Azerbaijan Deposit Insurance Fund (ADIF) is going to shift to differentiated risk system of collection of premiums paid by banks. This is reflected in the draft amendments to the legislation developed in accordance with new European directives. The differentiated risk system of premiums collection would be that higher interest payments will be introduced with regards to the banks, of which risks are higher. The payments will range from 0.1 to 0.5 percent. The Fund will assign ranking to the banks and they will make payments according to the coefficients based on this ranking. Those banks, of which risks are higher, will pay more.
World experience shows that the most rational is the differential principle to define payment rates. For the first time, the differentiated payment system has been introduced in the U.S. by the Federal Deposit Insurance Corporation in 1993. Currently, this system operates in Canada, France, Italy, Portugal, Norway, Finland, Hungary, Romania, Turkey and Kazakhstan. The methodology of payment differentiation is developed in Bulgaria and Malaysia. In general, the differentiated risk system is introduced in 35 countries, as it works on more equitable principles. Differentiated approach to pay insurance premiums enables to create a flexible system of stimulus, to take into account the payment of each person.
Today, ADIF coordinates these proposals to amend the legislation with the Central Bank of Azerbaijan, after which negotiations will be conducted with the relevant ministries and the project will be submitted to the Parliament.
Another innovation, which is expected due to changes to the legislation, is that the period for repaying insured deposits to the population by the ADIF will be reduced in case the bank becomes bankrupt. The Fund will move to new software. Payment will be possible to make within a maximum period of 14 days. At present, the payments can be made within 90 days from the date of the depositor's appeal to the bank or fund, according to the country's current legislation. The main goal is to maximally reduce the term to up to 14 days," he said. "It is important to consider the application and complete payment by this time.
The calendar payments made by 43 Fund member banks in the first half year amounted to 1.226 million manat, $1.392 million and 181,000 euros. The insurance reserves of ADIF in the second quarter increased by 7.2 percent and amounted to 37 million manat. Currently, the maximum level of insurance coverage for the deposit is 30 manat. Te depositors do not make any payments for the insurance of their deposits. The payments are made only by banks. Compensation is provided in case of insolvency of the bank on its obligations.
Meanwhile, the confidence of both legal and physical entities in the banking system is growing consistently. As of Aug. 1, 2011 the total amount of bank deposits of legal and physical entities in Azerbaijan amounted to 8.345.8 billion manat (including deposits of non-residents and government). According to the data provided by the Central Bank of Azerbaijan (CBA), this is 2.7 percent more than July 1. At the same time, since the beginning, the bank's deposit base increased by 9.4 percent, annually - by 32.8 percent.
As of Aug. 1, the total amount of deposits in the Azerbaijani banks amounted to 3.543.6 billion manat, where the deposits in national currency hit 1.745.4 billion manat or 49.25 percent. This is 2.6 percent higher than July 1. At the same time, since the beginning of the year, deposits increased by 17 percent, annually - by 30.4 percent. Population's deposits in the Azerbaijani regions (the country's regions, except Baku) amounted to 289.7 million manat or 8.2 percent of the total volume of deposits attracted by the Azerbaijani banks in January-July.
This figure hit 3.253.9 billion manat in Baku, where 1.532.5 billion manat account for deposits in national currency. The average interest rate on the country was 9.1 percent during the reporting period, in Baku - 9.3 percent.
The amount of deposits on Absheron economic region totaled 87.7 million manat at an average rate of 9.4 percent, Aran - 42.9 million manat at 5.2 percent, Upper Shirvan - 5.9 million manat at 7.7 percent, Ganja -Gazakh - 53.7 million manat at 8 percent, Guba-Khachmaz - 20.4 million manat at 8.2 percent, Lankaran - 22.7 million manat at 6.4 percent, Sheki-Zagatala - 24.2 million manat at 6.8 percent, Upper Karabakh - 9.9 million manat at 3.2 percent, Kalbajar-Lachin - 2.2 million manat at 4.8 percent, Nakhchivan - 20.3 million manat at 3.2 percent. The official exchange rate is 0.7869 manat to $1 on Sept. 27.
The loans provided to population in regions of Azerbaijan in January-July 2011 amounted to 1.374.9 billion manat, or 15.1 percent of total loans to Azerbaijani banks. As of Aug. 1, total lending to the country amounted to 9.120.2 billion manat, with loans in national currency totaling 5.723.3 billion manat.
The figure in Baku hit 7.745.3 billion manat, where the loans in local currency account for 4.721.8 billion manat. The average interest rate in the country for the reported period was 16.5 percent, in Baku - 15.9 percent.