Azerbaijan's Central Bank tightens credit risk and lending requirements

Photo: Central Bank of Azerbaijan

BAKU, Azerbaijan, October 12. The Board of the Central Bank of Azerbaijan has amended the rules governing credit risk management, asset classification, and prudential standards for credit risk.

This was reflected in Decision No. 39/3 of the CBA’s Board of Directors, dated September 15, 2026.

Under the amendments, an additional requirement has been introduced for loans issued to legal entities engaged in retail installment sales, as well as to individuals conducting business activities without forming a legal entity.
Specifically, information on the total volume of the installment sales portfolio and the number of buyers, as provided by these entities to the bank, will be compared with the corresponding data they submit to credit bureaus. If it is determined that the level of compliance for any of these indicators is less than 90%, this circumstance will be taken into account when classifying assets.
In addition, the decision replaces the term “standard asset subject to additional risks” with the term “asset under observation.”

According to an amendment to the Regulation on Prudential Standards and Requirements for Credit Risks, including Large Credit Risks, when a guarantor provides collateral for a consumer loan, the guarantor’s debt-to-income ratio (DTI) must not exceed 70%.

In addition, it is stipulated that loans issued based on a model and written off the balance sheet over the past 12 months will also be included in the calculation of the approved loan amount. The new DTI requirement will apply only to loan applications submitted after this requirement takes effect.

In accordance with the amendment to the “Rules for Credit Risk Management in Banks,” the use of projected income based on a behavioral model will be prohibited in cases where the borrower’s income can be determined based on relevant documents or information obtained from government information resources and systems.

In such cases, the borrower’s income will be determined based on a salary statement from the employer, a corresponding pension statement, a document confirming the payment of pensions and benefits, a bank statement confirming interest income from existing deposit accounts, or other documents confirming income, as well as information obtained from government information resources and systems.

The amendments approved by Parts 1–3 of the resolution will take effect one month after the date of the resolution’s publication. The new requirements, subject to the relevant exceptions, will apply to credit claims arising after the date they take effect.