Central Bank of Azerbaijan to help reduce burden on solvency of borrowers
Change of classification on restructured assets by the Central Bank of Azerbaijan will help reduce the burden on borrowers, especially in foreign currency, Executive Director of Unibank Jalal Gasimov said.
The Central Bank of Azerbaijan has made the consequential amendments to the "Rules of classification of assets and formation of special reserves to cover possible losses", approved by the decision of the Chairman of CBA Elman Rustamov.
All assets, restructured until February 23, 2015, cannot be classified as standard ones, and those restructured since February 23, 2015 - as satisfactory ones, according to the amendments.
"To put it simply, earlier, banks had to create reserves in the amount of 30 percent of the amount of restructured assets," he said. "But after the decision of the Central Bank, the loans, restructured until February 23, will be provided with reserves for 30 percent as before, and the loans restructured after February 23 at 5 percent."
He said that the Central Bank, realizing that the restructuring of assets will occur more often and will not be linked to one bank or the borrower, but to the general situation, helped borrowers of banks to reduce the burden of monthly payment.
Therefore, all banks inform that they restructure, extend deadlines and so on, the executive director said.
"If the Central Bank did not make this decision, the banks would have to create reserves in the amount of 30 percent of the restructured sum. That's too much and "eats" the capital of banks, but now, knowing that it is necessary to help the banks, the population and business, we are allowed to restructure more loans than before," said Gasimov.
It is an interim solution, which will be canceled after six months or a year, according to the representative of Unibank.
Restructured assets (loans) are the assets for which the original terms of payment under the credit agreement have been changed due to the deteriorating financial condition of the borrower, or a new debt liability has been drawn.