Azerbaijani Banks Switched to Short-Term Crediting under Gold Mortgage
OREANDA-NEWS. January 28, 2010. Well-informed sources say that a range of domestic banks (including separate top-leaders of the sector) in fact introduced a banning regime of consumer small (in the amount of up to 5,000 manats) crediting for terms of up to 12 months.
“On the one hand, separate banks claim potential customers that they have not money for small loans for a short period, but they are ready for medium- and long-term crediting for large sums. On the other hand, other banks express readiness for micro short-term loaning, but set out exorbitant conditions for that. In particular, they demand gold as compulsory mortgage and fix a loan interest at the level of at least 30-36% per annum,” a source said.
Azerbaijan Central Bank’s accounting rate is only 2%.
“The banks do not comment reasons for such moves, but it is going to have negative consequences for the country’s consumer market,” the source considers.
One should note that the practice of micro loaning under gold mortgage under annual rate of 36% in the country was introduced by Azerbaijan Micro Finance Bank (current Access Bank) in the past century. Possibly, in connection with this Bank’s success other domestic credit institutions also decided to adopt its practice.
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