Consumer Loans Cheaper

For access to concessional funding from the Central Bank of Azerbaijan Republic (CBA) commercial banks will be forced to follow the new requirements of the main regulator.

Now, the actual annual interest rate on consumer loans will not exceed 29% per annum (was 30 to 40% depending on the size of assets), and micro loans - 25% (it was in the range 30-35%). The rate is fixed in a written recommendation by the CBA sent out to the banks’ Boards yesterday.

However, as Turan reported from Unibank, in the current agreements this category of loans is not subject to the recommendations of the CBA.

We recall a month ago, the Central Bank ordered to reduce the upper limit of the fee for servicing consumer loans to 1%. This instruction has been executed, but the banks in order to compensate for losses increased interest rates on loans.

Earlier, speaking on state television, the head of CBA Elman Rustamov said that by year's end interest rates on loans will be reduced gradually. According to experts, 29% APR on consumer loans are almost twice the revenues of European credit institutions. Local banks thus due to the population compensate the loss of non-refundable and extended multi-million dollar commercial loans issued by "the request from above."

In Azerbaijan, 43 banks operate after the closure of two credit institutions.--17D-