The Board of the Central Bank of Azerbaijan (CBA) has amended ‘the procedure for temporary regulation of the activities of credit organizations amid the coronavirus (COVID-19) pandemic, Trend reports referring to CBA.
Following clause 3 of part III of the Action Plan, in pursuance of clause 10.2 of the Azerbaijani president’s decree dated March 19, 2020 No. 1950 ‘On several measures related to reducing the negative impact on employment in the country and on business entities’, an action plan has been developed to mitigate the potential negative impact of the pandemic on the banking sector of Azerbaijan,
The above plan defined the classification of credit and risk groups in banks and local branches of foreign banks operating in Azerbaijan, as well as the capital stability ratio and the procedure for its calculation.
According to the rule, from March 1, 2020, interests on a loan have been subsidized to legal entities that are in a satisfactory classification category and were approved by the order of the Cabinet of Ministers of Azerbaijan No. 135s dated April 4, 2020. It is expected that in the event of restructuring loans to individuals engaged in entrepreneurial activity, without opening a legal entity, the loan’s classification category won’t worsen until the end of September 2020 until the restructuring.
At the same time, if concessional loans which were in a satisfactory classification category as of early March 2020 and issued at the expense of government agencies were restructured by September 30, 2020, the classification category of the loan won’t deteriorate before the restructuring.
According to the amendment, the period until September 30, 2020, has been changed to January 1, 2021. It means that, in the event of a restructuring of loans to legal entities with subsidized interest rates and individuals doing business without opening a legal entity, the category will not deteriorate before the restructuring until January 1, 2021.
In particular, during the restructuring of concessional loans, which since March 1, 2020, have been classified as satisfactory and issued at the expense of funds created by the state structures, the category of loan classification before restructuring won’t worsen until January 1, 2021.
It is reported that this rule is aimed at reducing the negative impact of sharp fluctuations on the economy of Azerbaijan and macroeconomic stability.
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