable ADB’s requirements.

Yes

We request the conclusion of local environmental expertise. Conduct monitoring and in case violations are identified loan is suspended. Precautionary measures are undertaken, which are described in the contract.

Please give details of any material social and environmental issues associated with clients during the reporting period.

No

In case the existing ESMS is not fully functional, what is the action plan being

Please provide information or cite recommendations made by ADB’s review mission to improve the

11

implemented by your organization? - ESMS and its implementation. (We have fully functional ESMS)

Capacity Yes/No Please provide the name and contact information of the Environmental/Social Officer or Coordinator who has the overall responsibility for the implementation of the ESMS.

Yes

Coordinator for compliance with environmental regulations – A.Fazliev - Head of sector for environmental assessment and monitoring. Uzbekistan, 170119 Andijan, 85 Babur st. tel: +998 74 2980043 (1125) mob: +998 90 2530690 [email protected]

Training:

26-29/07/2017 Green climate found: training for ESMS;



23-24/11/2017 workshop for ESMS from Asian Development Bank.

Please provide current staffing of other core ESMS persons in the organization involved with ESMS implementation.

yes

All front and Back office staff was trained on-site in the branches to comply with environmental policies. Head of front office is the focal point for the environment compliance at branches

What was the budget allocated to the ESMS and its implementation during the year?

No

In our Bank the budget for the training not allocated. Trainings are organized as per reports and as per plan of study

Monitoring Yes/No Do you receive environmental and social monitoring reports from subproject companies that you finance?

No

If yes, please describe and provide supporting documents including any social and environmental considerations if applicable.

Do you check for ongoing compliance of your subproject companies with national regulation and any other requirements?

Yes

We check our clients in compliance with national regulation and chek their activity according to our ESMS

policy

Please describe how you monitor the subproject company and their subproject’s social and environmental performance.

Yes

After the loan’s disbursement we monitor the activities of clients once every 6 or 12 months according to our ESMS policy

Do you require the subproject owner to submit to you evidence of compliance with required environmental and social approvals and permits for the subprojects.

No

If yes, please describe how these are recorded as part subproject monitoring reports.

Please provide details of any accidents/ litigation/complaints/regulatory notices and fines:

- Any incidents of non-compliance with the applicable Environmental and Social Requirements

- Covenants/conditionalities imposed

by the Financial Institution to the subproject company as a result of any non-compliance

No

Reporting Yes/No Is there an internal process to report on social and environmental issues to senior management?

Yes

Report is provided monthly for mamagement:

1. The report of the monitoring in the branches

2. The report of the managar’s conclusions for financial projects

Do you prepare any social and environmental reports:

- For other multilateral agencies

- Other stakeholders

- E&S reporting in the Report

Sustainability reports

Yes

If yes, please provide copies of these reports.

Activities on ADB’s Prohibited Investment Activities List

13

If any, please indicate the dollar percentage of loans or investments out of your total outstanding exposure provided to clients who are substantially involved in ADB’s Prohibited Investment Activities List (Refer to page 122 of SPS).

0,54%

(production of or trade in alcoholic beverages)

If the percentage is not zero, please explain these exposures and any steps that have been taken to reduce such exposure.

We have an agreement with IFC to have up to 1% of the total credit portfolio for the production or trade in alcoholic beverages

exceeding

A. Category “B” Subprojects Using ADB Funds E. Please provide information about all new subprojects using ADB loan funding

approved during this reporting period.

Name of Subproject Company: "GLORY FOOD" LTD

Subproject location: Tashkent region, Uchtepa district, Farhod street 10

Industry sector: confectionery

Value of exposure (US$ ): 145509,00

Was any environmental and social due diligence undertaken by your organization?

We check our clients in compliance with national regulation and chek their activity according to our ESMS policy

Any environmental assessment report or audit reports reviewed by your organization?

Yes

What were the main environmental issues associated with this subproject that were identified through due diligence conducted by your organization, and how were the issues dealt with (i.e., outcome of due diligence)?

We check our clients in compliance with national regulation and chek their activity according to our ESMS policy (in ESMS policy in more detail described process analysis of clients)

Did you discuss with the subproject owner the applicable environmental and social safeguard requirements and their implementation?

Yes, we discuss with the owner all our check questions.

Does the subproject comply with applicable government requirements?

Yes

Does the subproject comply with applicable ADB safeguard requirements?

Yes

Have there been any recorded incidents of non-compliance or requests for corrective actions?

No

Have there been any grievances or complaints lodged on the subproject by any affected person or concerned stakeholder?

No

Name of Subproject Company: "Xo'jaobod Fazo" LTD

Subproject location: Andijan region, Hodjaabad district, Laylak street 3

Industry sector: Textile

Value of exposure (US$ ): 250000,00




Yes






Yes


Yes

Have there been any recorded incidents of non-compliance or requests for corrective

No

15

actions?


No

Name of Subproject Company: "XAIT TEKS INVEST" LTD

Subproject location: Andijan region, Shakhrikhan district, Buvayda MFY

Industry sector: Cotton industry

Value of exposure (US$ ): 150 000,00




Yes






Yes


Yes


No

Have there been any grievances or complaints lodged on the subproject by any affected

No

person or concerned stakeholder?

Name of Subproject Company: AL'YORTEKS LTD

Subproject location: Andijan region, Jalalkuduk district, Yorkishlok MFY






Yes






Yes


Yes


No


No

Name of Subproject Company: "COTTON GRAND TEXTILE" LTD

17

Subproject location: Andijan region, Shakhrikhan district, Uzbekistan KFY






Yes






Yes


Yes


No


No

Name of Subproject Company: "BARAKA HAMKOR LUX " LTD

Subproject location: Andijan region, Andijan city, Boburshokh street 21b

Industry sector: Trade





Yes






Yes


Yes


No


No

Name of Subproject Company: "NEW LINE PRODUCTION SHO`RSUV" LTD

Subproject location: Ferghana region, Uzbekistan district, Shursuv street 175

Industry sector: Construction industry




19


Yes






Yes


Yes


No


No

Name of Subproject Company: “NAMUNA” LTD

Subproject location: Andijan region, Andijan city, Sarkiy street 89

Industry sector: Sewing factory





Yes






Yes


Yes


No


No

Name of Subproject Company: “Chin Ilhom” PE

Subproject location: Andijan region, Balikchi district, Hujaobod city, Kahramon KFY 21

Industry sector: Towels production





Yes

What were the main environmental issues associated with this subproject that were identified through due diligence conducted by your organization, and how were the issues

We check our clients in compliance with national regulation and chek their activity according to our ESMS policy (in ESMS policy in more detail described process

21

dealt with (i.e., outcome of due diligence)? analysis of clients)




Yes


Yes


No


No

Name of Subproject Company: "GREAT VOYAGE" LTD

Subproject location: Tashkent city, Yakkasaroy district, U.Nosir street 12

Industry sector: Tourism





Yes



Did you discuss with the subproject owner the Yes, we discuss with the owner all our

applicable environmental and social safeguard requirements and their implementation?

check questions.


