Baku, Azerbaijan, May 16
By Azad Hasanli - Trend:
The legal framework regulating the activities of pawnshops will be modernized in Azerbaijan, the Financial Markets Supervision Chamber told Trend.
However, the Chamber did not specify whether the modernization of the legislation implies the introduction of state regulation of this sphere.
Currently, there is no separate law on the activities of pawnshops in the country, but their work is regulated by other laws and regulations, including certain articles of the Civil Code.
A financial market source told Trend that the Chamber has conducted surveys among banks to find out which of them is currently issuing so-called "pawn loans". The source said the financial regulator today examines the general situation with pawnshops.
The popularity of pawnshops has increased against the background of the deterioration of the situation in banks in 2015-2016 - after two devaluations [in February and December 2015], the number of problematic borrowers has increased, this has affected the financial position of banks and some of them have been forced to declare bankruptcy. Over 10 banks have been closed in Azerbaijan during this period.
In order to prevent such a situation in the future, both the banks themselves [by changing their internal rules], and the Chamber [through changes in legislation] tightened the requirements for lending, so it has become difficult for certain categories of citizens to get loans from banks.
A source in one of the country's major banks told Trend, the reasons for the growth of the popularity of pawnshops in Azerbaijan are obvious.
"A certificate of income or any long procedures are not required for getting a loan in a pawnshop. Consideration of a loan request in a bank may take some time, up to several days, but the pawnshop may issue the same funds immediately. In this regard, even the "pawn loans" of some banks can not compete with the pawnshops themselves. Even the high rates on such loans do not stop people".
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