Baku, Azerbaijan, May 2
Trend:
President of Azerbaijan Ilham Aliyev signed on May 2 a decree amending the "Decree on Ensuring the Activity of the Azerbaijan Mortgage and Credit Guarantee Fund", dated Nov. 29, 2017.
According to the amendment, when determining the ratio of the guarantee to the loan, the following ratios of collateral to the loan are taken as a basis, taking into account the risk categories.
|
Ratio of collateral to loan |
Risk category |
|
|
Average |
Low |
|
|
Low |
up to 75% |
up to 70% |
|
Average |
up to 70% |
up to 65% |
|
High |
up to 65% |
up to 65% |
Under the credit rating model of the Fund, no guarantee is given for loans classified as of high risk.
The amount of the guarantee is determined upon the request of an authorized bank, taking into account ratio of the guarantee to the loan.
During the validity period of the guarantee, the ratio of the guarantee to the loan can be reduced upon the request of the authorized bank to 15 percent, wherein the annual commission for the guarantee remains unchanged.
The limits on the collateral-to-loan ratio categories (low, medium and high) are determined by the Board of the Fund, and they should be reviewed at least once a year.
The Board also defines the size of the annual commission in accordance with the rules approved by the Fund's Board of Trustees.
The changes also affect the terms of obtaining a guarantee. Previously, the volume of total guaranteed loans of a borrower or a group of related borrowers in all authorized banks did not have to exceed three million manats, but now the figure should not exceed five million manats for an individual borrower and 10 million manats for a group of related borrowers.
Furthermore, the upper limits of all guarantees for one borrower and a group of borrowers were also increased.
Thus, the upper limit of all guarantees for one borrower was increased six-fold - from 500,000 manats to three million manats, and for a group of borrowers by eight times - from 750,000 manats to six million manats.
The changes also bring new tariffs for services of the authorized banks.
Thus, the cost of banking services for each request will be 0.1 percent of the guarantee amount, not exceeding 50 manats.