After the decline in oil prices, economic slowdown has begun in Azerbaijan. This was particularly evident in the banking sector. After the devaluation, the number of troubled loans has increased dramatically. Nevertheless, most of customers were able to pay their loans on time. Currently, the economic problems are far behind. However, unfortunately, today a number of banks do not make any concessions to their customers. Is it possible to apply various concessions to exemplary customers? Is there such a point in world practice?
According to economic expert Rashad Hasanov, currently there is no serious competition in the banking sector. "Most of the banks are not interested in lending under present conditions. At the same time, it is necessary to pay attention to the interest rates created within the existing conditions. Because banks attracting deposit in manat with a rate of about 10-15 percent can not be interested in lower interest rate lending in conditions of inflation and in the face of existing devaluation risks. That is irrational. At the same time, it should be borne in mind that naturally, banks that target the expanding of the customer base in a long-term period, may apply various concessions for trouble-free customers. This tendency is observed to some extent. Perhaps the concessions offered are not particularly noticeable, but in any case, they are applied. For example, some banks gradually reduce interest rates for repeat and reliable customers. In some cases, a full exemption from commission is applied or, some changes are made to the terms of payment," he said.
The expert added that after 2014, most customers have actually become difficult. "At present banks strive to get more shares from a small marginal customer group. But the other main purpose of banks is to generate income under existing conditions. The expectation of more serious concessions in such a risky period would be naive. However, the change in the competitive environment in the banking sector and further development could lead to the expansion of proposed discounts. As I said, competition in the banking sector is currently very low. Credit accessibility becomes more difficult. In fact, the mechanism of concessions is an approach that depends on the credit strategy of each bank. But, of course, the lending process should ensure its profitability. Therefore, different mechanisms are created by banks around the world. In some cases, preferential loans are offered to certain social groups, which enter the reliable customer category. Similar trends are used in some cases in Azerbaijan too. Some banks offer targeted lending, particularly for certain groups working in government agencies. Practices such as reducing interest rates, lending costs, withdrawing interest rates for a certain period, withdrawing most of the principal debt after a certain period, and applying interest rates on targeted loans under certain socio-economic projects are also applied in our country. For example, loans with lower interest rate are offered in the financing of agricultural business projects. The main issue here is to maintain the functionality of the funds, to protect profitability, as well as to have a greater share in the existing customer base," Hasanov noted.
Economic expert Azer Badamov said that banks currently apply various concessions to their regular customers. "However, the issue of applying special concessions to exemplary customers is not widespread yet. There are various problems in this field. Applying such concessions is not an easy task. It needs some time. At present, mostly entrepreneurs are offered various types of preferential loans. In the future this tendency can be continued,” he added.