The Central Bank of Azerbaijan (CBA) has introduced significant amendments to the regulations governing credit risk management for banks and non-bank credit organizations (NBCOs). These changes, approved by the CBA Board, update the existing frameworks established in September 2023 and November 2024, respectively.
According to the Operative Information Center-OMM, CBA Governor Taleh Kazimov has signed the new decree, which is set to take effect on October 1 of this year. The Legal Support Department for Financial Markets has been instructed to register these amendments with the Ministry of Justice within three days.
The new regulations introduce stricter controls over remote consumer lending. Banks and NBCOs are now required to provide customers with the option to restrict remote consumer loan agreements or remote increases in credit limits through all available sales channels. If a customer activates such a restriction, it can only be lifted through a written application submitted in person, or via enhanced electronic signature or authentication methods.
Furthermore, financial institutions must verify the status of these restrictions through both their internal systems and the credit bureau's database before processing any remote loan applications or limit increases. If a restriction is active, the remote transaction is prohibited.
To enhance security, institutions must immediately notify customers via mobile applications or SMS if an application for a remote loan or limit increase is received for an account where restrictions have been applied. Additionally, the CBA has implemented mandatory waiting periods for the disbursement of funds:
- For amounts up to twice the minimum wage: Funds will be disbursed two hours after the agreement is finalized.
- For amounts exceeding twice the minimum wage: Funds will be disbursed 24 hours after the agreement is finalized.
The regulations also stipulate that if a loan is issued or a limit is increased in violation of these requirements, the borrower must be released from obligations regarding that specific amount.
These measures are part of the Central Bank of Azerbaijan's ongoing efforts to strengthen the financial sector's stability and protect consumers from unauthorized credit activities. By mandating waiting periods and robust authentication, the CBA aims to mitigate risks associated with digital financial services, which have seen rapid growth in Azerbaijan in recent years.
