Baku, Azerbaijan, June 14
By Azad Hasanli - Trend:
Non-bank credit organizations (NBCOs) of Azerbaijan may receive a new source of financing of loans after the corresponding law is adopted, Executive Director of the Azerbaijan Micro-Finance Association (AMFA) Zhala Hajiyeva told Trend June 14.
She said the new law on NBCOs, which is being developed, may help the NBCOs obtain loans directly from the Central Bank of Azerbaijan (CBA).
The possibility of direct lending to NBCOs was discussed by the CBA and AMFA two years ago. However, the talks yielded no results.
"The main problem is that the NBCOs should open correspondent accounts in the CBA to receive loans from the bank," she noted. “The current legislation doesn’t allow the NBCOs to open correspondent accounts in other financial institutions, so they cannot take loans from the CBA. We want to add the possibility of opening correspondent accounts in the new law and achieve progress in the negotiations.”
After two devaluations, problems with search for lending funds arose in the Azerbaijani micro-finance market. On the one hand, the share of bad loans increased and NBCOs could not repay the loans in the same amount to issue new loans. On the other hand, attraction of funds from foreign investors proved to be unprofitable for NBCOs due to the changes in the manat rate against the dollar. At the same time, the micro-finance market participants could purchase limited loans from the banks because of the high interest rate on them.
As a result, market participants are actively searching for new sources of financing. Besides the negotiations with the CBA, AMFA held various negotiations with potential foreign investors. Some market participants discussed the possibility of creating new funds to expand lending. At the same time, negotiations were conducted with the European Bank for Reconstruction and Development and other international financial organizations.
(1.7 manats = $1 on June 14)
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