Yes


Yes


No


No

Name of Subproject Company: "APITEKS" LTD

Subproject location: Tashkent city, Yakkasaroy district, Beshchinor street 2






Yes






Yes

23


Yes


No


No

Name of Subproject Company: "YUKSAK QURILISH SAVDO" " LTD

Subproject location: Andijan region, Shakhrikhan district, Pakhtaobod KFY, Metar street 1

Industry sector: Construction





Yes






Yes


Yes


No


No

Name of Subproject Company: "RUZMATJON OTA " LTD

Subproject location: Ferghana region, Furqat district, Shoyimbek city






Yes






Yes


Yes


No


No

Name of Subproject Company: ADM TEKSTIL LTD

25

Subproject location: Tashkent city, Yashnaobod district, Jarqurgon street 39






Yes






Yes


Yes


No


No

Annex 3: PFI’s ANNUAL ENVIRONMENTAL AND SOCIAL PERFORMANCE REPORT from JSC “Uzbek Leasing International A.O.”

Name of Organization JSC “Uzbek Leasing International A.O.” Completed by (name): Mukhrimov Davlat (ESMS manager) Position in organisation: Senior specialist of

Finance & Administration Department

Date: January 10, 2018

A. Portfolio Information Report covering period: From: January 2017 To: December 2017 Number of Leases approved during the period:

91

Amount US$ 18.49 mln B. For the reporting period, please provide the following information about your portfolio where applicable:

SECTORS:*

(Please complete) Number of leases for

the period Average lease

amount this period Percent of total lease amount for the period

Food Industry

Construction, construction materials

Chemical

Printing

Pulp and paper production

Transport

Mining

3

Trade

Poultry

Business and other services

Agriculture

Textile

TOTAL

* e.g.: automobiles, construction equipment, manufacturing equipment, etc. Please provide information on top 10 leases in your portfolio:

Company/ Project name

Type of lease Tenor of lease

(months)

Value of exposure (US$ mn)

Industry Sector1

Any environmental and social risks and measures taken to mitigate the risks*

*Please attach E&S due diligence reports with the E&S monitoring and ESAP

verification/updates, where available, for those leases. Please provide details on any leases in textile and agri-sectors currently in portfolio:

Client Description of main business/activity

Exposure, USD

Tenor of lease (date of signing – date of ending)

Share in total portfolio

Main E&S and labor impacts identified and mitigation measures proposed*

1 Please use any standard classification or the sectors listed in the earlier table

TOTAL * Please attached E&S due diligence reports for those clients performed according to Appendices 8 and 9 of your ESMS policy. C. Environmental & Social Management System (ESMS)

Processes Yes/No Details and comments Has your organization developed and implemented an ESMS?

Yes The Environmental and Social Management Policy of Uzbek Leasing International A.O. was approved by the Board of Directors and states that: The objectives of the environmental and social management system are: i) To avoid, and when avoidance is not possible, to minimize and mitigate or offset adverse impacts of subprojects on the environment and affected people; and ii) To maximize opportunities for environmental and social benefits.

Were any transactions rejected on account of the ULI’S Exclusion List?

No If yes, please provide details.

Were there any transactions categorized as cat A (category 1-2) reviewed with the application of IFC Performance Standards? If so, please separately provide examples of E&S due diligence reports for these projects.

No

Were any transactions rejected due to environmental and/or social concerns?


Were there any difficulties and/or constraints related to the implementation of environmental procedures?


Were there any material environmental and social issues associated with borrowers during the reporting period in particular?


Please attach 3 copies of E&S due diligence reports for leases signed in the reporting period in various sectors

Please find attached files: 1. KOKAND PLUS MEDIKAL

SERVIS 2. DISCOVERY INVEST 3. Q

Capacity Yes/No Details and Comments

5

Please provide the name and contact information of the Environmental Officer or Coordinator who has the overall responsibility for the implementation of ESMS.

Yes Davlat Mukhrimov (ESMS manager) Mob.: +998909896633 e-mail: [email protected] Feruzbek Bannapov (ESMS coordinator) Mob.: +998909983377 e-mail: [email protected] ESMS manager and coordinator are attended training workshop on Promoting Adoption and Implementation of Environmental and Social Management System (ESMS) for Financial Intermediaries (FIs) which was held on 23-24th of November 2017 in Tashkent, Uzbekistan.


Yes Mainly ESMS manager and ESMS cordinator. Regional representatives of ULC, Staff of Credit Department and Monitoring Department will assist ESMS manager and cordinator.


Yes Staff costs and training as well as any actual costs regarding to the ESMS and its implementation during the year was included to the Ordinary Core Business Expenses.

Supervision and monitoring Yes/No Details and comments

Do you supervise the performance of your projects?

Yes

Do you receive non-financial reporting from your clients. If so, please provide examples.

Yes

Do you conduct client site visits? Please attach examples of E&S monitoring reports (with E&S action plan implementation updates)

Yes

Describe how the borrower’s environmental and social performance is monitored (e.g. site visit by bank staff; inspection by environmental/health authorities; copies of updated or renewed permits, reports from the borrower; other (please specify).

Yes

Do borrowers receive visits by local environment and labour regulatory authorities to monitor their environmental and social performance?

Yes If so, please provide details

Reporting Yes/No Details and comments Is there an internal process to report on environmental and social issues to Senior management?

Yes If yes, please explain the process, reporting format and frequency and actions taken if any.

Do you prepare any environmental and social reports: - For other MLAs - Other stakeholders - S&E reporting in the Annual Report - Sustainability reports

Yes If yes, please provide copies of these reports.

Stakeholder engagement Yes/No How many complaints have you received during the reporting period through (1) external and (2) internal communication channels?

Please provide details of those, i.e. how those have been considered, what were the outcomes

Annex 4: PFI’s ANNUAL ENVIRONMENTAL AND SOCIAL PERFORMANCE REPORT from JSICB “Ipak Yuli”

Please provide responses to the questions below. Please include additional sheets or attachments as required to provide details on questions that have been answered Yes. The PFIs are required to submit the performance report to TA consultant.

Name of Organization JSICB “Ipak Yuli”

Completed by (name): T.Mahkamov, ESMS Manager; D.Nurmuhamedova, ESMS coordinator

Date: March 2018

Reporting period From: 01.01.2017 To:31.12.2017

Project No. Loan Number 3405-UZB, Small Business Finance Project

A. Portfolio Information

Report Covering Period: From:01.01.2017 To:31.12.2017

7

For the reporting period, please provide the following information about your portfolio where applicable:

Business Lines Product line Description Total exposure

outstanding for most recent FY year end (in US$)

Average loan or transaction size (in US$)

Retail banking/Consumer loans

Loans and other financial products for individuals (consumer, housing, vehicle loans)

13 032 109 2 923

Loans or other financial products for individuals (individual entrepreneurs)

23 812 248 7 204

Long term: Transactions with tenor greater than 12 months SME Any lending, leasing or other

financial assistance to any corporate or legal entity other than an individual, with individual transactions less than US$ 1 million

104 270 796 37 561

Subproject finance/Large Corporate finance

Any lending, leasing or other financial assistance to any corporate or legal entity other than an individual, with individual transactions larger than US$ 1 million

53 446 206 1 842 972

Trade finance Wholesale and retail trade loans 34 863 439 51 119 Short term (ST): Transaction with tenor less than 12 months

SME Transactions less than US$ 1 million

43 764 862 30 266

ST Corporate finance Transactions larger than US$ 1 million

4 864 849 1 621 616

ST Trade finance Wholesale and retail trade loans 9 405 254 17 384 Other Microfinance Other (if applicable) Please describe

Exposure by Industry Sectors If there is any exposure in the area of SME finance please provide an indicative % of portfolio that these sectors represent of the total SME portfolio.

