The Committee for Competition Promotion and Consumer Protection has proposed that the Central Bank of Uzbekistan change how loan payments are calculated. According to Spot.uz, the agency is pushing to legally codify conditions for early loan repayment.
The problem
Borrowers who pay more than their monthly loan installment currently find that the surplus does not go toward the principal debt. The money stays in the bank’s transit accounts. As a result, the base for calculating interest does not decrease, and the client continues to overpay.
The Committee classifies this practice as a direct violation of the Consumer Protection Law.
Who is affected
According to Spot.uz, the loan agreements of Uzpromstroybank and Hamkorbank explicitly state the obligation to direct excess payments toward the principal debt. In practice, these conditions are not met: banks cite process management issues when payments are made via mobile services.
Meanwhile, UzNews.uz, which also confirmed the Committee’s initiative, does not name specific banks, mentioning only complaints against “certain commercial banks.”
The Committee emphasizes that banking software glitches should not increase a borrower’s obligations.
Proposed changes
The agency sent two initiatives to the Central Bank:
- Revise in favor of clients paragraph 37 of the Regulation on Minimum Requirements for Banking Activities, which governs the allocation of excess payments.
- Codify the early loan repayment mechanism in the Law on Banks and Banking Activities.
As a benchmark, the Committee cites foreign experience: the “Principal Only” option in US bank mobile apps, the right to interest reduction in the European Union, and the practice of penalty-free early repayment in Kazakhstan and Russia.
The Central Bank of Uzbekistan, the banking market regulator, has not yet publicly responded to the proposal.
According to the Committee, banks must eliminate technical barriers in mobile apps that prevent clients from saving on interest when paying ahead of schedule.
