Baku - APA-Economics. Director General of the Central Bank of Azerbaijan Rashad Orujov addressed a letter to the banks and Non-Banking credit Organizations in the country.
According to APA-Economics, the letter says that several banks imposes high commission fees on interest rates of consumption loans and the Effective Annual Interest Rate on consumption loans in the banks significantly exceeds the average effective annual interest rate of banking sector.
CBA demands banks and NBCOs the commission fees not to exceed 1% of sum of credit, including cashing.
Several banks told APA-Economics that the letter has a number of points arising questions.
“We have received the letter. However, there are some issues to be discussed. The Central Bank should present details and concretize. The commission fee made 3-4% depending on the period of the loan. My profit was 2%. Other commission was for insurance of the clients. Now, let the Central Bank answer this question. Is the life insurance of the clients is included in this commission fee or not? I cannot insure client with my profit”.
Other banker said that the banks have already started discussions with the Central Bank.
Another banker says the new demand will affect the interest rate on consumption loans: “We think the interest rate will increase”.
Expert Samir Aliyev said that the Central Bank cannot demand such things: “Because, according to the bank legislation, the banks have right to define commission fees. Central Bank can only recommend in this regard”.
Expert also noted that this initiative is a positive in terms of competitiveness in the loan market and will eliminate abuses: “Currently, the banks have are able to manoeuvre sufficiently through the commission fees. They prefer principle of “low interest rate – high commission fee”. The commission fees even reach 6-7%. This is hidden incomes of the banks. However, 1%-commission fee will allow client to choose appropriate bank”.
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