Azerbaijan, Baku / Trend corr I. Khalilova / The Azerbaijan Deposit Insurance Fund will begin operations on 13 August. According to the Deputy President of the Fund, Aftandil Babayev, the establishment of this financial institute is a classic form of market economy. "This need is increasing taking into account the high growth rate of the Azerbaijani economy and for the increase of deposits and that proves the trust in not only the banks but the State as well," Babayev said.
According to Babayev, the deposit growth rate made up 70% in the last 12 months, and it will increase after the Insurance Fund begins operations. Thirty banks are members of the Fund. However, the list may still be extended. The specific weight of the deposits comprises 98% of the deposits in bank sector.
According to Azad Javadov, the Executive Director of the Fund, the banks have already been issued certificates and they will have to pay the one-time fees (AZN 10,000) on the first day of the Fund's operation. The Fund will be also be formed at the expense of calendar payments (total annual 0.6%), which will be paid off each quarter (0.15%).
In accordance with the Law on Deposit Insurance, deposits in the sum of AZN 4,000 will be covered by 1 January 2008, deposits in the sum of AZN 6,000 will be covered from 1 January 2008 to 1 January 2010 and deposits in the sum of AZN 8,000 will be covered from 1 January 2010. Deposits with interest rates exceeding the rate of the National Bank of Azerbaijan 1.8 times (13%) will not be insured, that means the rate on the insured deposit could be up to 23.4%.
Over 1bln deposits by the public were deposited into Azerbaijani banks by 1 July 2007.