Murad Mammadli does not know which bank to choose to deposit the money he has saved for his daughter’s education abroad. He says one of the banks he finds reliable is AGBank.
He called the bank to ask how he can deposit his money with the bank. They told him they could not give him any information about interest rates over the phone, and that he needed to come to one of the bank’s offices to discuss the details.
“I was surprised by their terms. The annual interest rate is 1%, which means my deposit will increase just 1 per cent within an entire year. It was 8% until December,” Murad Mammadli says after he talked to the bank representatives.
azadliq.org quotes AGBank representatives saying that the terms were changed on January 13. “The customers need to regularly contact us to get further information about changing terms,” they said.
Another Azeri bank, Kapital Bank offers even lower interest rates. “It is 0.25% for those who want to take their interest money every month and 0.5% for the customers who take their money at the end of the term. Bank employees say that interest rates for dollar deposits have been decreased after the devaluation. Interest rates for manat deposits, however, are 12 or even 13%.
“Access Bank” offers 3 % interest for those who keep their money in the bank until the end of their term. If a customer wants to take his interest money on a monthly basis then the interest rates decrease 0.5 %.
“Bank Respublika” offers slightly higher interests: 4% for those who wait until the end of the term and 3.5% for customers who want their money on a monthly basis.
Ineterests for AZN deposits however are much higher – 10.5% and 10% respectively. Ineterst rates of other banks also vary between 5.5% and 12%.
“Bank Standard” accepts deposits with 12% interest regardless of deposit periods and the type of currency. The bank officials told Radio Liberty that they do not experience problems with customer numbers and their deposit portfolio is increasing.
Economist Samir Aliyev says that the drop in interest rates is quite normal: “People deposit their money in dollars, and facing strong dollar deposits the banks had to decrease the interest rates. It’s market law. When demand is high, supply goes down.”
“There is no normal banking sysem in Azerbaijan. This is why our citizens finds it safer to save their money at home rather than in the bank. In the current situation they are right. If the bank is normal it is ok to deposit money with 1% or 0.1% interest.
Concerning the banks that are accepting deposits with high interest rates, that means those banks are struggling.
They are doing this to attract more money.
Do not deposit your money in such banks,” says Akram Hasanov, a lawyer specializing in finance and banking.
He also explained that banks need to offer loans in order to be able to pay interest to their customers. “In this situation, however, banks think twice before offering loans. Also, the banks have large amount of dollars so they just have to decrease interest rates.”
Banks are extra careful when issuing loans. “Unibank” says it only gives loans to its “own customers”. It requires the customer’s wages to be over AZN 200.
The maximum size offered by “Turanbank” is USD 5,000, and you have to pay 20 – 26% interest on top of that. “Bank Standard” also offers USD 5,000 maximum with 20 – 25% interest rate.
Economists believe that tightened loan terms are caused by increase in the number of problematic loans, and decrease in jobs and wages.