BAKU, Azerbaijan, October 29. Governor of the
Central Bank of Azerbaijan (CBA) Taleh Kazimov has rejected claims
that prudential requirements for lending to the real sector,
particularly small and medium-sized enterprises (SMEs), agriculture
and export-oriented businesses, are too strict, Trend’s correspondent reports
from the event.


He made the remarks at a press conference on Thursday following
a meeting on the parameters of the interest rate corridor.


“Our prudential requirements for financing the real sector are
not strict; on the contrary, they are lenient. Compared with
international practice, our requirements are relatively lenient,
particularly regarding lending to businesses, including SMEs,
agricultural producers and export-oriented companies. Foreign
experts sometimes criticize us for this,” he said.


The CBA governor noted that if a specific prudential requirement
is allegedly preventing banks from financing the real sector, that
provision should be identified in the relevant regulations.


“If we have strict limits or requirements, let us identify the
specific provision in our regulations. Let us show that this is
precisely why loans are not being issued. If that is indeed the
reason, I am ready to accept it. But there is no such provision,”
Kazimov emphasized.


He said that assessments of prudential rules in the banking
sector should also take into account comparisons with international
practice.







“If we look carefully at the roadmap adopted in July, we will
see that it introduced not only tighter requirements but also
relaxations. In particular, certain tighter requirements for
consumer lending were introduced not to reduce lending, but to
encourage lending with lower risk,” the CBA governor said.


According to Kazimov, the main reason for tightening consumer
lending requirements is to prevent excessive household
indebtedness.


“We have always considered strict requirements for consumer
lending desirable. The main reason is to prevent excessive
borrowing by households. Despite the strict requirements, consumer
lending has grown by 15–20% in recent years. If we ease these
restrictions and requirements, consumer lending will increase even
further. Can you imagine how high household indebtedness could
become? It could reach an uncontrollable level. That is why we
regulate it,” he added.


The CBA governor urged experts and market participants to study
the existing regulations carefully and compare them with
international practices before commenting on their strictness.


“My appeal to experts is this: first, let us read the
regulations carefully and, where possible, compare them with
international practice. Only then should we comment on whether they
are strict, lenient or something else,” Kazimov said.