Azerbaijan, Baku, May 9 / Trend , A.Huseynbala/
On Friday, at the plenary session the Parliament of Azerbaijan adopted amendments to the Law On deposit insurance. The paper envisages an increase the maximum insurance limit of bank deposits through the Azerbaijan Deposit Insurance Fund (ADIF) to five times.
Introducing amendments to the Law, chairman of the Parliamentary Committee on Economic Policy Ziyad Samadzade said that the aim of establishing a system of deposit insurance was to prevent the possible loss of individuals' funds in banks, stability and development of financial and banking sector.
"This will allow to attract funds, which are in circulation outside of banks, it is considered an important tool for economic development at the expense of internal funds," Samadzade said.
Deposits, the rate of which at the time of their adoption by 1.8 times exceed the discount rate of the Central Bank of Azerbaijan (3 percent), i.e. the rate for the insured deposit of up to 5.4 percent, cannot be insured.
"The rate of CBA has been reducing on the background of global financial crisis and within the framework of the financial stability policy from the second half of 2008. In 2009 it had reached 3 percent in two stages. In this connection, in fact, all deposits were given the non-insured status, as the average rate is 13-14 percent," Samadzade said.
Under the amendments, the maximum rate of insured deposits will be defined by the Trustee Board of ADIF through agreeing with CBA depending on economic situation.
Another change affects the maximum amount guaranteed deposit through ADIF. Since early 2008, compensation at the rate of 100 percent is paid if the amount of deposit does not exceed 6,000 manats, and the sum is expected to be reached to 8,000 manats since Jan. 1, 2010.
"The possibilities of Azerbaijani banks were limited on traction of financial resources from abroad due to deepening of global financial crisis. The rate of compensation will be increased to 30,000 manats in order to increase the potential to attract domestic investments," Samadzade added.
These proposals will cover deposits of Jan.1, 2009.
The Azerbaijan Deposit Insurance Fund was established on Aug.13, 2007 and has 42 members. Fund's deposit portfolio, which is covered through the Social Deposit Insurance Fund, hits 1.373 million as for 2008.
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