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Parabank to turn into NBCO

26 October 2016 16:53 (UTC+04:00)
Parabank to turn into NBCO

By Nigar Abbasova

Parabank, a banking license of which was cancelled by Azerbaijan’s Financial Market Supervisory Body in July 2016, will operate as a non-banking credit organization (NBCO).

FMSB, which is engaged in the regulation of financial and banking activities in the country, granted its permission to the Bank to operate as NBCO.

The reason for the halt of the bank’s license was the non-compliance of bank’s assets to the established classification, the inadequacy of provisioning in case of losses and non-conformity to the minimum capital requirement.

The phenomenon of turning the bank into NBCO is new for Azerbaijan, however, the country’s legislation allows banks to turn into NBCO, should the financial institution fulfills all its obligations, in particular, to depositors.

NBCOs, the overall number of which currently stands at 59 provide certain types of banking services, but do not hold a banking license and are not eligible to accept deposits from the public.

Azerbaijan Deposit Insurance Fund (ADIF), which performs a role of a liquidator in Parabank started payment of compensations to its depositors. Acceptance of applications from insured depositors of Parabank began on August 1, 2016 and the payment of compensations has been carried out since that day.

The volume of paid compensations to the depositors of the bank currently amounts to 34.94 ($ 20.31), while the volume of insured deposits stands at 43.79 ($ 27.36).

As many as 32 banks possess licenses for the implementation of banking activity in the country.

Some nine banks halted their operations since early 2016, while the reduction in a number of banks operating in the country also negatively affected operations of NBCOs.

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

Follow us on Twitter @AzerNewsAz

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