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Norms of Creating Reserves on Bank Loans Undergo Changes in Azerbaijan

Business Materials 27 May 2008 14:29 (UTC +04:00)

Azerbaijan, Baku, 27 May / corr. Trend I. Khalilova/ The National Bank of Azerbaijan (NBA) has set the norms on loans reservation of the current banks, said Fatulla Alakbarov, the deputy director of the Department for Control on Credit Organizations of NBA.

The changes into the Regulation of the National Bank of Azerbaijan, on Classification of Assets and Creating Reserves to meet the possible losses, have already taken effect.

According to the changes, reserves worth 30% will be created from the indicated cost on the loans allocated in 'inadequate assets' category against the planned 25%. 60%Reserves will be created on the loans of 'dangerous assets' from the unpaid sum of the indicated cost against the previous 50%.

The ordinary reserves worth 10% will be created from the loans included in the assets which are under control. The reserves may make up 2% of the indicated cost in case of absence of problems and 100% on the loans on 'unreliable assets'.

According to NBA, as of 1 April 2008, the banks granted AZN4.932.100 against AZN2.880.900 against 1 April 2007. The loans were extended by AZN102.8mln against AZN130.5mln against 1 April 2007.

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