Banks Not to Give Mortgages in Foreign Currency

Starting tomorrow, the banks - partners of the Azerbaijan Mortgage Fund (AMF)will not give mortgages in foreign currency.

As stated in the report by the Financial Market Control House (FMCH), it is due to the new conditions and new prudential framework lending, including consumer ones, both in national and in foreign currency. In addition, this solution will help to restructure the loans granted in foreign currency to alleviate the debt burden of borrowers.

Earlier, FMCH recommended providing consumer loans exclusively in manats within the limits of growth of excessive debt burden on individuals. Depending on the borrower's income, a ratio of bank credit to income will be applied in order to ensure the repayment of the debt. So from April 5, 2016 there is a ban on the issuance of unsecured consumer credits in dollars and euros, and it remains in force.

Also, FMCH adopted a prospective decision for banks to use more stringent framework for credit risk management in order to strengthen the capital "buffer" and gradually increase the reserves.

Recall that on 3 February the President signed a decree on the establishment of FMCH to oversee the financial markets with the status of legal entity of public law. The department has to ensure the sustainability of this sector, improving the control of licensing and regulation of investment funds, insurance companies and credit institutions, including the postal operator, as well as payment systems. Its duties also include monitoring the prevention of legalization of money or other property acquired by criminal means and the financing of terrorism. --17D-