On 7 December 2016, the President of the Republic of Azerbaijan signed the Decree on implementation of the Law No. 384-VQ On Credit Bureaus, dated 28 October 2016 (the Law).
The Law sets out the principles of building a credit history and determines how such information can be used by credit bureaus. The Law also establishes the rights and obligations of credit bureaus and credit history subjects, as well as information providers and users.
The purpose of the Law is to improve access to financial services by legal entities and individuals by creating a long-term database containing data on the performance of financial obligations. The Law also aims, in general, to strengthen financial discipline and ensure the stability of the financial system.
Credit bureaus may be established as limited liability or joint stock companies, and the Chamber of Supervision over the Financial Markets (the FMSC) will determine the requirements with regard to their minimum charter capital amount and qualifications of executive staff.
Credit bureaus will collect, maintain, analyse and provide information on the credit histories of legal entities and individuals, prepare software to build credit histories, advise on how to build and use a credit history, conduct statistical research, assess the solvency and performance discipline of debt obligations by legal entities and subjects, and assign credit ratings.
A credit bureau shall collect credit histories from credit institutions and will also be able to collect such information from leasing, insurance, reinsurance and factoring companies, retailers, mobile operators, utility companies, and the Central Bank of the Republic of Azerbaijan, among other persons. Courts, executive state and local bodies, notaries, the FMSC and the National Television and Radio Council will also provide information to credit bureaus.
The information provided to credit bureaus will include, inter alia, amounts of current debts, purposes of loans, debt repayment dates, overdue debt amounts, repayment extensions, security obligations, financial penalties, and other sanctions. This information shall be stored by credit bureaus for ten years.
It is expected that the first credit bureau will be established in Azerbaijan in the near future, and its charter capital will be in the amount of EUR 2.2 million. Participatory interests in the charter capital will be divided between its operator, the Icelandic company CreditInfo, 13 local banks, and two local non-banking credit institutions.