The Competition Committee has asked the Central Bank to review this practice.
The appeals received by the committee raise issues related to the calculation of loan payments and the allocation of overpaid funds in some banks.
In particular, information was received that, despite the obligation in the loan agreements of Uzpromstroybank and Khamkorbank to send overpaid funds to repay the principal debt, in practice this requirement is not fulfilled. As a result, additional funds may remain in transit accounts, while interest on the principal debt continues to accrue. There is also a lack of credit payment management capabilities in banks' mobile applications.
The Competition Committee stressed that in accordance with the requirements of the Law "On Consumer Protection", consumer rights must be respected.
According to paragraph 37 of the Regulation on Relations with Consumers of Banking Services, unless the contract provides for a different procedure, funds received in excess of the monthly payment must be used to repay the principal debt, and the loan amount must be recalculated. At the same time, technical failures in the bank's software should not lead to an increase in consumer obligations.
In order to protect consumer rights and ensure the interests of customers who make timely loan payments, the committee proposed:
to review, taking into account current practice and foreign experience, paragraph 37 of the Regulation on Relations with Consumers of Banking Services, which regulates the procedure for sending excessively deposited funds to repay the principal debt;
to fix the procedure for calculating loan payments, including the conditions for early repayment of the loan, directly at the legislative level — in particular, in the Law "On Banks and Banking Activities".
How is this issue handled in other countries?
According to the data provided by the committee, in a number of countries there are various mechanisms for early repayment of loans and sending additional payments to reduce the principal debt.
For example, in some US banks, customers can select the "Principal Only" function in the mobile application and direct additional funds directly to repay the principal amount of the loan.
In Russia, there is no additional charge for early repayment of consumer loans. In Kazakhstan, the loan can be repaid ahead of schedule without penalties. In case of partial early repayment, in agreement with the bank, you can reduce the amount of the monthly payment or shorten the loan term.
The European Union also provides for the right to reduce interest and expenses related to the remaining term of the loan upon its early repayment. These provisions are set out in Directives 2008/48/EC and 2014/17/EU.
The committee's proposals are aimed at eliminating problems in calculating loan payments, ensuring timely allocation of excessively deposited funds to repay the principal debt and protecting the interests of consumers.
