Azernews.Az

By Leman Mammadova

The payment of compensations for problem loans to individuals in Azerbaijan began on April 22. Within the first three days, the Azerbaijani postal operator Azerpost has paid compensations on individuals’ problem loans worth 8.44 million manats ($5 million).

Azerpost has stated that the funds have been paid to those 31,336 clients of non-bank credit organizations and the banks in the process of liquidation, who are entitled to the compensations in the amount of than 500 manats ($294). The compensations are being paid at 1,497 post offices throughout the country.

The individuals who are entitled to the compensations worth more than 500 manats ($294) will be able to receive them starting from May 1, 2019. These funds will be provided via plastic cards, which can be obtained at 77 post offices in Baku and the country’s regions.

Azerpost draws attention to the fact that compensations in the post offices are paid only to the clients of non-bank credit organizations and the banks which are being liquidated. In total, Azerpost intends to pay compensations to about 121,000 individuals, and almost 45,000 people of them will receive compensations in the amount of more than 500 manats each.

Azerbaijan’s Finance Ministry has allocated 350.8 million manats ($206.42 million) as part of the first tranche to pay compensations on problem loans to individuals in the country. It is expected that 602,347 people will receive compensation. All payments are due to be completed in May 2019.

Earlier, Azerbaijani President Ilham Aliyev signed a decree on additional measures in connection with solving the issue of the individuals’ problem loans. The decree envisages the payment of compensation to citizens whose loan burden increased as a result of the devaluation of the manat in February and December 2015.

The decree aimed at improving the welfare of the population is an important element of the social policy. That’s because the solution of the problem of credit loans of the population won’t only ease the financial burden, but will also restore confidence in the banking sector and free some debtors from legal proceedings.

The decree applies both to loans taken from banks and non-bank credit organizations. Credit unions are an exception.

According to the decree, opportunities are created for restructuring on concessional terms of both US dollar loans and manat loans with a delay of more than 360 days. If the amount of compensation exceeds 500 manats, these funds will be transferred to the account of the individual; if less, the payment will be made via money transfer.

In addition, banks will receive preferential loans under a state guarantee in the amount of up to 682 million manats as part of the decree. In order to prevent deterioration of the currency position of banks, they will also be provided with securities worth up to 215 million manats ($126.5 million) with an annual interest rate of 0.5 percent for the allocated loan.

The decree also covers loans in rubles and euros. Loans in euros and rubles will be converted into US dollars at the rate of the Central Bank for February 21 and December 21, 2015. Compensation will be issued in manats, regardless of the currency which the loan was taken in.

The corresponding plastic cards which will be received by individuals are issued for a period of 1 year and are free of charge. Banks and the postal operator are not entitled to charge a fee for issuing or conducting operations with these cards or for making money transfers.

Earlier, the website for compensation of problem loans was presented in Azerbaijan, through which citizens can get detailed information about their credit debt, the amount of compensation, including what part will be received by the borrower and what will be used to pay off the debt, and the ways of loan restructuring, among other things.

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Leman Mammadova is AzerNews’ staff journalist, follow her on Twitter: @leman_888

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