BAKU, Azerbaijan, November 20. This week it became known that compensation payments of Muganbank will be made through Azerbaijan International Bank and Kapital Bank from November 27, Trend reports.
According to Article 28.3 of the Law of the Republic of Azerbaijan "On Deposit Insurance", the Deposit Insurance Fund accepts applications of depositors within one year from the date of the first publication of the notice on compensation payment.
In addition, this week it was reported that the money market in Azerbaijan has doubled since 2022.
Chairman of the Central Bank of Azerbaijan (CBA) Taleh Kazimov at the plenary session "Monetary policy in current conditions" within the XI Congress of Financiers of Kazakhstan said that at that time there was no interbank market in the financial sector, there was a shallow inter-money market, there was a large liquidity in the banking sector, 80 percent of which was concentrated in 2-3 systemically important banks.
"Consumer lending was increasing while the interest rate channel was weak. The Central Bank of Azerbaijan was able to drastically alter its market involvement strategy. We began issuing quarterly projections for oil and inflation. In addition, in July 2022, some restrictions on consumer credit were implemented, reducing credit growth from 2.8 percent to 1.6 percent every month. Our intention was to establish an interbank market. As a result, the country's money market increased by double," Kazimov said.
He said that since the CBA started introducing the new monetary policy environment, constant action instruments as well as open market operations have been provided for the first time.
"Inflation in Azerbaijan reached 13 percent on April 2022, peaked at 15.6 percent in October of the same year, and in October this year, annual inflation was 3.9 percent. Inflation in our trading partners was almost 20 percent on April, and this figure reached 22.3 percent on October last year. It is now in the range of 10.1 percent. Our analysis shows that at least 70 percent of inflation in Azerbaijan is imported inflation," he said.
The CBA Chairman emphasized that today inflation in Azerbaijan has fallen to 3.9 percent from a peak of 15.6 percent mainly due to strengthening of the nominal effective rate (it strengthened by 21.6 percent in 2023).
In addition, it was noted this week that the International Bank of Azerbaijan (IBA) is entering a new strategic period.
"In the new strategic period, the bank's main objectives are market leadership by segment, data-driven digital experience, high level of customer centricity and top employer status in the financial sector. Our new strategy envisages the implementation of 58 initiatives and hundreds of projects to achieve all these strategic goals," said Chairman of the Board of the International Bank of Azerbaijan Abbas Ibrahimov.
Director General of the Central Bank of Azerbaijan Togrul Aliyev said during the II Baku Forum on Sustainable Development that currently less than 10 banks operating in Azerbaijan are seriously engaged in covering risks related to environmental, social and governance (ESG) aspects.
He noted that according to World Bank calculations, about 55 percent of the loan portfolio of Azerbaijan's banking sector is concentrated in organizations that may be vulnerable due to climate change.
"In June and July of this year, the Central Bank conducted surveys among financial sector representatives. The poll included 52 financial institutions, representing 95 percent of all financial institutions. Our goal is to investigate the level of sustainability awareness and to learn about the actions they intend to take in the future. So far, less than ten banks in the country have actively considered environmental, social, and governance (ESG) risk coverage. This is still in the planning stages at other institutions," Togrul Aliyev said.
Aliyev added that there are also expectations from financial institutions for certain concessions in this area. The Central Bank is also focused on this issue and will take measures in this direction.
The directions of further cooperation between the central banks of Azerbaijan and Uzbekistan were discussed this week.
In addition, cooperation between Azerbaijan and the International Monetary Fund was discussed.
According to IFC representative in Azerbaijan Aliya Azimova at the II Baku Forum on Sustainable Development, the International Finance Corporation (IFC) has invested over $800 million in more than 60 projects in Azerbaijan over the past 30 years.
"The IFC is one of the world's major multinational financial institutions, promoting private sector investment in developing countries. We have invested over $800 million in over 60 projects in Azerbaijan over the last 30 years. Furthermore, we have contributed to government programs in over 20 different areas, including the investment climate, renewable energy, corporate governance, SME growth, agribusiness, and the financial sector," Azimova said.
"There are numerous prospects for private sector investment in digital communications in all of the region's countries, particularly given regional integration and collaboration, as well as new transportation corridors. In terms of Azerbaijan, I'd like to refer to our recent study on the country's private sector diagnostic, which offers potential for encouraging private sector investment. It describes the possibilities of attracting more than $1 billion in private investment in digital infrastructure, more than $700 million in soft logistics investment every year, and more than $6.5 billion in digital financial investment if these opportunities are achieved in Azerbaijan," she said.
In addition, Azimova noted that Azerbaijan is entering a new stage of financial services development.
"Over the last few years, the IFC has been working to build digital financial markets in Central and Eastern Europe, the Caucasus, and Central Asia. This path will remain in the forefront of our minds in the future, as it will have a big impact on the availability of financial services and economic prosperity. We collaborate with financial sector stakeholders, including assisting banks in their digital transformation efforts through consulting services and programs. We also assist emerging fintech startups in constructing market platforms," Azimova said.
"Azerbaijan is developing digital financial concepts, however the country will need major backing to encourage adoption and implementation. The banking sector is deploying innovative digital technologies, and online banking penetration is comparable to other nations in the region. I'd like to speak quickly on the newly passed law "On Digital Payments Strategy, Payment Systems, and Services," which was created with the assistance of the World Bank and the International Finance Corporation. It will emerge as the most crucial legal foundation for the growth of digital financial services. With the passage of this legislation, Azerbaijan enters a new phase in its financial services development. The IFC will continue to engage in this area and advocate for further electronic and digital payment reforms," she said.
Head of the Small Business Investment Committee of the European Bank for Reconstruction and Development (EBRD) Andrew McDonald noted at the World Forum on Small and Medium Enterprises in Baku that the EBRD is currently working to expand the number of partner banks in Azerbaijan.
"Banks are very important for us to reach out to the local economy because they give us many more partners and then we can reach out to more companies, which provides a greater scale of impact. So leveraging those relationships and increasing the amount of work we do in the advisory business will complement it, and allow companies to see the benefits of it," he said.
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