Azerbaijan, Baku, June 10 / Trend /
Leyla Abdullayeva, expert of Trend 's analytical center
Adopted on first reading by the plenary session of the Parliament of Azerbaijan, the draft law on non-banking credit organizations can solve some problems, restraining the development of the credit unions in Azerbaijan. The active Law on Credit Unions in the Republic still prohibits receiving deposits from its members, although this is the basis of the unions, and all credit unions (CU) in 96 countries worldwide have such a right. This innovation will enhance the activities of non-banking credit institutions and enhance the interest of the citizens of Azerbaijan in the financial institutions.
CU provides access for the general population, including poor people, to financial services, contributing to the revitalization of business activity in the regions. The attractiveness of credit unions is that while the banks restrict credits, here not only entrepreneurs get credit for the purchase of equipment or the farmer to purchase seeds, but also the students can obtain credits for education.
Presently, on the backdrop of global financial crisis, people in Azerbaijan, like foreign citizens, no longer believe either banks, or different investment funds. So, the credit unions could save this field by their potential opportunities and improve confidence on them.
The attractiveness of credit unions is that credit unions do not risk the money of shareholders, do not invest their funds in risky projects, do not buy risky securities, the money is working within the union. Most importantly, members of the CU, irrespective of the amount of share, have equal rights and opportunities for control over their funds.
Credit unions functions almost in 100 world countries, uniting over 300 million people. Credits unions are more expanded in Canada, Ireland, Australia, South Korea, the U.S., Taiwan, and Poland. In the post-Soviet area it is more developed in Ukraine. Roughly, 90 percent of people use services of credit cooperatives in France. Furthermore, 30 percent of older people are members of credit unions in the United States, 70 percent in Ireland, 4.5 percent in Poland and 1.2 percent in Lithuania.
Following the examples of these countries, the Association of Credit Unions (AKİA), which is an official partner of the World Council of Credit Unions (WOCCU), has developed a bill on non-banking credit organizations. Upon the new legislation, all non-banking credit organizations will have to apply International Financial Reporting Standards, implement corporate governance standards.
The law can open up greater opportunities for non-banking credit organizations in Azerbaijan in the way of forming a positive image. Legislative support for the development of non-banking credit organizations in Azerbaijan is the main economic feasibility of alternative forms of crediting.
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