Industrial Sector % of SME Portfolio

Apparel, fabric mills, integrated textile operation (spinning, weaving/knitting, but no garment ), spinning (yarn, including integrated with fiber poduction), textiles - others 14,0%

Chemicals 2,0%

Collective investment vehicles 0,0%

Construction 4,4%

Consumer goods 2,1%

Crop production 3,5%

Electrical equipment, appliances and components 0,2%

Fabricated metal product manufacturing 1,3%

Finance & insurance 0,7%

Finishing (dyeing, printing, finishing, etc.) 0,0%

Fishing 0,0%

Food & beverages 9,4%

Forestry 0,0%

Furniture and related products 2,1%

Internet subprojects 0,1%

Leather and allied products 0,1% Livestock 1,9%

Machinery and other Industrial 0,0%

Nonmetallic mineral product manufacturing 3,0%

Oil, gas and mining 0,0%

Plastics & rubber 4,4%

Primary metals 0,0%

Printing & publishing 1,5%

Paper 0,2%

9

Telecommunications 1,4%

Transport service, common carriers 2,9%

Transportation equipment 1,1%

Utilities 0,0%

Warehousing & storage 0,1% Wholesale and retail trade covering any of the following: gasoline stations, dry cleaners, printing, large auto and truck fleets, photographic film processing and any operations involving the use of any chemical of biological wastes or materials 2,8%

Wood products 0,2%

Real estate management 4,2% If engaged in long term project finance/corporate finance, please provide information as requested of all loan assets meeting the following conditions: • Longer than 12 months tenor • Larger than US$ 1 million outstanding exposure

Name of Subpro-ject

Type of loan

(large corporat

e/ SME/tra

de finance)

Tenor of

loan (mont

hs)

Value of

exposure

(US$ mn)

Industry Sector*

Safeguard category

Any outstanding environmental and IR and

IP issues during reporti

ng period

and action

s taken

to address the

issues

Subpro-ject using ADB

funds

(yes/no)

Env IR IP

МЧЖ"J-UNITED corporat Auxilary B C n/a No No

GROUP" e 23,13 1,50 business activities service


corporate

39,23

1,37

Textile B C n/a No No


corporate

47,87

1,05


АЛ-ХАКИМ Хусусий корхонаси

corporate

40,63

1,62

Apparel B C n/a No No

OOO"GLOBAL STEEL"

corporate

30,37

1,16

Wholesale trade

B C n/a No No

ООО "GREEN TRADE EXPORT"

corporate

27,70

4,12

Wholesale trade

B C n/a No No

MChJ шаклидаги "JURABEK LABORATORIES" QK

corporate

32,53

1,67

Pharmaceutical industry

B C n/a No No

OOO "SOFIYUN TORG"

corporate

60,47

2,34

Consumer goods

B C n/a No No

MChJ "SILVER VITA"

corporate

24,30

1,40

Food industry

B C n/a No No

"ARGUMENTI I FAKTI UZBEKISTAN" Совместное предприятие в виде ООО

corporate

24,30

1,05

Publishing company

B C n/a No No

OXALIK OLTIN BOGI MEVASI MCHJ

corporate

81,70

1,00

Food industry

B C n/a No No

OOO "GLOBAL TRADE"

corporate

31,90

1,09

Non-metal mineral industry

B C n/a No No

POLIFLEKS MChJ corporate

31,90

2,72

Printing and publishing

B C n/a No No

ООО "O`ZJIHOZBUTLASH"

corporate

31,90

1,05

Metal product manufacturing

B C n/a No No

"ARK EKO TEKSTIL" МЧЖ ХК

corporate

48,67

1,75


ООО "TTMZ" corporate

31,90

1,18


MCHJ "ASIAN INTER IMPEX"

corporate

31,90

1,29

Chemical industry

B C n/a No No

МЧЖ шаклидаги "INTER AGRO

corporate

51,17

1,90

Agriculture B C n/a No No

11

STAR" чорвачилик-наслчилик хужалиги "O''''ZBEKISTON" MCHJ

corporate

58,83

1,62


MUSHTARI-OQDARYO MCHJ

corporate

63,33

1,00


MCHJ "TOXIR" corporate

32,97

1,40

Food industry

B C n/a No No

*Please use the sectors listed in the earlier table or any standard classification or Note: Env=Environment, IR=Involuntary Resettlement, IP=Indigenous Peoples

B. Environmental and Social Management System (ESMS) Policies & Processes Yes/No

Has your organization developed and implemented an ESMS?

Yes On April 15th, 2013, the Bank's Supervisory Council approved the Regulation “On the environmental and social risk management system” of the JSICB "Ipak Yuli". On September 13th, 2016, the Supervisory Council of the Bank approved the Policy “On the environmental and social risks management of JSICB "Ipak Yuli".

According to the above-mentioned documents, all projects considered by the bank for financing must comply with the requirements of ESMS.

If there is an ESMS already in place, have there been any updates to the ESMS or policy and procedures adopted by your organization during the reporting period?

Yes If yes, please provide a copy of the updates including dates and reasons for the same.

In addition to the mentioned in the above paragraph in connection with implementation of the ADB project 3471-UZB: Horticulture Value Chain Development, the Management Board of JSICB "Ipak Yuli" approved the ESMS Procedures for implementation of the said Project on May 24, 2017.

Has senior management signed off on the updated policy/procedure?

Yes If yes, please provide the date and internal communication indicating the same

As indicated in the paragraphs above, the internal documents of the bank on ESMS were approved by the Supervisory Board and the Management Board of the Bank.


Yes IF yes, please provide information on number of staff and qualification (experience and education backgroud) to implment the ESMS.

In order to implement the ESMS, the ESMS Manager

and the ESMS Coordinator were appointed in the Bank's head office. In the branch offices, the heads of lending departments are appointed as regional ESMS managers (15 regional ESMS managers). Also all employees of the Bank's lending divisons are involved in the implementation of ESMS. Loan officers apply procedures for managing environmental and social risks when considering every project financed by the Bank. They ensure compliance with protective measures for environmental and social issues, and if required, ensure the availability of environmental documents for each decision on granting a loan. Moreover, the staff of the Loan Portfolio Monitoring department carry out monitoring on the fulfillment of the ESMS obligations by the borrower after granting loan. All the above-mentioned staff are trained and have knowledge about ESMS procedures of the Bank.

The head of the Risk-Management Department Tursun Makhkamov is the ESMS Manager of the JSICB "Ipak Yuli". T. Makhkamov received Master’s degree in International Economic Relations from the University of World Economy and Diplomacy. He has been working in the banking sector since 2000 and has experience of working in loan division of the Bank, and as head of the branch office of the Bank. At present he is the head of the Risk Management Department of the Bank.

Dinara Nurmukhamedova is ESMS coordinatorof the Bank. D.Nurmuhamedova graduated from the International Law Faculty of the University of World Economy and Diplomacy (Bachelor). She received LLM degree from Kyushu University (Japan). She also graduated from the Tashkent Finance Institute (bachelor degree in accounting and audit). She has been working in the banking sector since 2004 and has experience of working in the legal department, loan department and risk management department of the bank.

Project Implementation Unit

13

In accordance with the Order of the Chairman of the Bank Project Implementation Unit was established in order to implement ESMS for Small Business Finance Project. It consists of: Tursun Mahkamov, ESMS manager; Dinara Nurmukhamedova, ESMS coordinator; Muzaffar Safarov – Head of Project finance department; Shuhrat Mamatov – Head of Division in the Project Finance Department; Ulugbek Tavakallov – Head of Credit Portfolio Monitoring Department; Anvar Samandarov – credit risk leading specialist.

Please give details of any transactions rejected due to environmetnal and/or social concerns.

