Baku, Azerbaijan, March 31
By Emin Aliyev - Trend:
The maximum size of credit risks were approved in Azerbaijan. The corresponding credit risks regulation for one borrower or associated groups of borrowers approved by the Central Bank of the country, came into force on March 22 this year.
The document defines the criteria by which the dependence of several borrowers on each other depending on the source of their income, the presence of joint or subsidiary liability on bank liabilities and other parameters are determined.
In accordance with the rules, the maximum size of credit risk on one or several related borrowers is determined in the amount not more than 20 percent of the bank's capital of first level, and in the case if the market value of the collateral on the loan request is not less than 100 per cent of this requirement (if the collateral includes real estate - then,150 percent). Otherwise, the maximum threshold is seven percent depending on the size of bank's first-level capital.
This threshold is determined in the amount of no more than eight times size of first- level capital, on aggregate large credit risks, i.e. risks on loans on one or more related borrowers, the amount of which exceeds 10 percent of the first level bank capital.
Furthermore, the regulations also define the upper limit risks for auto lending to a single borrower. Thus, if the value of the purchased car is more than 30,000 manats, and the time of loan processing does not exceed the date of car manufacturing more than a year, then the risk on such loan may not exceed 60 percent of the cost of the purchased car.
The threshold is 50 per cent for motor vehicles, which cost less than 30, 000 manats. Risk threshold for vehicles, from the date of manufacturing of more than year at the moment of loan registration, accounts for no more than 20 percent of the purchased asset.
This means that the initial payment on the car loan will be in accordance with the above criteria 40, 50 and 80 percent of the value of the vehicle, respectively.
The official exchange rate on March 31 is 0.7843 AZN / USD.
Translated by S.I.
Edited by C.N.