11:38 - 24.02.2022
February 24, Fineko/abc.az. According to the statistical bulletin published by the Central Bank of Azerbaijan, the share of non-bank credit organizations (NBCOs) in the total volume of credit investments in the country is below 3%. For example, as of 1 January of this year, credit investments in Azerbaijan totaled AZN 17.12 bn (97.3% accounted for banks and 2.7% for NBCOs).
Nevertheless, observations show that banks’ activity in the field of lending does not cover all populated localities of the country. They are more active in the capital, as well as in other large cities and district centers. And those who live in remote villages and settlements apply to NBCOs for a loan. Although, microfinance organizations offer loans almost 2-fold expensive than banks.
For example, if you can borrow from banks at 13-25% per annum, then in NBCOs the annual interest rate ranges from 20-30%. But they also have their own customer base. How then do NBCOs compete with banks?
ABC.AZ tried to find an answer to this question.
Azerbaijan Microfinance Association’s executive director Zhalia Hajiyeva, says that NBCOs manage to remain competitive mainly because of financial resources: "In banks, financial resources are formed mainly at the expense of funds raised from governmental agencies and the population. The financial resources of NBCOs depend on shareholders, foreign investors, individuals and legal entities engaged in entrepreneurial activities. Therefore, the possibilities of NBCOs to take risks when giving a loan are wide in comparison with banks, as they do not risk the money of the state and the population.”
