Central Bank bans automatic loan deductions from social benefits without citizens’ consent

The Central Bank of Uzbekistan has addressed the issue of credit institutions deducting social benefits from citizens' accounts. A corresponding letter has been published on the regulator’s website.

Banks have been automatically withdrawing funds deposited onto the cards of socially vulnerable citizens in the form of state-provided allowances and financial aid. These funds have been used to repay loan debts, according to complaints submitted to the Central Bank.

Article 57 of the Constitution guarantees the protection of the rights of individuals who are unable to work, elderly persons living alone, and other citizens in need of social support, the regulator reminded. The Law “On the Protection of Consumer Rights” prohibits the inclusion of contract terms that infringe on consumers’ rights or deny them their legal benefits and entitlements.

“The Central Bank considers the automatic, non-consensual deduction of state-paid social benefits for debt repayment as a practice that contradicts the principles of fairness and is fundamentally unjust,” the letter states.

Credit institutions have been instructed to revise their internal procedures and automatic debt collection systems. The Central Bank has mandated that banks restrict the non-consensual use of disability benefits, child allowances, temporary disability payments, and other forms of assistance to vulnerable groups for debt repayment.

If citizens file complaints about automatic deductions, banks are required to immediately stop the collections. Furthermore, the regulator emphasized that banks are obligated to return any funds already withdrawn under such practices.

In May, the Central Bank released a letter outlining “unfair practices” used by banks and financial institutions in service delivery. These included unilateral changes to interest rates and loan terms, imbalanced rights and responsibilities, the imposition of additional paid services, and other violations.