Instruction No. 241 on the Procedure for Disclosure of Information on Banking Services to Consumers of Credit Financial Organizations

1 "Registered" "Approved" Ministry of Justice of the Republic of Tajikistan by Resolution No. 1026 dated July 14, 2020 by Resolution No. 79 dated June 25, 2020 of the Board of the National Bank of Tajikistan

Instruction No. 241 "On the Procedure for Disclosure of Information on Banking Services to Consumers of Credit Financial Organizations"

Instruction No. 241 "On the Procedure for Disclosure of Information on Banking Services to Consumers of Credit Financial Organizations" (hereinafter referred to as the Instruction) is developed in accordance with Articles 6 and 7 of the Law of the Republic of Tajikistan "On the National Bank of Tajikistan", Article 55 of the Law of the Republic of Tajikistan "On Banking Activity", Article 61 of the Law of the Republic of Tajikistan "On Islamic Banking Activity", and taking into account Article 3 of the Law of the Republic of Tajikistan "On Microfinance Organizations", Articles 4, 7, and 8 of the Law of the Republic of Tajikistan "On Payment Services and the Payment System", and Article 39(1) of the Law of the Republic of Tajikistan "On Protection of Consumer Rights". The purpose is to create favorable conditions for protecting the rights of consumers of banking system services, increasing the level of financial intermediation, strengthening public trust in the activities of credit financial organizations, and it defines minimum and main unified requirements for the disclosure of information on banking services provided to consumers of credit financial organizations.

CHAPTER 1. GENERAL PROVISIONS

1. This Instruction establishes minimum and main unified requirements for the disclosure of information on banking system services to consumers of credit financial organizations.

2. Credit financial organizations must provide in their internal documents the procedure for disclosing information on the provision of banking services to consumers of credit financial organizations, taking into account the minimum requirements and unified main rules established by this Instruction.

3. The following main concepts are used in this Instruction:

• credit financial organizations - credit organizations and Islamic credit organizations carrying out activities provided for by law on the basis of a license from the National Bank of Tajikistan;
• credit organizations - legal entities (banks and non-bank credit organizations, including microfinance organizations) carrying out all or individual banking operations provided for by law on the basis of a license from the National Bank of Tajikistan;
• Islamic credit organizations - legal entities (Islamic banks, Islamic non-bank credit organizations, Islamic microfinance organizations, including "Islamic banking windows") carrying out all or individual Islamic banking operations provided for by law on the basis of a license from the National Bank of Tajikistan;
• credit - monetary funds provided to a borrower by a credit organization on the condition of paying interest and repayment within a specified period, and/or a sum provided to a client by an Islamic credit organization in accordance with the principles of Islamic banking activity, which may or may not include conditions for payment of the principal amount, profit, rent, or for services;
• Islamic financing - term placement, interbank placement, subordinated financing, murabaha, commodity murabaha, ijarah, ijarah muntahia bitamlik, muzaraba, musharaka, musharaka mutanaqisa, salam, istisna, Islamic credit (qard hasan), mortgage, letter of credit, accrued but uncollected income, unused client credit lines, guarantees issued by Islamic credit organizations, and others, according to Islamic principles of financing;
• disclosure of information - providing information to consumers of banking services about the terms of services of credit financial organizations in oral or written form, including before signing the contract, during the signing of the contract, and throughout the term of the contract; minimum requirements and unified main rules established by this Instruction and other normative legal acts of the National Bank of Tajikistan and internal acts of credit financial organizations;
• consumer of banking system services (client) - a natural or legal person who uses or intends to use the services of credit financial organizations;
• interest rate on credit - a percentage expression relative to the credit amount, indicating the period relative to which this percentage is accrued. The periods for accruing interest payments are determined by the contract between the client and the credit organization, and the definition is not limited (i.e., the period may be one day, one week, one month, two months, quarter, half a year, year at the discretion of the client and the credit organization);
• income or profit (on Islamic financing) – relative to the definitions of "Islamic credit", "investment account", "Islamic deposit or savings" includes various forms of profit, dividend or benefit, rent (markup), as well as commissions or gifts payable to or presented by the Islamic credit organization;
• payment service provider – the National Bank of Tajikistan and credit financial organizations providing money transfer services;
• payment services – receipt and issuance of cash funds, settlements and transfers of monetary funds, including transfers of electronic monetary funds, issuance (emission) and/or maintenance of payment instruments, and services for receiving payments;
• transfer of monetary funds – actions of the payment service provider within the framework of applying forms of non-cash settlements to provide the recipient with the payer's monetary funds;
• banking system services (provision of services) – services provided by credit financial organizations according to the license issued by the National Bank of Tajikistan;
• annual effective interest rate - a percentage expression according to which interest on the credit is accrued taking into account all payments by the client for servicing the credit to the credit financial organization;
• authorized structural subdivision of the National Bank of Tajikistan - a structural subdivision of the National Bank of Tajikistan and its regional subdivisions authorized to carry out measures to create favorable conditions for protecting the rights of consumers of banking system services;
• "Mystery Shopper" event - a special event conducted by the authorized structural subdivision of the National Bank of Tajikistan to check the quality of service provision by a credit financial organization.

