BAKU, Azerbaijan, Apr.1
By Zeyni Jafarov - Trend:
The system of lending to bounder groups, covering many Azerbaijani regions, was first introduced by the Credit Implementing Agency (CIA) NBCO within the World Bank project, and later within the International Fund for Agricultural Development (IFAD) project, Arif Aliyev, Chairman of the NBCO’s Board, told Trend.
According to Aliyev, the main essence of this lending is that the members of the group are both borrowers and guarantors of each other, which initially creates favorable conditions for the formation of a group potentially interested in the repayment of loans of each bounder, as well as control over the fulfillment of loan obligations between the group members themselves.
He stressed that last year, due to the COVID-19 pandemic, many credit institutions, based on their internal capabilities, as well as on the direct instructions of the regulator - the Central Bank of Azerbaijan (CBA), provided their clients, including small and medium-sized enterprises (SMEs), with certain benefits and payment deferrals. So, already from the first quarter of 2020, the process was started at the CIA.
Speaking about the commission and the interest rate, the board chairman noted that these limits are regulated by the internal instructions of the credit institution within the CBA’s requirements and depend on the term and purpose of the loan, as well as on the financial discipline of the bounders of this group.
"According to our internal instructions, currently this amount ranges from 14 percent per annum for a period of up to 24 months," Aliyev further said adding that despite a difficult 2020, the agency managed to end the year with a profit.
"We can unequivocally say that as of early January 2021 the share of loans from the bounder groups in the loan portfolio averaged 12.5 percent," he concluded.
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