The Central Bank of Azerbaijan (CBA) has reacted to some media reports on conditions set by the bank to regulate consumer loans.
In a report, CBA confirmed that it has ordered its branches across the country to tighten their control over loans. However the bank added: "Unsecured loans need to be issued upon obtaining borrower's long-term financial statements and credit histories, under the requirements of CBA Regulations on Issue of Loans in Banks."
The bank went on saying: "Individuals should give a statement of salary or a statement of their earnings from other officially confirmed sources. To note, in an international practice unsecured loans are deemed to be the loan products, which require deeper evaluation and underwriting. Hense, confirmation of borrower's income and accordingly his/her indebtedness capacity is used to protect the credit portfolio quality, avoid deterioration of borrower's financial standing and boost bank's financial sustainability.
The CBA also stressed that it will continue efforts to raise financial awareness of the population.
Earlier a source in the Azerbaijani banking sector told that the CBA has called domestic banks to apply stricter regulations over paying loans to their clients.
The CBA has sent a letter with instructions to the banks operating in the country to stop lending to borrowers without a workplace reference.
"This measure is aimed at preventing possible risks in the future. There is an approved procedure for issuing loans. This includes the necessity of handing over a certificate of employment. This paragraph has not been violated, but the CBA believes that control of its implementation was insufficient and banks were instructed to control compliance with the rules," the source said.
The Azerbaijani banks have increased lending to the economy by 24.51 percent in January-November 2013 and by 29.96 percent per annum.
The banks delivered loans totaling over 15.245 billion manat including about 10.927 billion manat in national currency and around 4.319 billion manat in freely convertible currency.
There are 43 banks in Azerbaijan.