Yes Some examples from the Bank’s practice when the Bank rejected transactions due to environmental and / or social concerns:

- The client brought a contract for the purchase of slate, but could not provide information about percent of asbestos contained in the slate;

- B category was assigned to the project, however the client did not bring the required documents (state expertise conclusion, etc.);

- the client applied for funding the project of a poultry farm with more than 40 thousand hens.


Yes Sometimes there are difficulties in determining which category of environmental risk the project belongs to.


Yes Financing of projects by the bank (project evaluation, categorization, financing and monitoring) is carried out in accordance with Regulation “On the environmental and social risk management” and Policy “On the environmental and social risks management of JSICB "Ipak Yuli".

According to Order of Chairman the loan officers of the Bank must ensure fulfillment of ESMS requirements set in the Project Agreement (Small business finance) and enternal bank documents.

In particular, the loan officers have been familiarized with ESMS requirements, including ADB’s list of prohibited investments activities, Environmental exclusion Checklist.

Necessary templates for evaluation of environmental and social impact were provided to loan and monitoring specialists.

Environmenal screening checklist filled by a loan officer is checked and affirmed by ESMS mananger (coordinator).

After financing of the project, monitoring specialists conduct monitoring and check weather Environmental management plan is implemented by client.

In order to coordinate and monitor implementation of ESMS requirements, a Project Implementation Unit for Small Business Finance Project was organized in accordance with the Order of the Chairman of the Bank.

In addition, according to the local legislation the divisions of the Committee on Ecology and Environmental Protection monitor compliance with the requirements stated in the State Expert Examination Conclusion by enterprises.

Please give details of any material social and environmental issues associated with clients during the reporting period in particular.

No n/a

In case the existing ESMS is not fully funcional, what are the action plan beining implemented by your organization?

No The existing ESMS is fully functional.

Capacity Yes/No

Please provide the name and contact information of the Environmental and Social Officer or Coordinator who has the overall responsibility for the implementation of ESMS.

Yes Please describe the training or learning activities the Environmental/Social Officer or Coordinator attended during the year.

ESMS training

ESMS Manager – TursunMakhkamov

Tel. No. +998 (71) 140-78-04

Email: [email protected]

ESMS Coordinator – Dinara Nurmukhamedova

15

Tel. No. +998 (71) 140-69-43

Email: [email protected]

She participated and received Certificate at the ADB’ seminar for the implementation of the environmental and social management system for financial intermediaries in Uzbekistan, held on November 23-24, 2017.

She also participated in the following training courses and seminars:

-Training Center of State Committee for Ecology and Environmental protection - 72 hours course on environmental management (Certificate dated 16 February 2018);

- Seminar by ADB consultant Irakli Kavidadze (17 February 2018);

- Seminar of the Agency for Restructuring Rural enterprises on environmental management for commercial banks (Certificate, February 26, 2018)


Yes Please describe the training provided to the ESMS persons and other team members during the year.

Project Implementation Unit

In accordance with the Order of the Chairman of the Bank, Project Implementation Unit was established in order to implement ESMS for Small Business Finance Project. It consists of: Tursun Mahkamov, ESMS Manager; Dinara Nurmukhamedova, ESMS Coordinator; Muzaffar Safarov – Head of Project Finance Department; Shuhrat Mamatov – Head of Division in the Project Finance Department; Ulugbek Tavakallov – Head of Credit Portfolio Monitoring Department; Anvar Samandarov – Credit Risk Leading Specialist.

In order to educate loan and monitoring specialists of the bank, including ESMS officer, in the field of environmental management, the Bank organized

training for 20 specialists of the bank from all branch offices and loan departments of the Head office together with Training Center of the State Committee for Ecology and Environmental Protection during the period of February 12-16, 2018 year. All specialists received certificates confirming upgrade of qualification in environmental management.

Also training was conducted in the Bank for 60 loan and monitoring specialists from all branches of the bank and the Head office on the topic: “Assistance in implementation of ESMS system for financial intermediaries in Uzbekistan, Small Business Finance Project” by ADB Consultant Mr.Irakli Kavidaze on February 17, 2018 in Tashkent.

Besides that, 18 loan and monitoring specialists of the Bank participated in a day-long training conducted by the Agency For Restructuring Rural Enterprises on the topic “Upgrading knowledge and qualification of loan officers working in the commercial banks which implement projects financed by International Finance Organizations” which was conducted during the period from 26 February to 13 March 2018 year.


Yes Please provide budget details including staff costs and training as well as any actual costs.

Salaries of employees involved in the implementation of ESMS. Other costs are payable as required.

Monitoring Yes/No

Do you receive environmental and social monitoring reports from subproject companies that you finance?

Yes After financing of the project, environmental and social issues are monitored according to the provided list of questions (template) which is provided to all monitoring divisions of the Bank. Also, the Bank's monitoring officer checks the implementation of the Environmental Management Plan of the project.


Yes If yes, please describe the process including any

social and environmental considerations if

applicable.

When completing Analysis of the environmental impact of the project and the preparation of the Environmental Management Plan, the requirements for mitigation measures prescribed in the Conclusion of the State Committee on Ecological and

17

Environmental Protection are considered. When monitoring is carried out, implementation of the activities envisaged in the environmental management plan is verified, thus implementation of the national rules and ADB’s standards is checked.

Also, according to the local legislation, the divisions of the Committee on Ecology and Environmental Protection carriy out monitoring on implementation of the requirements, envisioned in the Conclusion of the State Committee on Ecology and Environmental Protection by enterprese.


Yes Please describe and provide supporting documents such as environmental and social monitoring reports and please provide information on the number of subprojects where a field visit was conducted by staff to review aspects including social and environmental issues. Under the ADB loan 3405-UZB: Small business finance project as of 31 December 2017 the Bank provided finance to 20 projects for the total amount of 4.746.071 USD. For some of the sub-projects equipment or raw materials have been already delivered and put into operation.

Accordingly, at present, the bank conducted monitoring on environmental and social impacts for sub-projects where eqipment (raw materials) have been delivered.

After financing was made for the sub-projects, the loan files were transferred from the Investment Project Financing Department (loan department of brach office) to the Loan Monitoring Department (loan monitoring division of the branch). After familiarization with environmental and social protection documents the monitoring specialist during sight visit signed Act of Monitoring of environmental and social impact of the subproject. The monitoring specialist also checked implementation of environmental management plan.

Monitoring of environmental/social issues for the above mentioned sub-projects was conducted after equipment is put into operation or raw materials

delivered.

The frequency of monitoring is not less than once every 6 months.

Please provide details of any accidents/ litigation/complaints/regulatory notices and fines: - Any incidents of non-compliance

with the applicable Environmental and Social Requirements

- Covenants/conditionalities imposed by the Fund Manager to the subproject company as a result of any non-compliance

No n/a

Reporting Yes/No

Is there an internal process to report on social and environmental issues to Senior management?

Yes If yes, please explain the process, reporting format and frequency and actions taken if any. According to the adopted procedure, based on the results of the monitoring, if the borrower fails to meet the requirements for compliance with environmental protection measures, the monitoring specialist must notify the ESMS Manager for taking appropriate measures.

The ESMS Manager should provide timely reports on the implementation of ESMS policies and procedures to the Management Board and interested parties of the Bank.

Do you prepare any social and environmental reports: - For other multilateral agencies - Other stakeholders - E&S reporting in the Report - Sustainability reports

Yes If yes, please provide copies of these reports. Yes, prepared for Netherlands Development Finance Company (FMO)

Activities on ADB’s Prohibited Investment Activities List If any, please indicate the dollar percentage of loans or investments out of your total outstanding exposure provided to clients who are substantially involved in ADB’s Prohibited Investment Activities List (Refer to Attachment 1).

