Baku, Azerbaijan, July 31
By Ilaha Mammadli - Trend:
International Finance Corporation (IFC) presented to the Central Bank of Azerbaijan (CBA) the final version of the draft law on secured transactions, providing the establishment of moveable property registry in the country.
IFC project coordinator for the financial infrastructure strengthening in Central Asia and Azerbaijan (ACAFI) Teymur Heybatov told Trend while commenting on the issue.
"Creation of movable property registry in the country will affect the number of issued loans, in particular to small and medium-sized business entities. Today the entrepreneurs, in whose assets there is a lack of real estate, having difficulty while attracting credit resources," Heybatov said.
As the IFC representative noted, the registry will allow registering the right to demand movable property when it acts as collateral for the loan.
"For example, if today the bank issues a loan secured by movable property, it takes the risk that unscrupulous borrower can receive a loan under the bail of the same property at another financial institution. This situation significantly increases the risk for the banks, therefore, they are extremely reluctant to accept movable property as collateral. The registry will allow to register the right to claim to this property. Thus, the bank which first registered the pledge will have a priority," he said.
Accordingly, the creation of the registry will reduce the risks for the banking sector of the country. The registry will work in online mode, but the structure that will manage it is not determined yet.
The draft law was prepared by the ACDI-VOCA international organization assisted by the USAID in 2008. In 2010, the ACAFI project started finalizing the draft. Since 2010, the draft law is being finalized jointly by IFC and USAID, then the Central Bank of Azerbaijan connected to the process.
The IFC representative expressed confidence that the process of the adoption of the law will be accelerated.
In 2005, formation of credit histories of debtors started in Azerbaijan after the establishment of the Central Credit Register Service (CCR) under the Central Bank of Azerbaijan. The register covers the whole spectrum of personal data about banks, non-bank credit institutions, debtors, owners of large stock packages of participation in debtors' capital, their credits and pledges on them. The credit bureau, in turn will be able to collect credit information from other financial institutions such as leasing companies, organisations involved in micro-crediting, non-financial organisations, including communal and telecommunications companies and trading by selling goods on credit.
The objective of ACAFI project is the improvement of the infrastructure of Financial Markets in Central Asia (Kyrgyzstan, Tajikistan and Uzbekistan) and Azerbaijan by creating an effective system of credit information exchange and introduction of training and certification in the field of risk management among employees of financial institutions.
The project activities will help financial institutions take quicker and correct credit decisions and thereby increase the availability of financial services to individual consumers as well as small and medium enterprises in the region. This three-year project is being implemented with the cooperation of the Government of Switzerland.
Edited by CN