CBA talks on revocation of licenses from banks
Devaluation of the national currency and other unfavorable process that challenged the financial sector of Azerbaijan forced the state to interfere in the situation and take serious steps to overcome the difficulties.
Devaluation of the national currency and other unfavorable process that challenged the financial sector of Azerbaijan forced the state to interfere in the situation and take serious steps to overcome the difficulties.
Deputy CEO of the Central Bank of Azerbaijan (CBA) Aftandil Babayev said that the closure of non-viable banks in the country is aimed at mitigating the influence of unhealthy credit organizations on the economy of the country.
The CBA has withdrawn licenses of six banks operating in the country since early 2016. Moreover, Financial Market Supervisory Body (FMSB) revoked licenses of four banks after the authority got a right to held supervision over the banking sphere in the country.
Babayev said that the process is running not only in Azerbaijan, while the analogous situation may be observed in most of the countries.
“New members constantly join banking market, while old participants leave it. A bank’s license is revoked if the bank cannot fulfill its obligations in accordance with the law or if it voluntarily leaves the market. Prior to license’s revocation, a bank receives recommendations to fix flaws in its work,” he said.
He also mentioned that the closure of banks in Azerbaijan is a normal process, and it is not new.
“During 25 years there was a time in the history of Azerbaijan when the country had more than 200 banks,” he reminded.
The assets of the closed banks were not classified in line with the law, they didn’t create adequate reserves and the aggregate capital of these banks doesn’t meet the minimum requirements which stand at 50 million manats ($31.8 million). In general, banks haven’t fulfilled the instructions of the regulator.
The closure of the banks is expected to reduce the risks for the banking sector, as well as strengthen the financial stability, increase the confidence and ensure the development of the financial sector.
Some 33 banks are currently implementing their operations in Azerbaijan.