CHAPTER 2. GENERAL REQUIREMENTS FOR DISCLOSURE OF INFORMATION ON SERVICES TO CONSUMERS OF CREDIT FINANCIAL ORGANIZATIONS

4. Credit financial organizations, in their interactions with consumers, must observe the principles of fairness, good faith, and professionalism and disclose information in compliance with the following minimum requirements:

• information for all consumers and potential consumers of services must be provided on equal terms and in equal volume;
• information must be accurate, complete, and provided in a timely manner;
• information must be provided to the consumer in simple and accessible language, without containing complex, confusing words and expressions, professional, and technical terms;
• information must be provided by the credit financial organization in the state language and, if agreed, offered to the consumer in any other language;
• information must be provided to the consumer in such a font that the consumer can easily find the information of interest to them;
• information about the service must be provided in such a way that it is relevant and substantive for the consumer in terms of understanding the essence of the service and evaluating its compliance with their needs;
• provided information must not be presented in a manner that hides important conditions or diminishes its significance, creating the impression that it is not important. Distortion of the meaning of information leading to ambiguity or otherwise allowing ambiguous interpretation of the properties of the provided services is not permitted;
• relevance of information on the date of provision in accordance with the circumstances stated by the consumer of services and affecting the terms of the service contract.

5. In relations with consumers of services of credit financial organizations, the legislation of the Republic of Tajikistan, normative legal acts of the National Bank of Tajikistan must be observed, and ethical norms of business conduct must be followed.

CHAPTER 3. DISCLOSURE OF INFORMATION TO THE CONSUMER BEFORE CONCLUDING A CONTRACT

6. Before concluding a contract for the provision of services, the consumer must be provided with full disclosure of information about the provided service. Credit financial organizations are obliged to take all necessary measures to bring to the consumer's attention information about the terms of the provided service, potential risks associated with it, consequences, and responsibilities of the parties provided for by the legislation of the Republic of Tajikistan.

7. Before concluding a service contract, a credit financial organization must:

• explain to the consumer the essence and main conditions of the specific service of interest to them;
• familiarize the consumer with the amounts of all payments associated with the provision of the service of interest to them;
• explain the procedure for submitting, the process, and the terms for considering consumer requests arising from the contract;
• inform the consumer of their obligations provided for by the contract, including measures of responsibility that the credit financial organization may apply in case of non-performance of their obligations (penalties or any other measures worsening the financial position of the consumer);
• inform the consumer about the form, regularity, and terms of providing information (statements, notices) after signing the contract;
• before concluding the contract, provide the consumer with the opportunity and necessary time interval to familiarize themselves with the provisions of the contract;
• in case if, according to the terms of services, there is a need to use an additional service provided by a third party, the credit financial organization is obliged to provide the consumer with the opportunity to choose such a third party.

8. The consumer must be provided with sufficient information about products and services so that they can choose the product or service that best meets their needs and financial capabilities.

9. Before offering or recommending a credit/Islamic financing, a credit financial organization must assess the financial position, financial needs, and financial capabilities of the consumer, and ensure compliance with the following requirements:

• before concluding a credit contract/Islamic financing, exhaustive information about the terms of providing credit/Islamic financing must be disclosed, including information about its total cost;
• the consumer must be explained the consequences of non-performance or improper performance of their obligations and responsibility under the credit/Islamic financing contract;
• when publishing and disseminating information about the cost of credit/Islamic financing, both nominal and effective interest rates/income or profit from financing must be indicated.

