By AZE.US
Azerbaijan has revised the rules governing short-term “daily” loans issued by non-bank credit organizations, including a one-time restructuring option that can give qualifying borrowers up to 45 days to make payments without new late-payment interest or penalties.
The changes to rules on the regulation of credit risks at non-bank credit organizations took effect on Oct. 10. The decision was signed by Central Bank of Azerbaijan Chairman Taleh Kazimov, according to Vesti Baku.
Daily Loans Excluded From One Distress Test
Under the revised framework, one of the criteria used to identify a borrower’s financial difficulties is debt that is more than 90 days overdue and amounts to at least 20% of the borrower’s total obligations.
Short-term daily loans are now excluded from that specific test. The exclusion does not cancel an overdue debt, however, and it does not mean that a lender can disregard the borrower’s ability to repay.
One-Time 45-Day Restructuring
The rules allow a qualifying daily loan to be restructured once for a period of up to 45 days after the borrower pays 20% of the remaining principal.
During that restructuring period, overdue interest and penalties are not charged. Ordinary interest specified in the loan agreement continues to accrue.
For example, if 500 manats of principal remain unpaid, the borrower would have to pay 100 manats to qualify. The remaining principal would then be 400 manats.
Economist Khalid Karimli said the mechanism gives a borrower time to bring the loan back on schedule without accumulating new late-payment penalties. It is not an interest-free deferral, he said.
The 20% payment is a share of the outstanding principal, not an interest rate.
Scope Is Limited
The changes apply only to specified types of loans issued by non-bank credit organizations. Eligibility depends on the loan contract and the regulatory requirements; the measure is not a general amnesty for consumer debt.
Additional reporting on the changes is available in the original video report.