0%

If the percentage is not zero, please explain these exposures and any steps having been taken to reduce such exposure.

n/a

19

C. Subprojects Using ADB Funds

Please provide information about all new subprojects using ADB funds approved during this reporting period.

Name of Subproject Company:

LLC Favourite Textile Group

Subproject location:

Keles Town, Zangiota region, Korasaroymahallya, A.Karimov street

Industry sector:

Textile

Purpose of loan Purchase of raw materials Value of exposure (US$):

300 000

Safeguard category:

Environmental category B, Social category B

Were any environmental due diligence undertaken and by your organization?

The following environmental due diligence was undertaken by the bank:

1) Environmental impact analysis (ecological screening); 2) Social safeguards screening; 3) Safeguard due diligence briefing note;

The above documents were filled by loan specialist and reviewed by ESMS coordinator. The loan specialist also conducted field visit to learn situation on site.


Yes. Draft of ZVOS (statement of environmental impact) and positive Conclusion of State ecological expertise (05/2-1219 19.08.2015) were inspected by the loan specialist and ESMS coordinator. According to the mentioned Conclusion, the project is given 3rd category of environmental impact.

What were the main environmental and social issues associated with this subproject that were identified through due diligence conducted by your organization, and how were the issues dealt with (i.e., outcome of due diligence)?

The area of the site: The site area is 1241,08m2, including three-storied building of 658m2. The production premises are already in place. Planned production capacity: annually 150 ton of fabric and 240 thous. sets of knitted goods. Total amount of workers: 50 people. Impact on atmosphere air: emission of cotton dust, heating boiler and kitchen stove – maximum ground level concentration is within established quotes. Impact on water: Utility fluids will be passed to water proofed concrete cesspit with timely disinfection and removal to the places indicated by the sanitary and epidemiological inspection body. There will be no impact on surface water, ground and soil, provided the above mentioned environmental protection measures are fulfilled.

Waste. There will be 8 types of waste. All wastes are low hazard wastes (4 class), food waste (5 class), except of fluorescent lamps (1 class high hazard). Temporary storage place for each type of waste and its further movement is determined. Cotton fiber waste and rugs will be recycled, waste fluorescent lamps will be passed for demercuration, utility waste – to landfill site.

Did you discuss with the subproject the applicable environmental and social safeguard requirements and their implementation?

Yes. Bank specialists discussed, explained to the subproject owner all the requirements regarding the environmental and social safeguard that he/she should comply with during the implementation of project.

Were any conditions or covenants related to environmental and social issues made along with the investment?

The owner of the subproject should fulfill the requirement stated in the Conclusion of State Ecological Expertise.


Yes, implementation of the project was permitted in accordance with the Conclusion of State Ecological Expertise.


Yes. The project is assigned B category according to ADB classification.


JV LLC Ishonch-gilam


Navoi city, Sputnik 3

Industry sector:

Manufacture (weaving carpet)

Purpose of loan Purchase of equipment for carpet production Value of exposure (US$):

78 000

Safeguard category: (see Annex of Attachment 11)






21


Yes. Statement of maximum permissible emission and positive Conclusion of State ecological expertise dated 20.07.2016 No.682/16. According to the mentioned Conclusion the project is given 3rd category of environmental impact.


The area of the site: The site area is 1,1183 hectar. The production premises are already in place. Carpet weaving equipment is used. Planned production capacity: annually 6000m2 of carpet. Impact on atmosphere air: carpet production area and heating boiler are sources of emission. The dust from these sources is captured 99,8% by dust camera. Ground level concentration of all ingredients does not exceed established quotes.








Yes. The project is assigned B category for environmental impact according to ADB classification.


Big Bag Production Ltd


Tashkent city, Sergeli district

Industry sector:

Manufacturing

Purpose of loan Purchase of equipment for polypropylene bags production Value of exposure (US$):

300 000



Were any environmental due diligence undertaken and by your


organization?




Yes. Draft of ZVOS (statement of environmental impact) and positive Conclusion of State ecological expertise dated 29.03.2015 No.04-321 were inspected by the loan specialist and ESMS coordinator. According to the mentioned Conclusion, the project is given 3rd category of environmental impact.


The company will manufacture polypropylene bags from ready-made fiber. Polypropylene fiber will be purchased. Impact on atmosphere air: source of emission: the machine for cutting polypropylene fiber – maximum ground level concentration is within established quotes. Impact on water: Water will be used for domestic needs from municipal water system and waste water will be passed to municipal sewerage. Waste. There will be 3 types of waste. Scissoring of polypropylene fiber (low hazard waste 4 class), mercury lamps (1 class) will be passed to specialized company for demercuraton, domestic solid waste generated by livelihood of workers (5 class) will be taken to waste landfill. Noise – noise generated by equipment will be within permissible sanitary standards.






Yes, implementation of the project was permitted in accordance with the Conclusion of State Ecological Expertize.



23


LLC Fuber Side Plast


Tashkent city, Chilanzar district, Chorbog street, South Western Industrial zone

Industry sector:

Manufacturing

Purpose of loan Equipment for production of dry construction mixes Value of exposure (US$):

300 000








Yes. Draft of Maximum Permissible Release of Wastes and positive Conclusion of State ecological expertise dated 10.04.2017 No.04-2613 were inspected by the loan specialist and ESMS coordinator. According to the mentioned Conclusion, the project is given 3rd category of environmental impact.


The company will manufacture plastering and coating gypsum. The raw gypsum will be purchased from third company. The technological process is as follows: raw materials will be mixed in a mixing equipment to homogeneous mass. Then, this homogeneous mass will be packed to three layer paper bags. The following waste will be generated: Waste mercury lamps (1 hazardous class) - will be passed to ASP Selta company for demercuration. Mineral flunk-outs (4 class) – will be sold to third company. Polypropelen bags – is returnable packaging. Paper bags will be passed to third company for utilization. Waste sponge cloth and waste work garmet will be passed to third company for recycling. Domestic solid waste generated by livelihood of workers (5 class) will be taken to waste landfill. It is necessary to control safe storage of waste on the territory of the company and not to allow keeping waste beyond prescribed amounts.






Yes, implementation of the project was permitted in accordance with the Conclusion of State Ecological Expertize.




Archie Asia Trade


Tashkent region, Zagiata region, Turkiston village, Balikchi street

Industry sector:

Food industry

Purpose of loan Equipment for can production Value of exposure (US$):

210 000








Yes. Draft of ZVOS (statement of environmental impact) and positive Conclusion of State ecological expertise dated 24.06.2016 No.05/2-973 were inspected by the loan specialist and ESMS coordinator. According to the mentioned Conclusion, the project is given 3rd category of environmental impact.


The company will manufacture metal can by cutting metal sheets, rolling, welding, and pressing. The raw materials will be purchased from third company. Impact on atmosphere air: maximum ground level concentration is within established quotes. Impact on water: In the manufacturing process water will not be used. Waste. Paper waste in the amount of 0,25 tons per year (4 class) which will be passed to Uzbum company for utilization.

25

Metal waste will be passed to Tashkentvtorchermet company for recycling. Other wastes (rafts) will be passed to Utilsiryo company for recycling. Mercury lamps (19 lamps per year) will be passed to specialized company for demercuration.










