Central Bank of Uzbekistan prepares installment market reform: focus on transparency and debt burden control

The Central Bank of Uzbekistan has initiated the development of a regulatory framework to regulate the rapidly growing installment payment market (Buy Now, Pay Later-BNPL). This proposal was made by the Chairman of the Central Bank Timur Ishmetov, presenting to the Senate a report on the regulator's activities for 2024.

As of the beginning of 2025, the volume of the loan portfolio associated with the installment mechanism reached 8.5 trillion soums. The main share — 67% — is accounted for by business entities, 26% - by microfinance organizations, and only 7% — by commercial banks. The growth of this segment is accompanied by a sharp increase in the number of users, while there is still no legislative regulation.

Ishmetov pointed out a key problem: most BNPL contracts do not contain information about the actual amount of overpayment and the effective interest rate, which creates a risky debt structure. Many consumers do not realize the full cost of the loan and the level of their debt burden, because installment obligations are often not displayed in the databases of credit bureaus. This distorts the picture of borrowers ' creditworthiness and creates risks for the banking system.

The regulator emphasizes that despite the current requirement for a maximum debt load ratio (no more than 50%), banks and MFIs in some cases issue loans without having access to complete information about the client's existing installment plans. This leads to the fact that the real obligations of borrowers are significantly higher than reflected in the documents.

In response to these challenges, the Central Bank proposed to develop legislative measures, including: :

Mandatory disclosure of full information about the overpayment and effective rate in each installment agreement.

Transfer of data on all installment payments to credit bureaus-regardless of whether they are concluded with banks, microfinance organizations, or commercial enterprises.

According to the Central Bank, 1.9 million installment agreements were issued in 2024 alone. The average customer simultaneously serves three contracts, and 82 thousand people have more than ten active transactions. The main share of operations falls on the sale of household appliances (over 33%) and digital devices (11%).

The BNPL sector in Uzbekistan shows aggressive growth: the revenue of specialized services increased 25-fold in six years and reached 201.3 billion soums by the end of 2024. In the absence of systemic regulation, such rates represent both an economic opportunity and a potential threat to the stability of retail lending.

The Central Bank's initiative is aimed at reducing risks for both financial institutions and end-users. The introduction of uniform transparency and accounting standards should be the basis for sustainable development of the installment market in the long term.