10. In addition to the information specified in paragraphs 7, 8, and 9 of this Instruction, a credit financial organization must:

• explain to the borrower/client the essence and meaning of credit history, including informing them that in case of non-performance of obligations on credit/Islamic financing, information about this is provided to the credit history bureau;
• notify the borrower/client that in case of non-performance of their obligations, credit/Islamic financing may be forcibly collected from collateral property, and in case of insufficient collateral property, from other property of the borrower/client;
• notify the borrower/client of their right to refuse to receive credit/Islamic financing free of charge during the period after concluding the contract and before receiving the monetary funds;
• in case of the presence of a pledgor, guarantor, surety, or other person who is a party to the credit/Islamic financing contract, explain their responsibility and obtain their consent in arbitrary written form;
• in case of group credit/Islamic financing, explain to borrowers/clients their joint general responsibility for the credit/Islamic financing;
• explain to the depositor that the credit financial organization is obliged to issue the amount of savings/bank deposit/Islamic deposit or its part at the first request of the depositor, except for deposits of legal and natural persons pledged as security;
• explain to the depositor that in case of bankruptcy of the credit financial organization, compensation for savings/bank deposits is made by the Fund for Insurance of Savings of Natural Persons in amounts and according to the procedure established by the Law of the Republic of Tajikistan "On Insurance of Savings of Natural Persons".

11. If a credit financial organization refuses to provide a service to a consumer, the credit financial organization, at the consumer's request, returns to them the originals of those documents that the consumer received from third parties for providing to the credit financial organization for the purpose of obtaining the service (certificate of residence or employment, property appraisal act, notarized document, etc.).

12. A credit financial organization, when carrying out the transfer of monetary funds, is obliged to provide the consumer with the following information:

• list of payment systems carrying out the transfer of monetary funds;
• list of documents necessary for carrying out the transfer of monetary funds;
• terms for carrying out the transfer of monetary funds within the framework of applying forms of non-cash settlements;
• list of methods and systems carrying out the transfer of monetary funds;
• about the size of the minimum and maximum amount of transfer of monetary funds, if such size is established by the legislation of the corresponding foreign state;
• the amount of commissions paid by consumers of services, if provided for by the contract;
• the term for carrying out the transfer;
• about exchange rates and the procedure for their determination;
• the amount and currency paid in the country of destination of the transfer;
• about the terms for return, change of data, and cancellation of the transfer of monetary funds;
• about the procedure for the consumer to submit claims and the procedure for resolving disputes, including contact details of the credit financial organization;
• other additional information related to the specifics of money transfers.

13. Credit financial organizations, when providing services for credit/Islamic financing and deposit/Islamic savings, are obliged to provide the consumer with a certificate of the main terms of the provided service in accordance with Appendices 1 and 2 of this Instruction.

CHAPTER 4. MINIMUM INFORMATION IN CONTRACTS OF BANKING SERVICES OF CREDIT FINANCIAL ORGANIZATIONS

14. Contracts of credit financial organizations for the provision of banking services must comply with the legislation of the Republic of Tajikistan and contain the following minimum information:

• detailed description of the banking services used;
• rights and obligations of the parties to the contract;
• any interest/profit, service commissions, expenses, and payments that are charged or may be charged based on the contract. Also, the procedure for their calculation and termination;
• grounds and procedure for changing the terms of the contract unilaterally and the procedure for notifying the consumer of such changes;
• penalties and other measures of responsibility that may be applied in case of violation of the contract terms by the consumer;
• penalties and other measures of responsibility that may be applied in case of violation of the contract terms by the credit financial organization;
• grounds for early termination of the contract;
• contact details of the consumer service structure;
• information on the procedure for resolving disputes and contact details of the structure for considering complaints of the credit financial organization;
• terms of action of the contract and the procedure for its renewal.

15. A credit contract/Islamic financing contract must contain the following minimum information:

1. about the type of credit/Islamic financing;
2. about the size of the amount of credit/Islamic financing;
3. about the final term for repayment of credit/Islamic financing;
4. about the form of issuing the amount of credit/Islamic financing (lump sum or in stages);
5. about the repayment schedule for credit/Islamic financing, which must be attached to the credit contract/Islamic financing contract and include:

• schedule for repayment of the principal amount of credit/Islamic financing (day/month/year) and its total amount;
• schedule for payment of interest/profit on credit/Islamic financing (day/month/year) and the total amount of interest payments/profit;
• total amount of all payments on credit/Islamic financing, which includes the principal amount, interest/profit, and all other payments;

6. about the procedure for accruing interest/profit;
7. about the procedure for repaying the amount of credit/Islamic financing uniformly (annuity) or non-uniformly (differentiated);
8. a reference that the borrower/client will have to pay for insurance, appraisal, or other auxiliary, or notarial services, if it is known that the borrower/client will have to make such payments;
9. a reference to the means of securing the performance of the borrower/client's obligations, if any;
10. in case of securing the obligations of the borrower/client with collateral:

