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of July 22, 2022 No. 29/1-2
About approval of "Procedure for rather prudential standard rates and requirements in connection with credit risks, including large credit risks"
According to Articles 34.2. 5, 34.2.6 and 34.5 Laws of the Azerbaijan Republic "About banks" and article 22.0.17 of the Law of the Azerbaijan Republic "About the Central bank of the Azerbaijan Republic" DECIDES: Board of the Central bank of the Azerbaijan Republic
1. Approve "Procedure for rather prudential standard rates and requirements in connection with credit risks, including large credit risks" it (is applied).
2. Repeal the Resolution of the liquidated Chamber on supervision of the financial markets of the Azerbaijan Republic of November 16, 2018 No. 1851100016 "About approval of "Regulations of credit risks on one borrower or group of the connected borrowers" and the change approved in the specified Rules by the Resolution of November 18, 2019 No. 1951100034.
3. Charge to Legal department (Rena Melikova) in 3-day time to provide submission of this Resolution to the Ministry of Justice of the Azerbaijan Republic for entering into the State register of legal acts of the Azerbaijan Republic.
Chairman of the Central bank
Approved by the Resolution of Board of the Central bank of the Azerbaijan Republic of July 22, 2022, No. 29/1-2
This Procedure is developed according to Articles 34.2. 5, 34.2.6 and 34.5 Laws of the Azerbaijan Republic "About banks" also extend to the banks operating in the Azerbaijan Republic and determines the maximum extent of credit risks by one borrower or group of the connected borrowers, overall large credit risks, and also other connected credit risks in connection with credit requirements in the banks functioning in the Azerbaijan Republic, and local branches of foreign banks (further - banks) and rules of application of these standard rates.
2.1. The concepts used in this Procedure have the following values:
2.1.1. the maximum extent of credit risks - upper limit of credit requirements of bank for one borrower or group of the connected borrowers;
2.1.2. the extent of large credit risk - the size of the credit requirement (the large credit requirement) for one borrower or group of the connected borrowers exceeding 10 (ten) percent of the capital of the I level of bank after deduction;
2.1.3. the credit requirement - the rights to claim of bank connected with execution of monetary commitments in any form and also any undertaken obligation on provision of money, guarantee, the guarantee, purchase of debt securities and other right connected with the requirement of return of the means provided under the agreement in this or that form. If other is not established by this Procedure, in calculations the principal debt according to the credit requirement is considered;
2.1.4. the borrower - the physical person or legal entity having in this or that form monetary commitment before bank according to the credit requirement;
2.1.5. the non-bank financial organizations - the financial organizations rendering other financial services except transactions on attraction of deposits (deposits) (non-bank credit institutions, credit unions, lessors, the insurance, factoring, lombard organizations and other similar organizations);
2.1.6. automobile loan - the loan granted for the purpose of acquisition of the vehicle which subject of providing is the specified vehicle;
2.1.7. the vehicle - the vehicle acquired by physical persons for private consumption;
2.1.8. the credit for real estate - the loan granted to physical persons for acquisition or construction of real estate for private consumption;
2.1.9. the credit relation to providing (coefficient of OKO) - the relation of total amount of the credit (principal debt according to the credit agreement) and the charged percent) to market value of providing on the credit;
2.1.10. multilateral development banks - the international financial institution founded by two or more countries for support of economic development;
2.1.11. the banker acceptance - the document providing consent or guarantee of bank for execution of short-term debt obligations;
2.1.12. the liquid market - the market in which there is enough offers of purchase and sale and also on which it is possible to perform sale in acceptable time limits and at the market price;
2.1.13. partially secure or unsecured credit requirement - the credit requirement in case of which providing types, the stipulated in Item 5.3 presents of the Procedure act as providing the credit requirement, and their market value is less than 100 (hundred) percent of obligation amount provided with them and when other types of providing - less than 150 (hundred fifty) percent, except as specified, provided by this Procedure act as providing the credit requirement.
2.2. The concept of the relation of debt to the income (coefficient of ODD) used in this Procedure matters, established "By procedure for classification of assets and creations of special reserves for compensation of possible losses".
3.1. Borrowers are recognized connected the following cases:
3.1.1. when one of borrowers has considerable influence on other borrower of bank;
3.1.2. when the same person (irrespective of, it is the borrower or not) has considerable influence on two or more borrowers of bank;
3.1.3. when person bearing joint or subsidiary liability according to obligations of this or that borrower is borrower of bank;
3.1.4. when the same person (irrespective of, it is the borrower or not) bears joint or subsidiary liability according to obligations of two or more persons who are borrowers of bank;
3.1.5. when one borrower transfers the credit obtained by him in bank to other borrower in this or that form or if two or more borrowers list the credit obtained by them in bank together or separately to the same person (irrespective of, it is the borrower or not) (except as specified when two or more borrowers for commercial purposes transfer funds to the same supplier of goods or services);
3.1.6. when borrowers jointly utilize the credits obtained in bank for income acquisition;
3.1.7. when more than 50 (fifty) percent of the income or expenses of one borrower (including the consolidated income and expenses) are connected with other borrower of bank;
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