Azerbaijan extends financial sector aiding measures due to COVID-19

2 January 2021 17:19 (UTC+04:00)

By Trend

The Central Bank of Azerbaijan (CBA) has extended the validity of decisions and recommendations regarding measures to support the country’s financial sector due to the continuation of measures to support businesses affected by the COVID-19 pandemic until April 1, 2021, Trend reports referring to the CBA.

The above decisions and recommendations’ validity was extended in order to synchronize the regulatory policy of the CBA with the state policy of supporting the economy, reduce the regulatory burden of credit institutions, as well as protect consumer rights.

It was also decided to extend the term of benefits associated with loans, covered and restructured state support mechanisms, the minimum threshold for the capital adequacy ratio, accounting for operational and market risks in capital and a countercyclical capital buffer until April 1 this year, as well as non-accrual of interest and other penalties until the appointed date and advise credit institutions to report on delays in credit obligations of borrowers to the credit bureau with a special note.

For the aim to stimulate non-cash payments during a pandemic and reduce the costs of economic entities for these services, the decision of the Central Bank on reducing the service fees charged to banks in interbank payment systems, acquiring tariffs for payment cards of entrepreneurs by 50 percent, as well as deadlines for providing securities market participants with regulatory benefits, tariffs for transactions in the securities market, as well as tariffs for listing on the Baku Stock Exchange was also decided to extend until the above date.

As earlier reported, in pursuance of the Decree of the President of Azerbaijan ‘On measures to reduce the negative impact of the coronavirus (COVID-19) pandemic and the resulting sharp fluctuations in the world energy and stock markets on the Azerbaijani economy, macroeconomic stability, employment in the country and business entities’ and approved by the Cabinet of Ministers in connection with the implementation of clause 10.2 of Order No. 1950 dated March 19, 2020 ‘Action Plan’ on the provision of regulatory leave to credit institutions in order to regulate the obligations of entrepreneurs working in the areas affected by the pandemic during the quarantine regime, the Board of the Central Bank of Azerbaijan (CBA) adopted Resolution No. 16 dated April 24, 2020 approved a package of additional measures to support the financial sector and adopted the ‘Procedure for the Temporary Regulation of Credit Institutions in the Context of the Coronavirus Pandemic.’

Later, the CBA published a statement in September 2020, according to which after the expiration of the initial period established by the package of measures, the period for the application of the vast majority of the relevant decisions and recommendations in view of the continuation of the pandemic conditions had been extended until the end of September.

As part of measures to support individuals and entrepreneurs affected by the pandemic, as well as modifications to the regulatory framework for the banking sector until January 1, 2021, regulatory requirements for loan classification were relaxed and dividend payments were limited, and benefits for loan classification were applied to subsidized business loans and the restructuring of loans from public funds.

Besides, credit institutions were recommended not to charge additional interest and other fines to lenders, as well as provide information about the negative credit history of borrowers to the credit bureau with a special note until January 1, 2021.

According to the CBA’s latest statement the decline in economic activity and income of enterprises, as well as households, observed against the background of the reintroduction of quarantine measures and restrictions in some areas of economic activity, doesn’t remain without consequences for the financial sector.

Given the above factors, the Central Bank decided to extend all the support measures for the financial sector until April 1, 2021.