BAKU, Azerbaijan - Azerbaijan is tightening requirements for people who guarantee consumer loans, limiting a guarantor’s debt-to-income ratio to 70%. The new rules will take effect on Nov. 9, 2026.
The changes require banks to assess more closely the financial capacity of a person who guarantees someone else’s loan. Lenders must consider the ability of both the main borrower and the guarantor to meet their obligations.
The Central Bank of Azerbaijan said the amendments are intended to improve assessments of borrowers’ repayment capacity and align prudential requirements more closely with credit risk. Its Oct. 13 announcement confirmed that the changes will enter into force Nov. 9.
Helping an Acquaintance Can Leave a Guarantor Paying the Debt
In a television report, one woman said she agreed to act as guarantor for an acquaintance who was experiencing financial difficulty. The borrower later stopped making payments on time, the case went to court and the guarantor was required to pay the remaining loan balance.
Other people interviewed for the report described guaranteeing loans for relatives. Some said the arrangement caused no problems, while others faced demands from banks and additional expenses.
The accounts illustrate why lenders must review the finances of both parties. If a borrower stops paying, the obligation can become a direct burden on the guarantor’s household budget.
Why the Limit Is Being Introduced
Banking expert Faraj Akhundov said one of the main goals of the changes is to protect citizens’ financial stability and reduce the risk of excessive indebtedness.
He said holding several loans and credit cards at the same time makes payments more difficult to manage. When a large share of a person’s income already goes toward debt service, additional obligations increase the likelihood of missed payments.
A stricter review should reduce the risk that a person who is already struggling with personal payments agrees to assume responsibility for another borrower’s loan.
Borrower Income Must Be Verified With Documents
The amendments also change how lenders determine the main borrower’s income.
When salary, pension, scholarship, benefit, deposit-interest income or other receipts can be established through supporting documents or state information systems, lenders may not substitute income projected by a behavioral model.
When verified information is available, the affordability assessment must therefore rely on that evidence rather than an estimated forecast.
The Central Bank said the measures are designed to strengthen borrower assessment, improve credit-risk management and support sustainable lending.
Watch the original television report.
Source: Vesti Baku.