AZE.US
Azerbaijan is preparing new rules to regulate pawnshops, as authorities move to bring a loosely supervised lending market under clearer legal control.
The regulatory framework for pawnshop activity is now at the coordination stage, according to local media reports. Once approved, the sector is expected to face more formal oversight.
Economist Eldeniz Amirov told Ajans.az that the push for legislation is linked to long-standing problems in the market. Many borrowers, he said, have faced difficulties because of high interest rates, unclear practices and losses tied to pledged gold and jewelry.
In some cases, customers have complained that jewelry handed over as collateral was damaged or returned in poor condition. For many households, pawnshops are used as a last-resort source of quick cash, which makes weak regulation especially risky.
Amirov said the Central Bank appears to be approaching the issue from that perspective: the market cannot be properly controlled without a legal framework.
He said new legislation could help create clearer rules for both borrowers and pawnshop operators. The aim is not necessarily to shut down the sector, but to reduce arbitrary practices and make the terms of borrowing more predictable.
Amirov does not expect a sharp rise in interest rates as a result of the proposed regulation. Some changes may occur in individual areas, he said, but major increases or decreases are not currently expected.
The new rules may even make pawnshops more attractive to people who urgently need money, if the legal framework reduces the issues that have caused public complaints.
For borrowers, the main question will be whether the new system gives them stronger protection when they pledge valuables in exchange for short-term loans. For the market, it could mark the beginning of a shift from informal practice to a more regulated financial service.
AZE.US