Baku, Azerbaijan, Aug. 8
By Anvar Mammadov – Trend:
The Azerbaijan Deposit Insurance Fund (ADIF) doesn’t consider the possibility of increasing the interest limit on insured deposits for now following the increase of the interest rate by the Central Bank of Azerbaijan from 7 to 9.5 percent, Executive Director of the fund Azad Javadov told Trend Aug. 8.
“The issue of increasing the interest limit on insured deposits is not on the agenda for now,” Javadov said. “As you know, currently, upper limit of the annual interest rate on insured deposits in the national currency is 12 percent and the central bank has just now raised the interest rate to 9.5 percent.”
He said that if the banks accept deposits at an annual rate above 12 percent due to increase of the interest rate, then the Council of Trustees of the ADIF will consider the issue of raising the upper limit.
“We will analyze the market in the next few days,” he added. “If we see that the population invests funds in banks at an annual interest rate above 12 percent, then we will also consider the possibility of increasing the upper limit on interest rates. In this case, it all depends on the market.”
Javadov noted that the ADIF always changes interest limit on insured deposits based on the market analysis.
“When we raised the interest limit on insured deposits in the national currency and reduced the limit on deposits in foreign currency, our decision was based on the results of our analysis of the market,” he added. “So in this case, it all depends on how the market will act.”
The Central Bank of Azerbaijan (CBA) made a decision to increase the interest rate from 7 to 9.5 percent starting from Aug. 8. Interest rate cap and floor will remain unchanged – 15 and 4 percent, respectively.
Last time, the interest rate was changed in March 2016, when the CBA increased it from 5 to 7 percent.
The interest rate has almost never exceeded 5 percent since 2009.
ADIF began to operate on August 13, 2007 in Azerbaijan.
Earlier, in accordance with decision taken by the Council of Trustees of the ADIF, the upper limit of the interest rate on the insured foreign currency deposits was lowered from 12 percent to 3 percent, effective since March 1, 2016. The upper limit of the annual interest rate on the insured national currency deposits remained unchanged at 12 percent.