Visage Electronic LLC


Tashkent region, Zagiota region, Keles

Industry sector:

Food industry

Purpose of loan Equipment for production of items from polypropylene Value of exposure (US$):

300 000








Yes. Draft of ZVOS (statement of environmental impact) were inspected by the loan specialist and ESMS coordinator. Positive Conclusion of State ecological expertise dated 24.06.2016 No.04-572 was issued.

What were the main The company will manufacture goods from polyethylene, the raw

environmental and social issues associated with this subproject that were identified through due diligence conducted by your organization, and how were the issues dealt with (i.e., outcome of due diligence)?

materials will be purchased from Shurtangaz company. Impact on atmosphere air: maximum ground level concentration is within established quotes. Impact on water: Water will be used from town water supply system. Utility fluids will be passed to cesspool and then taken to nearest water cleaning site. Waste. Plastic waste will be recycled by enterprise itself. Waste oil will be passed to specialized company for utilization. Metal waste will be passed to Uzikkilamchikormetal company for utilization. Solid utility waste will be taken to utility waste landfill. Mercury lamps will be submitted for demercuration to specialized company.










Nilufar LLC


Honobod town

Industry sector:

Textile

Purpose of loan Equipment for textile production Value of exposure (US$):

220 000






The above documents were filled by loan specialist and

27

reviewed by ESMS coordinator. The loan specialist also conducted field visit to learn situation on site.


Yes. Draft of ZVOS (statement of environmental impact) and positive Conclusion of State ecological expertise dated 22.05.2017 No.11/940 were inspected by the loan specialist and ESMS coordinator. According to the mentioned Conclusion, the project is given 4 category of environmental impact.


The company will sew apparel (T-shirts, underwear) from ready knitted fabric. Impact on water: Water will be used from town water supply system. Utility fluids will be passed to sewage network. Waste. Utility waste will be taken to town landfill. Fabric rags will be recycled.










BAR-SUM-TEKS


Tashkent city, Mirzoulugbek region, Altin Tepa street, 47

Industry sector:

Textile


299 300



Were any environmental due diligence undertaken and by your


organization?




Yes. Draft of ZVOS (statement of environmental impact) and positive Conclusion No.04-239 dated 18.03.2016 of State ecological expertise were inspected by the loan specialist and ESMS coordinator. According to the mentioned Conclusion, the project is given 4 category of environmental impact.


The company will manufacture stockings and socks. The technological process consists of knitting and sewing. Impact on water: Water will be used from town water supply system. Utility fluids will be passed to sewage network. Waste. Utility waste will be taken to waste landfill. Fabric rags will be recycled. Noise. Equipment for knitting is main source of noise. In order to decrease harmful influence of noise the premises must be sound and vibration proof.










Keng Makon


Tashkent region, Zangiota, Chigatoy Oktepa

Industry sector:

Manufacturing

Purpose of loan Equipment for furniture production

29

Value of exposure (US$):

298 736








Yes. Draft of ZVOS (statement of environmental impact) and positive Conclusion of State ecological expertise 23.12.2014 No. 05/3-2330 were inspected by the loan specialist and ESMS coordinator. According to the mentioned Conclusion, the project is given 3 category of environmental impact.


The company manufacture furniture. Sources of emission to the atmosphere are sites of semi finished products, MDF, particle boards treatment, mechanical assembly of semi finished items, wood evaporation as well kitchen. According to the draft of maximum permissible emission and calculation of emission amount, maximum over ground concentration of pollutants will not exceed established quotes. At two sites of the sources of pollutant emission dust cleaning devices are installed with cleaning capacity of 99%.










“Namangan yog’och mahsulotlari ishlab chiqarish” LLC

Subproject location: Namangan tumani, Irvadon KFI, Orta Rovuston MFI

Industry sector:

Textile


300 000








Yes. Draft of ZVOS (statement of environmental impact) and positive Conclusion from 06.06.2014 No. 07-09/103 of State ecological expertise were inspected by the loan specialist and ESMS coordinator. According to the mentioned Conclusion, the project is given 3 category of environmental impact.


The company will manufacture textile products. Impact on water: Water will be used from water supply system. Utility fluids will be passed to sewage network. Waste. Utility waste will be taken to town landfill. Fabric rags will be recycled.









31


PE “Natural fruit juice”


Namangan district, Mirishkor KFI, 1-Mirishkor MFI

Industry sector:

Juice production

Purpose of loan Raw materials Value of exposure (US$):

150 000 + 150 000 (total 300 000)








Yes. Draft of ZVOS (statement of environmental impact) and positive Conclusion from 06.06.2017 No. 07-09/13 of State ecological expertise were inspected by the loan specialist and ESMS coordinator. According to the mentioned Conclusion, the project is given 4 category of environmental impact.


The company will manufacture fruit juices. The technological process for juice making consist of the following steps: washing, pealing, cutting, making juice, filtering juice, pasteurizing and packing. Fruit manufacturing site is considered to be source of waste. The generated fruit waste is low hazard (5 class). It is planned to discharge waste to waste landfill site.










Vizir Collektion LLC


Tashkent city, Uchtepa, Zakariya Roziy street, 1-proezd, 24

Industry sector:

Textile

Purpose of loan Purchase of textile equipment Value of exposure (US$):

299 300








Yes. Draft of ZVOS (statement of environmental impact) and positive Conclusion from 29.05.2015 No.17 of State ecological expertise were inspected by the loan specialist and ESMS coordinator. According to the mentioned Conclusion, the project is given 4 category of environmental impact.


The company will sew apparel. The textile fabric will be bought from third party. Emission to atmosphere: no emission of pollutants to atmosphere. Water: will not be polluted in technological process. Waste: - off-cuts of fabrics – will be passed to third company for

utilization; - mercury lamps – will be passed to specialized company for

demercuration; - utility waste- will be taken to landfill site.

Did you discuss with the subproject the applicable environmental and social safeguard requirements and their


33

implementation? Were any conditions or covenants related to environmental and social issues made along with the investment?







Agro city LLC


Tashkent city, Sergeli region, Sogdiana street, 4A

Industry sector:

Agriculture

Purpose of loan Packing equipment for beans Value of exposure (US$):

132 000









What were the main environmental and social issues associated with this subproject that were identified through due diligence conducted by your organization, and how were the issues dealt with (i.e., outcome of

The company will process, clear and pack beans. The technological process include the following: cleaning, calibration, sorting out bad quality beans, photo sorting, sorting out broken beans, packing, marking. Water. Water will be used for utility needs and will be discharged to canalization network. Bean waste will be generated.

due diligence)? Bean dust will be emitted- there is aspiration system “Cyclon 150) which will capture the dust, and actually there will not be pollution of atmosphere. Solid utility waste will be taken to waste landfill site. Waste mercury lamps will be passed to specialized company for demercuration.










Ozod-K LLC


Andijan town, Nayman street

Industry sector:

Cotton industry


250 000







Any environmental assessment report or audit reports reviewed

Yes. Draft of ZVOS (statement of environmental impact) and positive Conclusion from 06.06.2015 No.11/1281 of State

35

by your organization?

ecological expertise were inspected by the loan specialist and ESMS coordinator. According to the mentioned Conclusion, the project is given 3 category of environmental impact.


The company will produce fabric from thread. The thread will be treated with starch water. During manufacturing process cotton dust will be emitted. The manufacturing premises will be equipped with aspiration system and centralized dust cleaning system. The ground level concentration of emission is within established quotes. Utility water will be discharged to centralized canalization system. Solid utility waste will be taken to waste landfill site.










