BAKU, Azerbaijan, November 5. The "Procedure for Opening, Maintaining, and Closing Bank Accounts," approved by the Board of the Central Bank of Azerbaijan (CBA) on February 4, 2022, outlines the requirements for the remote opening of bank accounts, and the existing framework will also be utilized in the development of a draft procedure for managing credit risks in non-bank credit organizations (NCOs), the CBA insider told Trend.
The source emphasized that regulating this process will enable the implementation of proper client identification measures during remote lending in NCOs, thereby preventing potential negative issues from arising in the future.
The CBA developed the revised law "On Amendments to the Law on Non-Banking Credit Organizations," which included provisions for credit risk management in NCOs. The proposed regulations will establish minimum standards for credit risk assessment and administration.
The draft also covers the criteria for remote consumer loan agreements. According to the Azerbaijani law "On Combating the Legalization of Criminally Obtained Property and Financing Terrorism," the CBA will include rules from that law as well as the "Rules for Compliance with the Requirements and Measures for Verifying Clients, Identifying Risk Factors, and Classifying a Client's Profile as Risk Groups When Implementing New Technologies" that were made in line with that law.
One of the key initiatives mentioned in the CBA's announcement is "Improving Customer Identification through Digital Channels," part of the "Financial Sector Development Strategy for 2024-2026." This initiative aims to enhance identification methods and digital signature processes for remotely closing accounts and contracts.
The CBA noted that, through a risk-based approach, NCOs will be able to digitize their processes in line with the consumer credit regulations.
"By adopting a risk-based approach, NCOs will be able to digitize their processes, following the relevant provisions of the rules for issuing consumer loans.
Remote lending offers quick and easy access, time efficiency, and the ability to secure a loan without visiting a physical bank, as the entire process takes place through digital channels. This method also enables customers to compare various loan offers. However, there are drawbacks: incorrect identity verification during remote lending or potential security vulnerabilities could introduce risks. Additionally, clients may receive less support during the remote application process," the report said.
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