Azerbaijan, Baku, April 29 / Trend A.Akhundov /
The ban on the issuance of consumer loans in retail trade, introduced by the Central Bank of Azerbaijan (CBA) for local banks, will encourage them to expand their branch networks and develop alternative sales channels, the director of the Azerbaijan Bank Training Centre (ABTC) Javanshir Abdullayev said.
In early February, the CBA sent a letter to commercial banks, instructing to stop issuing consumer loans in the retail outlets, to provide the loans centrally and directly at the banks. The CBA explained this decision by the increase in non-repayment of consumer loans.
According to Abdullayev, the regulator's decision is the right step.
"The sale of bank products by individuals outside the bank offices increases the risks. The principle of "four eyes" is not complied with. When the evaluation, acceptance of documents, examination and granting of loans are undertaken by one person, the risks grow. Secondly, it will negatively affect the reputation of the banking sector. Imagine, there is a bank sign next to the shoe store or sausage bay in the shop, and the employees are giving out loans. Surely, it negatively affects the bank's reputation," Abdullayev told Trend.
According to him, almost all retail banks used such sale tools, but now all the channels are closed.
"Given that many banks are now engaged in retail lending, many of them have had such sales channels. I believe that after this, the banks will increase efforts to expand the branch network or expand the list of sales tools by developing channels such as internet banking or mobile banking. The queues have appeared at some banks, thus, banks must extend the point of sales and apply automated system for collecting payments on loans. Largest retail bank has reorganized its sales network, and this has had a negative impact on lending. If the bank actually has loyal customers provided with good service, people will refer to it anywhere," Abdullayev said.
As of early 2013 the number of bank branches is 655, which is 1.7 percent less than at the beginning of 2012.
The branch network of the banks most significantly decreased in the third quarter (due to the cancellation of the RoyalBank's license, which had a fairly extensive branch network). At the beginning of the third quarter, the number of bank branches was 672. The number of branches of one bank with state capital is 37 (remains unchanged), private capital - 618 (decline of 1.8 percent).
39 of 43 banks operating in the country have branches.
As of January 1, 2013, banks also had 158 units (decline by 1.8 percent compared with 2012).