It was proposed to direct excess credit payments to the principal debt
The Competition Committee has submitted a report to the Central Bank due to some banks not directing funds exceeding the monthly payment towards reducing the debt
It was proposed to direct excess credit payments to the principal debt
In appeals received by the Competition Committee, it was reported that in some banks, funds paid in excess of the monthly credit payment are not being directed to reducing the principal debt, but are remaining in transit accounts.
As a result, the principal debt is not decreasing, and interest continues to be calculated on it.
For example, the credit agreements of "O'zsanoatqurilishbank" and "Hamkorbank" stipulate an obligation to direct excess payments to the principal debt. However, appeals have been received regarding the fact that in practice this requirement is not being met, the funds are kept in transit accounts, and the options for managing credit payments in mobile applications are insufficient.
The Committee considers such a situation to be contrary to the requirements of the Law "On the Protection of Consumer Rights".
According to the Regulation on relations with consumers of banking services, unless otherwise specified in the agreement, funds received in excess of the monthly payment must be directed to amortizing the principal debt, and the credit amount must be recalculated. Malfunctions in the bank's software should not lead to an increase in the consumer's obligations.
In this regard, the Competition Committee proposed to the Central Bank to review paragraph 37 of the Regulation based on current procedures and foreign experience, in the interests of consumers.
It was also proposed to regulate credit calculations, including the terms of early repayment of credit, directly at the level of law, specifically by the Law "On Banks and Banking Activity".
According to the examples cited by the Committee, in the mobile applications of some US banks, a customer can select the "Principal Only" option and direct excess funds directly to the principal debt.
In Russia, no additional fee is provided for the early repayment of a consumer credit. In Kazakhstan, credit can be repaid early without penalties. In case of partial repayment, the monthly payment is reduced or the credit term is shortened in agreement with the bank.
In the European Union, when a credit is repaid early, the right to reduce the interest and costs related to the remaining term is established. This procedure is provided for in Article 16 of Directive 2008/48/EC and Article 25 of Directive 2014/17/EU.