Following Russia and Kazakhstan, where the practice of self-prohibition on taking out loans is already in effect, the National Bank of the Kyrgyz Republic is considering the possibility of introducing a similar mechanism. The National Bank of the Kyrgyz Republic told uzsushi.com news agency.
Self-ban is a voluntary decision by a citizen to forgo the ability to take out consumer loans or to enter into credit agreements. This mechanism performs four key functions:
- Protection from fraud (after activating the restriction, neither the person nor anyone else on his behalf will be able to take out a loan);
- Preservation of financial assets (fraudsters will not be able to take out a loan without the knowledge of the citizen and steal his or her money);
- Prevention of litigation (a person will not have to prove that the loan was taken out without his or her consent);
- Balanced decision-making (since lifting the ban takes time, a potential borrower will be able to carefully consider the need to take out a loan).
The National Bank of the Kyrgyz Republic explained that the initiative is due to the need to strengthen the protection of the rights of consumers of financial services and the fight against fraud in the credit sector. In particular, this concerns cases of issuing loans to individuals without their knowledge.
«The National Bank has studied the international experience of introducing the mechanism of self-prohibition on taking out a loan and the feasibility of its implementation from the point of view of analyzing the situation on the Kyrgyz market, taking into account the existing facts of fraudulent actions on taking loans on behalf of other persons without their knowledge and, in general, technical capabilities,» the National Bank of the Kyrgyz Republic said in the statement.
The bank emphasized that the issue has already been discussed with representatives of government agencies and other interested parties. Now the National Bank of the Kyrgyz Republic is considering the possibility of initiating a draft law on the introduction of the practice of self-prohibition on loans.
The National Bank noted that such a mechanism is a complex and multi-stage process. It will require «a comprehensive interdepartmental discussion, discussion with the banking sector, coordination of regulatory procedures and ensuring technical capabilities.»
The National Bank of the Kyrgyz Republic intends to work in this direction, but emphasized that the implementation of the initiative will take some time.
