Tuesday, July 23

Azerbaijan plans to create agricultural bank for development of agrarian business

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What functions will the agricultural bank have to perform?

Recently, a conference was held in Azerbaijan, where entrepreneurs and representatives of the country’s Banking Association met. Important issues, first of all those related to the state of affairs in the agro-industrial sector, were discussed at the conference. In order to improve and automate the processes of accountability of persons doing business in the agricultural sector, the Central Bank announced plans to start a new program of soft loans. These services will be provided by the Agricultural Bank of the country, the creation of which is being considered by the government.
It is expected, but the new financial institution will operate in accordance with global principles and introduce modern tools to improve the industry. The idea is still under consideration, but representatives of the Central Bank and Agriculture Ministry are seriously working on this possibility.
Other issues related to the agricultural sphere were also raised at the conference. One of them is the options of financial support to entrepreneurs engaged in agriculture. An important task is to develop small business, which is going through difficult times. One way out could be to give farmers the opportunity to receive soft loans to organize and expand their business activities. Within this framework, it is convenient to use unsecured loans and loans secured by various types of property.
Transparency in agribusiness is one of the key points. According to the Central Bank, it is necessary to improve the reporting procedure and revise its rules. All conducted financial transactions should be as transparent as possible, including the registration of family farms. Such measures should be taken so that in the future entrepreneurs could unite in farming communities or organize credit unions to help develop the agricultural sector without any extra effort and paperwork.

Central Bank experts are also reviewing the requirements for state registration of land plots and ownership rights to them. It is planned to expand the options for the use of agricultural assets so that they can be used as collateral real estate. According to the Central Bank of the country, the new regulatory measures will allow developing the segment of guaranteed loans.
It is also important to expand the use of various financial instruments for agricultural business. This concerns factoring, leasing and other options that are used in the capital market.
As a result of the conference it was decided to create a project group. Its participants were specialists of the Central Bank and representatives of the relevant ministry. The main task of the working group is to study the prospects of the agricultural market and its problems in order to identify optimal ways to finance the industry and entrepreneurs that do business here.
It should be noted that the Agrarian Industrial Bank had previously operated in Azerbaijan, but due to the reform of the sector and modernization of the economy, it was eliminated.

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