Microfinance market to be remodelled
By Nigar Abbasova
Azerbaijan will soon facilitate the microfinancing service, which stands for the provision of a variety of financial services to low-income individuals or those who lack an access to typical banking services.
Microfinance organizations of the country are currently engaged in the revision of their policy and strategy with a view to facilitate a number of procedures connected with the return of a credit.
Ambassador of Switzerland to Azerbaijan Philipp Stalder, said that reforms aimed at providing cheaper and more innovative products to Azerbaijan’s population are needed to address the difficulties observed in the financial market of the country.
Stalder made the remark addressing the 8th Azerbaijan Microfinance Conference, which was focused on such issues as improvement of crediting operations, exchange risks of currency loans, use of innovations to meet the needs of small farmers, optimization of pricing policy in the financial sector, financial literacy and others.
Stalder mentioned that special attention is paid to the creation of private credit bureaus and registry of movable property within the framework of structural reforms in Azerbaijan’s financial and banking system.
Chairman of Azerbaijan Microfinance Association (AMFA) Suleyman Kalyashev addressing the event said that microfinancing organizations are currently implementing certain activities, including restructuring of dollar credits, liquidation of fees for expiration of certain limits.
He mentioned that the volume of credit portfolio of microfinancing organizations currently amounts to $485.15 million.
AMFA’s Executive Director Jala Hajiyeva, in turn said foreign investors show high interest in the microfinance market of the country, mentioning particular interest of a group of Islamic Development Bank (IDB), which carries out the study of the local market, as well as businessmen from the former Soviet countries.
The department head at the Financial Market Supervisory Body (FMSB) . Rustam Tahirov, for his part stated that the authority will soon introduce new rules of regulating credit risks, mentioning that the rules will define new frameworks for the management of risks, their identification and assessment.
He said that the changes will mainly cover the sphere of risk management, mentioning that the regulator seeks to bring the regulatory frameworks in compliance with Basel II (facilitated and standardized approach to the risk assessment) and Basel III (new approach) standards.
Addressing the event, AccessBank's CEO Michael Hoffmann said the banking sector of the country, which was seriously affected by a number of unfavorable processes, is now faced with a number of challenges, including mobilization of funds in the sector.
He said that the share of trouble assets (volume currently amounts to 9.5 percent) in the banking sector of the country may reach the level of 40 percent.
Hoffmann believes, that one of the most essential problems for the banking sector is shortage of manat means, as the interest to credits in a foreign currency has already come to nothing. Moreover, the volume of manat deposits in the bank also increased in recent month.
Microfinancing is mostly in demand in the countries with developing economies, as it helps solve many problems of national importance.
Azerbaijan Micro-Finance Association is engaged in strengthening the capacity of microfinance institutions and promotion of effective action in the sphere.
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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova
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