THE ROLE OF REGIONAL BANKS IN UZBEKISTAN’S SUSTAINABLE DEVELOPMENT: CHALLENGES AND INNOVATIONS

Аннотация

In the context of economic reforms and sustainable development strategies, regional banks in Uzbekistan are becoming a vital component of the national economy. This article examines the role of regional banks operating in various provinces of Uzbekistan in sustainable development, the challenges they face, and innovative solutions. The paper analyzes statistical data, government programs (e.g., *"Yel-yurt umidi"*), the introduction of digital technologies (Click, Payme), and the role of regional banks in supporting small and medium-sized businesses (SMEs). Research findings indicate that regional banks play a crucial role in infrastructure projects, agricultural financing, and enhancing financial inclusion. However, they encounter challenges such as competition with capital-based banks, a shortage of long-term resources, and difficulties in adopting digital technologies. Thearticle proposes solutions, includinggovernment support mechanisms, collaboration with fintech companies, and improving workforce qualifications. Keywords: regional banks, sustainable development, digital transformation, financial inclusion, SMEs,innovations, financial resources, government programs, fintech.. Introduction. In recent years, Uzbekistan has implemented profound economic reforms to ensure sustainable development. In this process, balanced regional economic growth, strengthening rural infrastructure, and improving living standards are key priorities. Regional banks serve as essential instruments inaddressing these tasks byfinancing local entrepreneurship, supporting infrastructure projects, and providing accessible financial services, thereby contributingto socio-economicstability. However, the full potential of regional banks remains untapped. First, major banks based in Tashkent (e.g., "Oʻzsanoatqurilishbank," "Agrobank") control a significant share of resources and privileges. Second, bank branches and digital services in rural areas remain underdeveloped, leaving nearly 45% of the population without access to financial services (Central Bank data, 2023). Third, regional banks often face limitations in providing long-term loans due to their relatively small deposit baseand capital. At the same time, the rapid development of digital technologies (Payme, Click) and government initiatives such as the "Green Economy" program are creating new opportunities. The study aims to define the role of regional banks in sustainable development, propose innovative approaches to enhance their efficiency, and develop practical solutions through systematic problem analysis. The article is based on statistical analysis, interviews with industry experts, and a review of government documents, focusing on improving Uzbekistan's financial system at the regional level. Research methodology. The study employed a mixed methodology to examine the role and challenges of regional banks in Uzbekistan's sustainable development. The research was conducted using the following methods: Data Collection: Open-access databases from the Central Bank of Uzbekistan, the Statistics Committee of the Republic of Uzbekistan, and the Ministry of Finance (2020–2023) were utilized; Analytical Methods: Statistical comparison of https://ijmri.de/index.php/jmsi volume 4,issue3,2025 523 regional banks' assets, loan portfolios, deposit dynamics, and digital service penetration rates; SWOT analysis to assess strengths, weaknesses, opportunities, and threats; Comparative analysis of banking activities in the Fergana, Kashkadarya, and Bukhara regions to identify regional disparities. This structured approach ensured a comprehensive evaluation of regional banks' performance andtheirimpact onsustainable development. Analysis and results. Although regional banks in Uzbekistan play a significant role in sustainable development, their activities face systemic challenges. Major banks in Tashkent control two-thirds of total assets, forcing regional banks to contend with resource shortages and limited credit opportunities. For instance, annual lending volumes in regions like Kashkadarya are ten times lower than in the capital, creating stark disparities in local business financing. While digital platforms (Click, Payme) improve regional services, poor internet infrastructure in areas like Surkhandarya or Navoi leaves 40% of the population excluded from digital banking. Government programs like "El-yurt umidi" disproportionately allocate subsidies to developed regions, exacerbating territorial inequalities. Additionally, the scarcity of rural bank branches (e.g., 2 per 100,000 people) and low financial literacy keep 65% of the population reliant oncash transactions, hindering access tosustainable financial services. Key Analytical Dimensions: - Resource Allocation: 2023 data shows Tashkent-based banks control 72% of total banking assets, while regional banks manage only 18% (foreign banks: 10%). This gap creates credit shortages in rural areas (e.g., Kashkadarya: 1.2 trillion UZS annu