Azerbaijani people seek routes to microcredit

Azerbaijan has recently observed an impetuous development in the credit union market, which shows high growth rates on major indicators of their activity.

According to the Central Bank of Azerbaijan (CBA), the assets of credit unions increased from 31.67 million to 37.12 million manat with capital growth from 9.01 million to 10.8 million manat in the first half of 2011.

The assets of other non-bank organizations fell from 26.64 million to 26.36 million manat with a decline in capital from 18.86 million to 18.53 million manat.

As of August, the loan portfolio of 77 credit unions- members of the Azerbaijani Credit Unions’ Association (ACUA) amounted to 29.34 million manat. This suggests that about 80,000 citizens use the services of credit unions. These credit unions include 20, 114 active members.

Creation and strengthening of the credit unions network in Baku, as well as in the country’s different regions allows most of the population to have access to credit and their rational use, contributes to the development of small businesses, providing the population with jobs, improve the social status of citizens.

A credit union may be an alternative to bank for entrepreneurs seeking to quickly get a loan for a short time. Commercial banks are guided by commercial interests and try to find a balance between the minimum risk and maximum profit.

Given its several shortcomings such as high rates of annual and short maximum period of loan, credit union has the advantage over commercial banks.

Credit unions do not seek to replace the banking system. They serve to a specific economic niche, lending to mainly farmers and small investors.


Leyla Abdullayeva
/Trend/