Azerbaijan is not considering lowering interest rate ceiling on insured deposits.

Azerbaijan, Baku, Dec. 17 / Trend J. Nasibova /

A change to the percentage ceiling on insured deposits which now stands at 12 per cent is not being planned at the moment, executive director of the Azerbaijan Deposit Insurance Fund (ADIF) Azad Javadov informed Trend on Monday.

"According to the statistics, no sharp reduction in interest rates by the banks is evidenced today on the market, therefore an issue concerning lowering the interest rate ceiling on insured deposits is not being considered either," Javadov said.

Last week Elman Rustamov, chairman of the board at the Central Bank of Azerbaijan (CBA), expressed the possibility of lowering the percentage ceiling on deposits insured by ADIF given the observed downward trend in interest rates on bank deposits.

To support these processes, starting December 10, the CBA reduced the discount rate from 5.25 per cent to five per cent. However, Rustamov believes that this issue is the prerogative of the Fund.

Currently, deposits in ADIF member banks at an annual interest rate of over 12 per cent are not being insured by the Fund and compensation for them is not provided. Currently, the maximum level of insurance coverage for one deposit is 30,000 manat.

The Fund's member banks serve 6,362,090 depositors, 94 per cent of which are the insured depositors. At least 56 per cent of insured deposits are placed in manats, 39 per cent in U.S. dollars and five per cent in euros.

In the third quarter of 2012, of the total of individual deposits (4.4 billion manat) in ADIF member banks, 64 per cent (2.8 billion manat) are insured and 36 per cent (1.6 billion manat) are uninsured.

In the third quarter, of the total liabilities of the banks on deposits of 7.3 billion manat (not including deposits of the financial sector), 4.4 billion manat constitute individual deposits.

Total deposits of individuals increased by 2.8 per cent (122 million manat), of insured deposits by 6.2 per cent (195 million manat), while the number of uninsured deposits declined by 2.7 per cent (45 million manat). As a result, the growth rate of insured deposits outpaced the growth rate of uninsured deposits.

ADIF started operating on August 13, 2007. Today, 42 out of 43 banks operating in the country are members of the Fund.

The official exchange rate is 0,7849 AZN / USD on December 17.

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