Banking Regulations – Basically, loans are issued by banks and other micro-finance organizations named as “non-bank credit organizations”. Unlike banks which are allowed to accept deposits, issue loans and make money transfers, non-bank credit organizations are not allowed to accept deposits. Postal service is also allowed to render banking services, including accepting deposits, issuing credit cards and making money transfers. Banks, non-bank credit organizations and postal services are licensed by the Financial Markets Supervisory Authority (FMSA). The license is granted on a perpetual basis. Minimum charter value requirement for the Banks is AZN 50 million.

FMSA is the quasi-state supervisory organization on revision of the financial statements, accounting books and any other records of banks. FMSA is also authorized to demand explanations on matters relating to the accounts and financial statements of the banks, to demand prior written notification for any purchase which will cause the purchaser’s shares to become equal or exceed the threshold of 20% of the charter capital. Further, any person who wishes to become a major shareholder of a bank in Azerbaijan or to create a bank holding must obtain a prior written consent from the FMSA. Operations of foreign banks in the form of branch and representative office are licensed by the FMSA.

Within the last 3 years the Ministry of Taxes, FMSA and the banks themselves have taken a number of measures for boosting the rate of the non-cash payments. So that, since 2017 entrepreneurs’ cash operations have been restricted to certain limits defined by the Law of the Republic of Azerbaijan “On non-cash payments.” Relevantly, payments of administrative fines, taxes, customs duties, pensions and others have been transferred to non-cash basis. Entrepreneurs withdrawing cash from their bank accounts became subject to tax payment at the rate of 1% (one percent) of the total withdrawal amount.  As the result of the mentioned measures, the funds in banks has impressively increased and such measures also founded the new ground for the issuance of new loans as well.

Notwithstanding with the fact that FMSA is the main regulatory authority of the credit organizations, the Central Bank of the Republic of Azerbaijan fulfills functions of a state bank and implements state monetary policy, maintains cash circulation and regulates foreign exchange rate of manat.

After the inspections in the field of customs audit were added to the Law “On suspension of inspections in the field of entrepreneurship”, as one of the exceptional inspections which would not be suspended, the inspections have been broadened in the field of financial markets as well. The inspections on financial markets are conducted by the FMSA, which investment funds, insurance organizations, controls securities market, credit organizations, currency exchange and payment systems.

Manat (ISO 4217 code of manat – “AZN” and the logo of manat – “‎₼”) is the name of the official currency of Azerbaijan Republic. All local and foreign companies and individuals may have accounts both in local and foreign currencies at all local banks. All the transactions and settlements within the territory of Azerbaijan Republic (including the payment of an employee’s salary) has to be made in AZN, with a few exceptions stipulated by law.