The Uzbekistan Competition Commission has proposed that the Central Bank amend the rules for loan repayment. The goal of these changes is to ensure that excess customer payments are directed towards reducing the principal debt.
According to a press service statement from the committee, consumers have repeatedly complained about monthly loan repayment procedures in several banks. Payments exceeding the amounts specified in the repayment schedules remain in transit accounts instead of being used to reduce the principal debt. As a result, borrowers' outstanding debt does not decrease, while interest continues to accrue on the initial amount.
The Committee noted that the lending agreements of Uzpromstroybank and Hamkorbank contain provisions obligating the application of payments exceeding the established monthly installment to the repayment of the principal debt. However, according to the committee, these conditions are not observed in practice. Banks attribute this to issues when processing payments through their mobile services.
The Commission considers this practice a violation of the Law on Consumer Protection. Furthermore, it was noted that regulatory requirements for bank-client interaction mandate that funds exceeding the monthly payment be directed to repay the outstanding debt, unless otherwise stipulated in the loan agreement. The Committee emphasized that technical failures in banks' software systems should not prevent clients from fulfilling their obligations.
To protect consumer rights, the committee proposed amending Clause 37 of the Regulation on Minimum Requirements for Banking Activities in Interaction with Consumers. The proposed amendment should require that excess payments be directed to reduce the principal debt, taking into account the interests of the clients. The committee also called for the conditions regulating early loan repayment to be enshrined in law, including amendments to the Law on Banks and Banking Activities.