Azerbaijan eases requirements on bank reserves
Baku, Azerbaijan, Jan.9
By Emin Aliyev - Trend:
Azerbaijan will ease requirements on bank reserves from Feb.1, 2014. The decision of the Central Bank of Azerbaijan (CBA) on setting rules for classification of bank assets and creation of special reserves for covering possible damage to them has been published in the register of legal acts of the country's Ministry of Justice.
According to the rules, assets fall into two groups: standard and non-standard. The standard assets group includes satisfactory and controlled assets and the non-standard assets group includes unsatisfactory, dangerous and unreliable assets.
If according to the current rules, commercial banks should create reserves to the sum of two percent of the loan cost belonging to the category of satisfactory assets, and 10 percent for controlled assets, the new rules envisage the reduction of requirements to one percent and five percent respectively.
Requirements on other categories remain unchanged with 30 percent for unsatisfactory assets, 60 percent for dangerous assets and 100 percent for unreliable assets.
Satisfactory assets include loans where the principal and interest payments are repaid in accordance with loan agreements, or with expiration of up to 30 days, controlled assets with expiration of 31 to 60 days, unsatisfactory assets from 61 to 120 days, dangerous assets from 121 to 180 days and unreliable assets over 180 days
Translated by L.Z.
Edited by S.M.