Baku, Azerbaijan, Feb.21
By Abbas Akhundov - Trend:
The restrictions imposed by the Central Bank of Azerbaijan (CBA) on issuing of car loans by banks have severely harmed small business insurance companies, according to the chairman of Royal Sıgorta insurance company Nusrat Babayev.
Before the adoption of this decision, nearly 30 percent of the company's fees were formed through voluntary vehicle insurance (CASCO), Babayev said.
"Currently, CASCO doesn't work in fact, which is a major blow on our business," Babayev said.
Loans for new cars are issued under the conditions of a down payment in the volume of from 40 to 50 percent depending on their cost, according to new requirements of CBA.
Only the cars that production date doesn't exceed one year at the time of sale are considered to be new cars. The lending terms for used cars have been more stringent, as the amount of a loan is only 20 percent of the car's cost. This means the down payment on this loan amounts to 80 percent of the purchased car's cost.
Currently, the issuing of car loans has dropped to a critical point; lending for the purchase of used vehicles was almost completely stopped.
Before the escalation of the situation in the market, the conditions for issuing car loans were pretty bland: it was possible to buy a new car with a loan for the period of up to five years with a down payment in the amount of 10-15 percent of its cost. Used cars were offered for credit with a down payment of 30 percent of the cost, nominal rate of 20-25 percent per annum for up to four years.
Royal Sıgorta passed state registration on October 11, 2011. A five-year license for insurance activity was issued to Royal Sıgorta by the State Insurance Supervision Service under the Ministry of Finance on December 28, 2011. Five individuals are founders of this insurance company.
The official exchange rate on Feb.21 is 0.7845 AZN/USD.
Translated by L.Z.
Edited by C.N.