CBA to recommend local banks to reconsider internal work system

Business Materials 16 December 2009 18:27 (UTC +04:00)

Azerbaijan, Baku, Dec. 16 / Trend N.Ismayilova/

The Central Bank of Azerbaijan (CBA) works individually with all local banks to reduce overdue loans, CBA Credit Organizations Supervision Department Director Rashad Orujov said.

"We demand all banks to strengthen individual work with each client, as there is a need to change the whole internal system of local banks," Orujov said.

He stressed the system of motivating bank employees, which the CBA recommends that the banking system change.

"The old system is based on the fact that the more an employee lends the more he earns. Now a motivation system has changed and works on the quality of loans, i.e. how well each employee manages its loan portfolio," Orujov said.

According to the bank official, the share of overdue loans made up four percent of the total loan portfolio of Azerbaijani banks. As international experience shows, the risk increases if the figure exceeds six percent.

According to the CBA, as of Nov. 1, banks provided 7.963.7 million manat (including 4.431 million manat in national currency and 3.532.7 million in hard currency) compared to 7.780.8 million manat (including 4.310.2 million manat in national currency and 3.470.6 million in hard currency) as of Oct. 1, 7.163.2 million manat (3.649 million and 3.514.2 million manat, respectively) as of Jan. 1, 2009 and 6.697.5 million manat (3.612.3 million and 3.085.2 million manat) as of Oct. 1, 2008.

In the total portfolio of loans, 290 million manat were overdue compared to 309.4 million manat as of Oct. 1, 159.8 million as of Jan. 1, 2009 and 142.6 million manat as of Nov. 1, 2008. Statistics of overdue loans do not include the non-bank credit organization Aqrarkredit.

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