CBA dissatisfied with decrease in interest rates on loans

/By Aynur Karimova - AzerNews/

The Central Bank of Azerbaijan considers the rate of decline in interest rates on loans unsatisfactory.

This was noted at a meeting of CBA Chairman Elman Rustamov with managers of the country's banks, the CBA said on July 10.

"Despite the fact that the central bank constantly pays attention to the banks on strengthening social responsibility in the process of lending, calls on banks to take into account the priorities and goals of the economic development of the country, the rate of decline in interest rates on loans and tariffs for other services associated with them, remain at an unsatisfactory level," CBA noted.

The central bank gave specific instructions to the banks on this issue, stating that they should use all available resources and opportunities to facilitate lower interest rates. The decision to limit the fee for banking services in the registration of consumer loans by up to one percent contributes to a significant reduction in the real effective interest rate on loans.

Bank managers were sympathetic to the positions and recommendations of the CBA, stating that they will undergo complex initiatives to implement the instructions by the central bank.

The CBA noted that the banks would continue to work together to reduce interest rates on loans.

The currency market and the exchange rate of Azerbaijani manat have significantly stabilized in the last two months, while the CBA reported an increase in its currency reserves.

The CBA is keen on continuing measures to support economic growth and strengthen Azerbaijan’s domestic markets.

“One of the most important measures taken in this sphere was the stimulation of reducing the cost of banking services, in particular, decreasing the discount rates,” CBA said on July 10.

To strengthen financial support to the non-oil sector, stimulate investments, optimize the cost of financing small and medium-sized businesses, and improve mortgage lending, the CBA decided to reduce its discount rate from 3.5 percent to 3 percent starting July 13, 2015.

The purposeful exchange rate policy pursued by CBA has strengthened the international competitiveness of the economy and contributed to sustainability in the balance of payments.