Central Bank warns credit institutions against withdrawing social benefits for loan repayment

The Central Bank of Uzbekistan has criticized the practice of unauthorized withdrawal of state-issued social benefits from citizens’ accounts to repay loan debts, calling it unjust and unfair. The warning was issued on June 30 in an official appeal to credit institutions.

According to the Central Bank, it has received multiple complaints regarding cases where, immediately after social benefits or financial aid are credited to the accounts of socially vulnerable citizens, credit institutions automatically deduct the funds to cover outstanding loans.

These social payments—such as child allowances for low-income families, disability benefits, and financial aid for temporary incapacity to work—are part of the government’s social protection measures aimed at supporting vulnerable segments of the population.

The Central Bank emphasized that such actions violate Article 57 of the Constitution of Uzbekistan, which obliges the state to protect the rights of the elderly, people with disabilities, and other socially vulnerable groups.

Furthermore, Article 21 of the Law "On Protection of Consumer Rights" explicitly prohibits the signing of contracts that infringe on consumer rights or deny legal benefits and protections.

The Central Bank reiterated that the automatic redirection of social payments to repay debts without the explicit consent of recipients contradicts principles of fairness and legality.

In this regard, all credit institutions are instructed to:

•  Review and revise internal procedures and automated collection systems to prevent the unauthorized redirection of social benefits to loan repayments.
• Immediately cease such practices upon receiving complaints and ensure that any wrongly withdrawn funds are returned to the affected citizens.

As a reminder, the Central Bank’s Financial Stability Review for 2024 previously revealed that 40% of loan recipients in Uzbekistan spend more than half of their monthly income on debt repayments.