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Interest rate and maximum limit on insured deposits may be cancelled - ANALYSIS

Interest rate and maximum limit on insured deposits may be cancelled - <span style="color: red;">ANALYSIS

25 June 2015 12:57 (UTC +04:00)

Baku. Musa Ahmadov - APA-Economics. Interest rate (12%) and maximum limit (AZN 30,000) on insured deposits may be cancelled.

Though the financial enterprises have not received any instruction about abovementioned issue, the interest rate on insured deposits and limit of the maximum sum are expected to be cancelled. The bankers say it aims to eliminate manat deficit, as well as achieve involvement of more deposits.

Provision of crediting with manat during four months of 2015 fell from AZN 4.4 bln to AZN 2.3 bln. In other word, the manat deposits made AZN AZN 4,422,400,000 in December 2014, AZN 4,276,300,000 in January 2015, AZN 2,987,800,000 in February, AZN 2,697,000,000 in March, AZN 2,245,100,000 in April.

The banks lost AZN 2 bln only in deposits. The population takes deposits back due to different causes.

Though many bankers think the cancellation of maximum limit on insured deposits is possible, some bankers don’t see it acceptable. According to some bank experts, elimination of interest rates will draw the depositors into placing the money in the banks. That’s the depositors will be sure that they are able to take their money back anytime and therefore place their money in the banks.

Some experts say differential approach can be applied in the cancellation of limit of interest rate: “That’s this limit may be cancelled in relation to depositors. However, the limit remains in relation to the banks. The banks getting high interest from this limit will pay commission to Deposits Insurance Fund (DIF)”.

DIF Executive Director Azad Javadov told APA-Economics that the change of maximum limit for deposits insurance is regulated by law.

“Interest rate on insured deposits can be discussed at the Council of Trustees of the Deposit Insurance Fund”, Javadov said.