Mega Mebiko (LLC)


Sergeli district, Tashkent city

Industry sector:

Chemical industry

Purpose of loan Equipment for pipe production Value of exposure (US$):

220 000





1) Environmental impact analysis (ecological screening); 2) Social safeguards screening;

3) Safeguard due diligence briefing note; The above documents were filled by loan specialist and reviewed by ESMS coordinator. The loan specialist also conducted field visit to learn situation on site.


Yes. Draft of ZVOS (statement of environmental impact) and positive Conclusion from 18.04.2014 No.18/385 of State ecological expertise were inspected by the loan specialist and ESMS coordinator. According to the mentioned Conclusion, the project is given 3 category of environmental impact.


The company will produce pipes from polyethylene. The raw materials will be purchased from third company. The technological process consist of the following stages: polyethylene granules will go though control to be cleaned from alien particles. Then, granules will be placed to and melted in extruder. After, filtration and formation of pipes will take place. Water will be used in cooling system. Atmosphere. Calculation of maximum concentration of pollutants emitted to air shows that over ground concentration for each ingredient will be within established quotes. Water for utility needs will be taken from centralized network. Utility water will be discharged to hydro isolated concrete cesspool. Water for manufacturing needs will be from underground source, consumption of this water is unreturnable. Waste: -Mercury lamp waste (20 lamps/year) – will be passed to ASP Selta company for demercuration; - Polyethylene waste will be recycled by company itself. - Polypropylene bags will be returned to suppler of raw materials. - Waste cloth will be passed to “Vtorsiryo” company for utilization. - Utility waste will be discharged to landfill site.





Does the subproject comply with applicable government


37

requirements? Does the subproject comply with applicable ADB safeguard requirements?



Garant Mebel LLC


Sergeli district, Massive Yuldosh, C2

Industry sector:

Manufacturing of pop (a carbonated, flavored, and sweetened soft drink) and cool tea

Purpose of loan Raw materials Value of exposure (US$):

300 000










The company will produce soft drinks. The technological process include treatment of water which will be obtained from wellhole. The water will be cleaned through three filters. Then, water will be passed to tanks. Syrup will be prepared in steel mixer. The soft drink will be filled to PET bottles. Atmosphere. Calculation of maximum concentration of emission shows that over ground concentration for each ingredient will be within established quotes. Waste: Mercury lamps (1 class of hazard) will be passed to specialized company for demercuration. PET bottle waste, utility waste (4 class of hazard). Limits for storing at the company and places for discharge were designated.

Did you discuss with the Yes. Bank specialists discussed, explained to the subproject

subproject the applicable environmental and social safeguard requirements and their implementation?

owner all the requirements regarding the environmental and social safeguard that he/she should comply with during the implementation of project.








SE Golden Silk


Namangan region, Mullakuding

Industry sector:

Textile


295 000








Yes. Draft of ZVOS (statement of environmental impact) and positive Conclusion from 18.03.2011 No.18/229 of State ecological expertise were inspected by the loan specialist and ESMS coordinator. According to the mentioned Conclusion, the project is given 3 category of environmental impact.

What were the main environmental and social issues associated with this subproject that were identified through due diligence conducted by your

The company will produce textile items (cotton fabric). Atmosphere: Calculation of maximum concentration of emission shows that over ground concentration for each ingredient will be within established quotes. Water will be discharged to canalization network.

39

organization, and how were the issues dealt with (i.e., outcome of due diligence)?

Waste: Mercury lamps (40 per year) will be passed to specialized company for demercuration. Solid utility waste will be discharged to waste landfill.









D. Sustainable Finance (subprojects with environmental and social benefits)

Sustainable finance Have you made any investments in subprojects that have social and environmental benefits such as investing in management systems, energy efficiency, renewable energy, cleaner production, carbon finance, pollution abatement and control, sustainable supply chain, corporate social responsibility, community development, etc.? Please list these in the format provided below: Subproject

Name Value financed by the Financial Institution

Type of social and

environmental benefit «QORA BAYIR SAVDO» ХК

60 492 (financed by the banks’ own funds jointly with Global Ecological Fund (GEF) in

proporation 60%/40%)

Installation of 130 кВт sun energy photo electric system

"Kesh Negtar" ҚК МЧЖ

64 113 financed by the banks’ own funds jointly with GEF in proporation 60%/40%)

Installation of pump which uses sun energy

"Frozen Products" МЧЖ

149 800 (financed by the banks’ own funds jointly with GEF in proporation 70%/30%)

150 кВт sun energy photo electric system

"Veterinar Shams Sharif" МЧЖ



"O'ZBEKISTON" МЧЖ

215 845 ((financed by the banks’ own funds jointly with GEF in proporation 70%/30%)

200 кВт sun energy photo electric system

"TANO" ФХ 499 700 (financed by the banks’ own funds Biogas equipment installation

jointly with GEF in proporation 70%/30%) (1000 м3) "INTER GOLD FRUIT" МЧЖ



Social benefit of the above sub-projects is to mitigate consequences of climate change. The bank also financed some projects to establish system of drip irrigation, which is aimed at saving water and prevention of climate change.

41

ANNEX 5: PFI’s ANNUAL ENVIRONMENTAL AND SOCIAL PERFORMANCE Annual report of PJSCB “DAVR BANK” (as of March 01, 2018)

Please provide responses to the questions below. Please include additional sheets or attachments as required to provide details on questions that have been answered Yes. The PFIs are required to submit the performance report to TA consultant.

Name of Organization PJSCB “DAVR BANK”

Completed by (name): Abubakirov Nuritdin Saydiganiyevich

Position in organization: Head of risk management division

Date: March 01, 2018

Reporting period From: To:

A. Portfolio Information

Report Covering Period: From: To: 01.01.2017 01.03.2018

For the reporting period, please provide the following information about your portfolio where applicable:

Business Lines

Product line Description Total exposure outstanding for most recent FY year end (in US$)

Average loan or transaction size (in US$)

Retail banking/Consumer loans

Loans or other financial products for individuals (includes retail housing finance and vehicle leasing)

8 012 696,15 743,98

Long term: Transactions with tenor greater than 12 months SME Any lending, leasing or other

financial assistance to any corporate or legal entity other than an individual, with individual transactions less than US$ 1 million

30 868 930,54 14 855,12

Subproject finance/Large Corporate finance

Any lending, leasing or other financial assistance to any corporate or legal entity other than an individual, with individual transactions larger than US$ 1

1 383 000 1 383 000

million Trade finance 0 0 Short term (ST): Transaction with tenor less than 12 months ST Corporate finance 866 510,17 72 209,18 ST Trade finance 0 0 Other Microfinance 455 183,31 2 310,58 Other (if applicable) Please describe 0 0

Exposure by Industry Sectors

If there is any exposure in the area of SME finance please provide an indicative % of portfolio that these sectors represent of the total SME portfolio.

