Preventive measures of Azerbaijani central bank provides banks with over 0.5 billion of additional liquidity

Business Materials 21 August 2009 11:47 (UTC +04:00)

Azerbaijan, Baku, Aug.20 / Trend I.Khalilova /

Preventive measures undertaken by the Azerbaijani Central Bank (CB) within the monetary policy and macro-prudential management in 2009 provided the banking system with additional liquidity worth 591 million manat, the CB said on Aug.20.

Since October, 2008 the refinancing rate has reduced from 15 to 2 percent per a year, the regulations of compulsory reserve on bank liabilities, both in national and foreign currency reduced from 12 to 0.5 percent and the regulations of compulsory reserve on foreign liabilities - from 5 percent to zero. The maximum interest rate corridor reduced from 17 to 7 percent and the minimum rate - from three to one percent.

The CB undertook measures on prudential regulation to enhance the financial security of the banking sector. Through these activities the CB tightened rates in the classification of assets: the rates of controlled assets increased from 6 to 10 percent, poor assets - from 25 to 30 percent and risk assets - from 50 to 60 percent. In addition, the requirements for securing real estate under loans was increased from 120 to 150 percent, restrictions on the maximum amount of subordinated debt, which may reach 50 percent from the capital of the first level, was imposed. The risk of mortgage loans increased from 50 to 100 percent.

Credit portfolio of the CB increased by 3.5 times in the January to July, as a result of intensifying the refinancing operations.

On Jan.1, 2009, some institutions were released from tax income directed to the capitalization of banks and insurance companies, to support the banking sector. The maximum amount of insured deposits increased from 6,000 manat to 30, 000 manat and a limit on the annual rate of insured deposits defined at 15 percent.

The Central Bank, together with the Azerbaijani Government develops an expanded program on preventive management to counter the global financial crisis. It provides the continuation of preventive measures initiated by the CB since the end of 2007.

On Aug.20, the official exchange rate is 0.8040 manat to $1.

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