Azerbaijan, Baku, May 3 / Trend A.Akhundov /
The Central Bank of Azerbaijan (CBA) is examining the banking market in order to clarify the situation with interest rates on loans and the reasons for their high level, chairman of the board of the Central Bank of Azerbaijan Elman Rustamov told reporters on Friday.
"The Central Bank is conducting a special study on the issue of high interest rates. The results will be presented to the public, including the objective and subjective reasons for this issue," Rustamov said.
According to him, there is a trend to lower the interest rates. However, they remain at a high level, especially for consumer loans. According to the research, the CBA will give appropriate instructions to the banks.
According to the bankers, the banks may not lend at a rate below the deposit rate as they must take into account their income and cover potential losses from bad loans. Rates on deposits in Azerbaijan currently form 10-12 per cent per annum. This is how the cost of credit resources provided by banks to customers is being formed. In addition to the cost of resources, the bank adds its own margin (a mark-up on the resource), to an amount that covers the loss and generates income for the bank.
Today, banks provide financing services to citizens on average at a rate of 28-32 per cent. The effective rate reaches up to 40 per cent per annum.
The average rate for the entire portfolio of consumer loans in the country including mortgages and car loans amounted to 18.25 per cent last year compared to 19.06 per cent in 2011.