(MENAFN- Trend News Agency)
BAKU, Azerbaijan, November 27. The“Rules of
Prudential Regulation of Activity of Non-Bank Credit Organizations”
and“Rules of Credit Risk Management in Non-Bank Credit
Organizations” were approved by the decisions of the Board of the
Central bank of the Republic of Azerbaijan dated November 15, 2024,
following the amendments made to the law“On Non-Bank Credit
Organizations (NCOs) in 2023," Trend reports.
According to information, these changes were adopted within the
framework of strategic objectives defined in the "Strategy of
Financial Sector Development for 2024-2026" of the Central Bank of
Azerbaijan.
The Central Bank of Azerbaijan notes that the development of
NCOs' activities, being an element of financial inclusiveness,
provides wider access for the population and small and medium
entrepreneurs to financial resources.
Meanwhile, the Central Bank of the Republic of Azerbaijan
continues to take necessary steps within its mandate to enhance
this role of NPOs, as well as to ensure accessibility and
transparency of credit products offered by them.
The rules establish new qualitative requirements. Thus, NCOs are
given regulatory requirements concerning the organization of the
credit risk management system, credit risk policy, credit risk
assessment and administration procedures, risk monitoring, as well
as the procedure for calculating the actual annual interest rate
under a loan agreement.
In addition, the Rules define for the first time the concept of
short-term“daily” loans, maximum limits on the amount, term, and
daily interest rate, as well as stricter prudential norms for such
loans.
At the same time, the Rules formulate quantitative requirements
affecting financial stability. According to the Rules, the
requirements to the authorized capital of newly established NCOs
have been raised to 1 million manat ($588,000), capital
requirements of 1 million manat ($588,000) have been set for
existing and new NCOs, and requirements to the ratio of liabilities
to capital and requirements to provisioning have been revised.
The requirements in the Rules are aimed at strengthening the
financial stability of NCOs and protection of consumer rights. The
Central Bank will continue its improvement efforts in this
direction, paying special attention to the current processes in the
NPO sector as well as the experience of advanced countries of the
world in this area.
The relevant aforementioned rules can be viewed at the links
below:
Rules for prudential regulation of activities of
Non-bank Credit Organizations
Rules for Credit Risk Management in Non-Bank Credit
Organizations
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