Banking community offers to create mechanism to protect creditors’ rights in Azerbaijan
Baku, Azerbaijan, July 11
By Anvar Mammadov – Trend:
The Azerbaijani banking sector will continue to operate at a loss in 2017, Zakir Nuriyev, head of the Azerbaijan Banks Association (ABA), said in an interview with Trend.
"The banking sector is operating today at a loss as a result of the problems that have arisen in the banking sector, in particular, the big amount of problem loans,” he said. “It will also continue in 2017. The banking sector will be able to reach profitability only in the coming years.”
“The restoration processes are underway in the sector,” he said. “Some banks increase their capital, so I think that banks will continue capitalization. The consolidation processes will continue in the market to increase profit and optimize costs. But we will see the results in the coming years."
He added that a mechanism of protecting the creditors’ rights must be created in the country to overcome the current situation.
"If anyone being solvent takes a loan and does not return it, rather, does not want to return it, the measures must be taken, as in case of non-fulfillment of obligations on tax, social and utility bill debts," he said. “There must be a similar mechanism in the banking system."
Nuriyev added that in case of non-repayment of a loan, banks can not timely fulfill their obligations to depositors.
"At present, the deposit portfolio of Azerbaijani banks is 7 billion manat, which is about 7 million accounts, which is a big amount,” he added. “The banks must pay the interest in time. If we do not protect the creditor's rights, the creditor will be unable to fulfill his duties in time. We will be unable to call creditors for more active lending to the economy and individuals.”
According to the Azerbaijani Central Bank, the commercial banks' loan portfolio amounted to 15.45 billion manat in January-April, 1.59 billion manat of which are problem loans.
Thirty one banks operate in Azerbaijan.