Industrial Sector % of Corporate Portfolio

Apparel Chemicals Collective Investment Vehicles Common Carriers Construction and Real Estate 38 Consumer Goods Crop Production Electrical Equipment, Appliances and Components Fabric Mills Fabricated Metal Product Manufacturing Finance & Insurance Finishing (Dyeing, Printing, Finishing, etc.) Fishing Food & Beverages 4 Forestry Furniture and Related Products Integrated Textile Operation (Spinning, Weaving/Knitting, but no Garment ) Internet Subprojects Leather and Allied Products Livestock Machinery and Other Industrial Nonmetallic Mineral Product Manufacturing Oil, Gas and Mining Plastics & Rubber Primary Metals Printing & Publishing Pulp & Paper Spinning (Yarn, Including Integrated with Fiber Production) Telecommunications Textiles - Others 58 Transport Service

43

Transportation Equipment Utilities Warehousing & Storage Wholesale and Retail Trade covering any of the following. Gasoline stations, dry cleaners, printing, large auto and truck fleets, photographic film processing and any operations involving the use of any chemical of biological wastes or materials

Wood Products If engaged in long term project finance/corporate finance, please provide information as requested of all loan assets meeting the following conditions: • Longer than 12 months tenor • Larger than US$ 1 million outstanding exposure Name of Subpro-

ject

Type of loan

(large corporate

/ SME/trade finance)

Tenor of loan (month

s)

Value of exposure (US$ mn)

Industry

Sector*

Safeguard category

Any outstanding environmental and IR and

IP issues during

reporting period and

actions taken to

address the issues

Subpro-ject

using ADB

funds

(yes/no)

Env IR IP

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - *Please use the sectors listed in the earlier table or any standard classification or Note: Env=Environment, IR=Involuntary Resettlement, IP=Indigenous Peoples

B. Environmental and Social Management System (ESMS) Policies & Processes Yes/No

Has your organization developed and implemented an ESMS?

Yes Submitted

If there is an ESMS already in place, have there been any updates to the ESMS or policy and procedures adopted by your organization during the

No New procedure was approved on 15.05.2017 for ESMS, a copy was submitted.

reporting period? Has senior management signed off on the updated policy/procedure?

No Management has not signed an updated policy


Yes AbubakirovNuriddin Head of Risk management division Gofurov Doniyor Deputy Head of the Credit division - Head of the Project implementation unit.

Please give details of any transactions rejected due to environmetnal and/or social concerns.

Yes Several subprojects were rejected according to ZVOS category and equipment's Country of origin


No There was not any difficulty regarding to implementation of ESMS.


Yes All subprojects which refinanced by ADB were screened by following steps: • in accordance with the list of prohibited investment activities; • according to the list of control questions for environmental screening; • According to the screening list for compliance with ADB's social risk measures

Please give details of any material social and environmental issues associated with clients during the reporting period in particular.

Yes

During refinancing subprojects, ESMS managers faced with many issues. For instance, organization located near to schools, kindergartens, near to population living places but there was not found any seriously risks which can influence to environment and social )

In case the existing ESMS is not fully funcional, what are the action plan beining implemented by your organization?

No Existing ESMS approved fully functional

Capacity Yes/No

Please provide the name and contact information of the Environmental and Social Officer or Coordinator who has the overall responsibility for the implementation of ESMS.

Yes Abubakirov Nuriddin Head of Risk management division Tel num: +998712070909 (internal numb 120) Gofurov Doniyor Deputy Head of the Credit division - Head of the Project implementation unit. Participated trainings:

1) Promoting adaptation and implementation of environmental and social management system for financial intermediaries which held on November 23-24, 2017

2) Promoting the approval and implementation of the environmental and social management

45

system (ESMS / ESMS) for financial intermediaries (FI) in Uzbekistan which held on February and seminar’s guest was Irakli Kaviladze (International Consultant of ADB)


Yes Every month PJSCB “DAVR BANK” ESMS managers organizes seminars for credit officers in order to give correct perception to initiators of subprojects and implement monitoring while refinancing projects


No Budget is not allocated

Monitoring Yes/No

Do you receive environmental and social monitoring reports from subproject companies that you finance?

Yes Monitoring manager of the bank fills the act- “Typical area monitoring form” during refinancing for subprojects of ADB.


Yes Every six months, the project is monitored by monitoring officer.


Yes With access to the site, monitoring manager fills the act-“typical area monitoring form” after refinanced subproject.

Please provide details of any accidents/ litigation/complaints/regulatory notices and fines: - Any incidents of non-compliance

with the applicable Environmental and Social Requirements

- Covenants/conditionalities imposed by the Fund Manager to the subproject company as a result of any non-compliance

No During researching environmental and social risks of subprojects there was not any incident, ligation and complaints.

Reporting Yes/No

Is there an internal process to report on social and environmental issues to Senior management?

Yes During the processing of documents, specialist of the credit department gives a conclusion on approval of the project for refinancing, as well as on environmental and social checklist screening. After financing, every six months with the access to the site, the project will be monitored and environmental and social checklist will be completed by the monitoring department manager and the Bank's management will be informed about monitoring results.

Do you prepare any social and environmental reports: - For other multilateral agencies

No PJSCB “DAVR BANK” does not prepare any reports on social and environmental protection to other agencies.

- Other stakeholders - E&S reporting in the Report - Sustainability reports

Activities on ADB’s Prohibited Investment Activities List If any, please indicate the dollar percentage of loans or investments out of your total outstanding exposure provided to clients who are substantially involved in ADB’s Prohibited Investment Activities List (Refer to Attachment 1).

0%

If the percentage is not zero, please explain these exposures and any steps having been taken to reduce such exposure.

0%

C. Subprojects Using ADB Funds

Please provide information about all new subprojects using ADB funds approved during this reporting period. Name of Subproject Company:

LLC “Rolling Time”


Tashkent region, Zangiota district, Nazarbek

Industry sector:

Food and beverages

Value of exposure (US$ mn):

70 000


Environment: B Involuntary Resettlement: C Indigenous Peoples: N/A


Yes Environmental Screening Checklist and Social Safeguards Screening

Checklists were attached


Yes Conclusion of State committee for Nature protection (ZVOS)


No


Yes

47


Yes


Yes


No

No


LLC “Luxury Furniture Business”


Djizzax region, Djizzax city, Industrial Zone A

Industry sector:

Textile


300 000









No


Yes


Yes


Yes


No

No


LLC “Juita Gulshana Invest”


Djizzax region, Djizzax city, Industrial Zone A

Industry sector:

Textile


300 000









No


Yes


Yes


Yes


No

No


LLC “Azalea Garment”

Subproject location: Tashkent region, Piskent district,

49

Gulshan street Industry sector:

Textile


154 390









No


Yes


Yes


Yes


No

No


LLC “Sino Industrial Tashkent”


Tashkent city, Mustaqillik street, 68 flat, 634 apartment

Industry sector:

Road Construction


300 000



Were any environmental due diligence undertaken Yes

and by your organization?

Environmental Screening Checklist and Social Safeguards Screening





No


Yes


Yes


Yes


No

No


LLC “Macro Production”


Tashkent region, Ohangaron city, industrial zone

Industry sector:

Production of construction materials


300 000








What were the main environmental and social issues associated with this subproject that were identified

No

51

through due diligence conducted by your organization, and how were the issues dealt with (i.e., outcome of due diligence)? Did you discuss with the subproject the applicable environmental and social safeguard requirements and their implementation?

Yes


Yes


Yes


No

No


LLC “Bek Mega Textile”


Tashkent city, Chorbog 2 street, flat 8

Industry sector:

Textile


170 500









No


Yes


Yes


Yes


No

No

D. Sustainable Finance (subprojects with environmental and social benefits)

Sustainable finance Have you made any investments in subprojects that have social and environmental benefits such as investing in management systems, energy efficiency, renewable energy, cleaner production, carbon finance, pollution abatement and control, sustainable supply chain, corporate social responsibility, community development, etc.? Please list these in the format provided below: Subproject

Name Value financed by the Financial Institution

(US$ million) Type of social and

environmental benefit

REPORT from PJSCB “DAVR BANK”

Annual Safeguard Monitoring Report€¦ · Annual Safeguard Monitoring Report 1st Annual Report...

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