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IFC to help Azerbaijan's financial institutions improve credit risk management

Business Materials 10 December 2009 18:10 (UTC +04:00)

Azerbaijan, Baku, Dec. 10 / Trend N.Ismayilova /

Working groups will be established with the participation of the Azerbaijani Central Bank and the country's financial institutions under an International Finance Corporation (IFC) project to develop financial infrastructure in Azerbaijan and Central Asia, IFC Project Coordinator in Azerbaijan Teymur Haybatov said.

"The project will be launched Dec. 15," he said.

"The establishment of working groups is necessary to develop a plan for the project," Haybatov added.

According to Haybatov, the IFC project aims to assist in establishing a private credit bureau (CB) in conducting a tender to define a technical partner and investor for the CB. The project will also provide advisory services to help financial institutions participating in the project improve policy and practice in the field of information exchange on loans.

"Several banks participating in the project will receive counseling help to improve risk management and credit management," he said. "The technical partner to be selected from global companies will also participate in the CB capital."

According to Haybatov, banks, microfinancial institutions, non-bank credit organizations (NBCO), and insurance and leasing companies may be the CB founders.

According to a survey conducted by the IFC, 22 percent of subjects interested in participating in the CB capital are banks, 21 percent - NBCO, seven percent - the insurance companies and 20 percent - leasing companies.

The establishment of a private CB with the support of the IFC will help to improve credit risk management, reduce information asymmetry between lenders and borrowers, which will lead to reducing credit risk, financial institutions and the economy as a whole, and positive credit debt will open access to more scale for potential borrowers.

The project on developing financial infrastructure in Azerbaijan and Central Asia will be implemented with the support of the Swiss State Secretariat for Economic Affairs SECO.

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