Azerbaijan’s Central Bank is preparing regulatory changes for mandatory unemployment-insurance coverage linked to bank loans, a measure intended to help borrowers continue payments if they lose their jobs.
Shahin Mahmudzade, a director general at the Central Bank of Azerbaijan, announced the plan on October 15 during the presentation of the Financial Stability Report for the first half of 2026, according to AZERTAC.
Mahmudzade said the goal was to support borrowers in meeting their loan obligations after losing employment while also reducing banks’ credit risk. Report said banks would be required to offer the insurance and that the planned changes were expected to take effect by the end of 2026.
The authorities have not yet published the premium, qualifying reasons for unemployment, benefit limits or payment period. The proposal is therefore not yet an obligation currently imposed on borrowers.
Nonperforming Loans Near 3%
Mahmudzade said nonperforming loans accounted for about 3% of the banking sector’s total loan portfolio. The regulator described the ratio as close to a historic low and said the recent rise in overdue debt did not create a systemic risk.
Deposit-Insurance Threshold to Track the Market
The Central Bank is also developing a methodology under which the maximum interest rate eligible for deposit protection would change with market conditions. The calculation is expected to consider the average rate on deposits attracted by banks during the previous six months.
The current ceiling for protected manat deposits is 12%. Under the new approach, it could be adjusted instead of remaining a fixed figure.
Separate Rules Planned for Pawnshops
A proposed law on pawnshops would introduce operating and supervisory requirements and strengthen protection for property pledged by customers. Existing pawnshops are expected to receive a transition period after the legislation is adopted, although its length has not been announced.
Source: Vesti Baku