Azerbaijan organizes working group on first private credit bureau

Azerbaijan, Baku, Feb. 26 / Trend I. Khalilova /

The International Finance Corporation (IFC) has begun discussions with the Central Bank of Azerbaijan concerning the creation of the first private credit bureau in the country, the IFC project on development of the financial infrastructure in Azerbaijan and Central Asia (except Kazakhstan and Turkmenistan) said today.

The bill on the credit bureau was presented at a meeting of representatives of state structures and the financial sector. Best practice on regulation of credit bureaus, including the development of the country's system and structure of the exchange of credit data was discussed. Following the meeting a decision was made to organize a working group in connection with the establishment of the country's private credit bureau.

"The Central Bank is interested in the establishment of transparent and reliable relationships between lenders and borrowers, improving the mechanisms for assessing borrowers, creating a system of exchange of credit information from banks and other lending institutions," the first deputy chairman of the bank Alim Guliyev said at a meeting. We are ready to support the financial sector and IFC draft in this direction, he said.

"The Credit Bureau is a part of the financial infrastructure. It will play an important role in increasing of opportunities of the population and small business to get credit, the head of the project Anastasia Marinina said. We hope that the working group on establishment of the first credit bureau will play a leading role in promoting exchange of credit information, and improve access to credit, she said.

The project development of financial infrastructure in Azerbaijan and Central Asia was launched from December 15, 2009. IFC's project intends to assist in the establishment of private credit bureau, in conducting the tender to determine a technical partner and investors for the credit bureau. The project will also render consultative services, help financial institutions participating in the project to improve a policy and practice in the field of information exchange for loans.

The founders of the credit bureau can be banks, microfinance institutions, non-bank credit organizations (NBKO), insurance and leasing companies. According to a survey conducted by IFC, about 22 percent of the subjects interested in share holding of capital, are banks, about 21 percent - NBKO, seven percent - the insurance companies and 20 percent - leasing companies.

Establishment of a private credit bureau with the support of the IFC will help to improve credit risk management, reduction of information asymmetry between lenders and borrowers. It will reduce the credit risk, financial institutions and the economy as a whole. Potential borrowers will will get access to funds in the broader scale.

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

Since March 2005 a credit registry has been operating in the Central Bank. Only banks have access to it now.