Tashkent, Uzbekistan (UzDaily.uz) — Uzbekistan’s Competition Committee has proposed that the Central Bank revise loan repayment rules to ensure that customers’ excess payments are applied to reducing their outstanding principal. The committee’s press service reported the proposal.
According to the committee, consumers have complained about monthly loan repayment procedures at several banks.
Payments exceeding the amounts specified in repayment schedules remain in transit accounts instead of being used to reduce the principal. As a result, borrowers’ outstanding debt does not decrease, while interest continues to accrue on the original amount.
The committee said Uzpromstroybank and Hamkorbank include provisions in their loan agreements requiring payments exceeding the scheduled monthly instalment to be applied towards principal repayment. However, according to the committee, these provisions are not being implemented in practice. The banks cite problems processing payments through their mobile services as the reason.
The committee considers this practice a violation of the Law on Consumer Protection. It also noted that the regulation governing banks’ interactions with customers requires funds exceeding the monthly payment to be applied towards outstanding debt unless the loan agreement stipulates otherwise.
The committee stressed that technical failures in banks’ software systems should not prevent customers from fulfilling their obligations.
To protect consumer rights, the committee has proposed revising Clause 37 of the Regulation on Minimum Requirements for Banks’ Activities in Interactions with Consumers. The proposed amendment would require excess payments to be directed towards reducing principal debt, taking customers’ interests into account.
The committee has also called for the conditions governing early loan repayment to be regulated by law, including through amendments to the Law on Banks and Banking Activities.
