Azerbaijan expects innovations in lending of non-bank credit organizations

Finance Materials 3 March 2020 10:22 (UTC +04:00)
Azerbaijan expects innovations in lending of non-bank credit organizations

BAKU, Azerbaijan, Mar. 3

By Fidan Babayeva – Trend:

On average over 60 percent of the total number of loans in the country has been restructured, Chairman of the Board of Directors at Azerbaijan Micro-finance Association (AMFA) Jalal Aliyev told Trend.

“Credit organizations have begun to carry out activities related to lending in foreign currency since April 2019. Restructuring lists were completed by the end of May 2019. Restructuring of loans began in most organizations in June,” Aliyev noted.

The chairman added that innovations in lending to small and medium-sized enterprises of non-bank credit organizations are expected in 2020.

“According to the mechanism for repaying the main amount of loans to individuals in foreign currency increased as a result of devaluation, and the procedure for determining benefits on accrued interest and interest on this amount, the restructuring was to be completed by December 31, 2019. Therefore, in the current situation, restructuring of loans falling under the relevant decree, funded through the Central Bank, is not carried out. But some credit organizations with their decisions think about continuing restructuring at their own expense,” the chairman of the board of directors said.

“Non-bank credit organizations operating in Azerbaijan are interested in using new business models. In particular, they are interested in applying developing financial and digital technologies,“ Aliyev added.

“Currently, preparatory work to introduce the CLARA expert system (Cash-flow linked Agriculture Risk Assessment tool) developed by International Finance Corporation (IFC) to accelerate the lending process is underway. If this system is implemented, then the process of analyzing and assessing risks and making decisions will accelerate when issuing agricultural loans,” the chairman said.

President of Azerbaijan Ilham Aliyev signed a decree on additional measures due to the solution of the issue of nonperforming loans to individuals in 2019.

The decree provides for the payment of compensation to citizens whose loan debt burden increased as a result of the devaluation of the manat in February and December 2015. The decree also creates opportunities for restructuring on concessional terms of both US dollar and manat loans that overdue for more than 360 days.