The Central Bank of Azerbaijan (CBA) has ordered commercial banks to stop issuing loans at retail outlets, claiming mounting concern that a consumer lending bubble is developing.
In a letter sent to banks operating in Azerbaijan, the CBA said that loans should only be issued at bank branches, not at points of sale. "Banking services should be rendered in suitable locations - in branches and sub-branches of banks," the CBA demands in the letter, according to Fineko/abc.az.
The order follows an increase in consumer loans issued at auto outlets and strores selling furniture, electrical equipment and mobile phones, Trend reports. Since the beginning of 2012, many banks have opened point of sales desks within stores and shopping centres to speed up the lending process and allow loans to be provided on the spot. These must be closed down within three days, the CBA's letter said.
"Today, there is no legal basis for rendering banking services beyond bank branches and offices... These facts raise bank's operational risks," a spokesman for the CBA said.
The CBA's latest figures show overall lending grew rapidly in 2012, although it does not offer a breakdown indicating the level of increase in consumer lending. In total, credit increased to December 1, when total loans reached AZN10.49bn ($13.4bn), a year-on-year increase of 17.9%.
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