Azernews.Az

By Aynur Karimova

The Azerbaijan Deposit Insurance Fund has no plans to raise a loan from the Central Bank of the country in the near future.

This was announced by Azad Javadov, the ADIF Head, at a press conference in Baku on March 3.

“To date, ADIF has paid nearly 93 million manats [$58.7 million] to three banks, where insured events occurred,” he said. “If to take into account that ADIF originally had 132 million manats [$83.32 million], now we still have nearly 40 million manats [$25.25 million] left on our account.”

Earlier, President of the CBA Elman Rustamov said the Bank will allocate the necessary funds to meet the demand of the ADIF under the relevant legislation.

"There is no fear in this regard. The ADIF continues payment of compensations to the depositors of the bankrupt banks. The Fund has also used the funds invested in securities for these purposes. Currently, the Fund has no shortage of funds," he added.

Javadov believes that they will not have to attract funds from the Central Bank in the near future.

The ADIF will also receive contributions from its member-banks, he added.

The Fund's member-banks are required to pay quarterly contributions amounting to 0.125 percent (0.5 percent per year) of the total amount of the insured deposits.

“The ADIF will receive more than seven million manats in contributions,” Javadov noted. “In addition, the tendency shows that the flow of customers applying for compensations is reducing gradually. Earlier we paid up to 10 million manats [$6.31 million] a day, but now this amount is nearly 2 or 3 million manats [1.26-1.89 million], and it will gradually decline.”

Since early 2016, the CBA has terminated the licenses of Texnikabank, Caucasus Development Bank, Atrabank, Gandja Bank, Bank of Azerbaijan, United Credit Bank and NBCBank. Later, the license of NBCBank was restored due to the bank's plans to merge. Caucasus Development Bank and AtraBank also have such plans.

The volume of insured deposits of Bank of Azerbaijan amounts to 24.2 million manats ($15.27 million), Gandja Bank to 1.5 million manats ($946,800), the United Credit Bank to 2.7 million manats ($1.7 million), and Texnikabank to around 123.2 million manats ($77.76 million).

In case a necessity arises (this will happen if all the depositors apply for compensations), the ADIF will raise nearly 20 million manats ($12.62 million) from the CBA, Javadov explained.

Interest rate decrease

Javadov went on to add that the decision of the Supervisory Board of the ADIF to reduce upper limit of the annual interest rate on insured deposits in foreign currency will not be applied to deposits invested in banks until March 2, 2016.

The upper limit of the interest rate on insured deposits in foreign currency has been decreased from 12 percent to three percent since March 1 in accordance with the decision by the ADIF Board of Trustees at an extraordinary meeting.

The upper limit of the annual interest rate on insured deposits in the national currency remained unchanged at 12 percent.

In accordance with the law "On the full deposit insurance", which has entered into force since March 1, 2016, the insurance covers all deposits in member-banks of the fund at an interest rate not exceeding three [for deposits in foreign currency] and 12 percent [for deposits in national currency], respectively, regardless of the amount of the deposit.

However, if the insured depositors have deposits with an interest rate more than three [for deposits in foreign currency] and 12 percent [for deposits in national currency] as of March 1, 2016, respectively, the existing agreements may be changed on the basis of their appeal for full insurance of their deposits.

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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova

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