Azerbaijan parliament approves law on non-bank credit organizations

Business Materials 4 December 2009 16:44 (UTC +04:00)

Azerbaijan, Baku, December 4 / Trend , I.Khalilova /

On Dec. 4, the Parliament of Azerbaijan adopted the bill on non-bank credit organizations (NBCO) during the second reading.

After the first reading, the bill was approved taking into account the comments of Azerbaijani parliamentarians and the experience of other foreign countries. The document mainly sustained editorial changes, and the major change relates to the clarification of the understanding of security deposit.

The bill envisages establishment of two types of NBCO - having the right to receive a security deposit while giving loan and without this law. In the previous version, the security deposit could be made only in cash, but in the last version it is included in cash and in non-cash form.

In the primary version of the bill, for the NBCO eligible to receive security for loan, the authorized capital was set at $75,000 manat and for credit institutions without having the right - at 25,000 manat. Currently, the authorized capital for credit institutions was set at 4,000 manat.

According to the law, all existing NBCO will have to apply international accounting standards, implement corporate governance standards. In addition, they will have an access to the credit bureau, acting under the Central Bank since 2005.

The bill was prepared with the assistance of World Bank specialists, and the representatives of ACDI/VOCA participated in the working group.

Today 31 microfinance organizations function in Azerbaijan, including 18 non-bank credit organizations established by international organizations, one state non-banking credit organization Agrar-Credit and the rest - the banks involved in microfinance. Today, microfinance organizations have 256,000 active customers, and the total loan portfolio is 150 million manat.

Official rate on Dec. 4 is 0.8026 AZN/USD.

Do you have feedback? Contact our journalist at: [email protected]