Central Bank decides to once more extend additional support measures package to financial sector due to coronavirus pandemic

01-07-2021

1 July 2021, Baku: The Management Board of the Central Bank of Azerbaijan adopted the ‘Procedure for temporary regulation of activities of credit institutions on the backdrop of the coronavirus (COVID-19) pandemic’ with its Resolution No.16 dated 24 April 2020 in accordance with the Actions Plan approved by the Cabinet of Ministers with respect to the implementation of Item 10.2 of Decree# 1950 of the President of the Republic of Azerbaijan dated 19 March 2020 on ‘A number of measures to mitigate the negative impact of Coronavirus (COVID-19) pandemic and consequent sharp fluctuations in global energy and stock markets on the economy of the Republic of Azerbaijan, macroeconomic stability, employment and businesses’.

Taking into account the current state of the financial sector, findings of assessment of financial stability of the sector, as well as recommendations of international financial institutions, the Central Bank constantly refines the regulatory support regime and makes policy decisions.

On the backdrop of easing of a restriction regime across various sectors of the economy and gradual recovery of economic activity, the Management Board of the Central Bank of the Republic of Azerbaijan with its decision No.19 dated 30 June 2021 extended the period of recommendations issued to credit institutions with respect to non-calculation of penalty interests, fines and other penalties, non-deterioration of credit histories of borrowers due to delinquency on their credit liabilities to protect interests of and support pandemic-affected individuals and entrepreneurs until 1 October 2021. At the same time, to further strengthen the capital position of credit and insurance institutions, and channel their available funds to capital the restrictions imposed on dividend payments remained in force until the said date.

On the next phase of gradual adaptation of the banking sector to capital related new regulatory requirements, from 1 July 2021 onward market and operational risks will be considered in banks’ aggregate and Tier I capital adequacy ratios, and from the said date onward the minimum level on aggregate capital adequacy ratio will be resumed on the level set by related regulations of the Central Bank. These requirements will serve to create an additional buffer in capital of banks to meet operational and market risks. At the same time, it was decided to extend the regulatory relief in connection with the counter-cyclical capital buffer until 1 January 2022.