Power of Azerbaijan's central bank may get limited (UPDATE)

Details added (first version posted on 15:26)

Baku, Azerbaijan, March 3

By Azad Hasanov - Trend:

Powers of the Central Bank of Azerbaijan (CBA) may be limited, according to amendments to the law on the country's central bank, which are under consideration of Azerbaijani parliament.

It is proposed to remove from the law the articles, which authorize the CBA to license the country's banks and regulate their activities, as well as to appoint temporary administrators, assess financial state of credit institutions and the country's national postal service operator.

The country's central bank may be also deprived of powers to establish standards of corporate governance in banks and local branches of foreign banks, issue a permit for the activity of clearing (processing) organizations and carry out supervision over them.

These amendments are connected with the recent decree of Azerbaijani president.

The amendments also provide for limiting the rights of members of the Board of the CBA, as well as their close relatives to possess prevailing participation share in financial institutions.

Thus, if now the law prohibits the aforementioned parties to hold shares only in credit institutions controlled by the CBA, in accordance with the amendments, shares in credit institutions, insurance (reinsurance) and investment companies controlled by the government of Azerbaijan may also be included in this interdiction.

It is also proposed to deprive the CBA of powers to participate in the formation of capital in the activity of international and regional organizations, which have the aim to cooperate in the field of monetary, foreign exchange and banking supervision.

The CBA will be able to allocate loans to banks in case of short-term problems with their solvency and a lack of liquidity only considering the appropriate application of the supervisory authority over financial markets.

In accordance with the amendments, the period for which the loan may be issued mustn't exceed six months. At the same time, despite the fact that the CBA will be considering questions on issuing such loans after the application of the supervisory authority over financial markets, the bank itself will make a decision to issue the loan in two days' time.

Currently, the CBA can allocate loans to banks, including the subordinated ones in the order and under the conditions specified by the bank itself in order to ensure stability of the banking system, protect the interests of creditors and depositors of banks.

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