• type of collateral and its description;
• a reference that the subject of collateral passes or does not pass into the possession of the pledgee;
• a reference that in case of non-performance of obligations by the borrower/client, credit/Islamic financing may be collected early in the manner established by law, also by selling the collateral property, and in case of insufficient collateral property, from other property of the borrower/client;

11. about the size of the interest rate on credit/Islamic financing, and in case if the contract provides for a clause according to which the interest rate/profit may be changed, then the exact terms and procedure for changing the interest rate/profit must be indicated;
12. about the size of the annual effective interest rate on credit;
13. about measures of responsibility applied by the credit financial organization in case of non-performance or partial non-performance of obligations by the borrower/client, including providing information to the credit history bureau about the borrower/client;
14. about the procedure for repaying overdue debt;
15. if a currency credit/Islamic financing is provided, indication of the type of currency (dollar, euro, Russian rubles, etc.), and a reference that changes in the exchange rate may affect the repayment of credit/Islamic financing;
16. about the consumer's right to early repayment of the principal debt amount of credit/Islamic financing at any time without paying penalties;
17. in cases where credit/Islamic financing is issued to several persons, the credit financial organization provides each of them with one copy of the contract;
18. a reference to related banking products, if any, or about the availability of voluntary banking products and the possibility of refusing to use them;
19. a reference to confidentiality;
20. a reference to dispute resolution.

16. A bank account or savings/bank deposit contract must contain the following information:

• about the type of bank account or savings/bank deposit;
• about the size of the amount of savings/bank deposit;
• about the term of savings/bank deposit;
• about the procedure for accruing and paying interest on the amount of savings/bank deposit;
• about payments, including taxes, charged from the bank account, if they are present;
• a reference that if, at the request of the depositor, the amount of a term deposit is returned before the end of the term or before the occurrence of circumstances specified in the contract, interest is paid to the depositor in the amount established for term deposits, unless the contract provides for another amount of interest;
• a reference that if the depositor, after the end of the term, does not request the payment of the amount of the term deposit, or if after the occurrence of circumstances specified in the contract, does not request the return of the amount of the deposit invested in the account on other terms, the contract will be considered renewed on the terms of a demand deposit, unless the contract provides for other terms;
• a reference that the credit financial organization is obliged to issue the amount of savings/bank deposit or its part at the first request of the depositor, except for deposits of legal and natural persons pledged as security;
• a reference that in case of bankruptcy of the credit financial organization, compensation for savings/bank deposits is made by the Fund for Insurance of Savings of Natural Persons in amounts and according to the procedure established by the Law of the Republic of Tajikistan "On Insurance of Savings of Natural Persons";
• a reference to the terms if the use of the banking product is automatically renewed;
• a reference to confidentiality;
• a reference to dispute resolution.

CHAPTER 5. MINIMUM INFORMATION DISCLOSED DURING THE TERM OF THE CONTRACT

17. During the term of the contract, the credit financial organization must notify the consumer in cases:

• of a change in the size of the interest rate, commissions, and other payments by the consumer, if provided for by the contract;
• of changes in normative legal acts that directly affect the rights and obligations of the consumer, if these changes affect the financial position of the consumer, if provided for by the contract;
• of other changes having a direct impact on the sphere of relations between the parties to the contract, if provided for by the contract.

18. Information is provided to the consumer by mail or by agreement of the parties by electronic mail, as well as by other means of communication (telephone, fax, message, etc.) or provided on the territory of the credit financial organization.

19. In cases where a credit financial organization reports changes by telephone, an employee of the credit financial organization must:

• state their name, as well as report the name of the credit financial organization;
• report the purpose of the phone call in a language accessible to the consumer, if the parties have not agreed on another language for transmitting information;
• report about the recording of the phone conversation, if such recording is made;
• at the request of the consumer, interrupt the phone conversation and call back later.

20. In case of changes in the repayment schedule for credit/Islamic financing related to early repayment of credit, change of interest rate, or other circumstances, the credit financial organization provides the consumer with a new repayment schedule for credit free of charge.

21. Credit financial organizations are obliged to provide the consumer with statements on their accounts, agreed with them, free of charge once a month.

22. An account statement must contain the following information:

• name and legal address of the credit financial organization;
• Full Name of the consumer;
• consumer's account number;
• date of issuance of the account statement;
• time period covered by the account statement (date/month/year - date/month/year);
• date of operations on the account statement;
• amount and currency of operations performed;
• name and purpose of operations;
• about