Regulatory Alerts2026-06-05
Regulation on Credit Risk Management in Banks
The Central Bank of the Republic of Azerbaijan issued this regulation to establish minimum requirements for credit risk management systems within its banking sector. Banks must develop and annually review a comprehensive credit risk management policy approved by their Supervisory Board, covering borrower assessment, internal risk rating, collateral appraisal, stress testing, and specific provisions for green and sustainability-linked loans. The framework mandates segregated risk and lending functions, validated behavioral models for income projection, explicit consideration of climate and ESG risks in collateral, and strict monitoring of non-performing loans, debt-to-income ratios, and foreign currency exposures.
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