EWMI NEWS:
JANUARY 2008
MODERNIZING CREDIT UNION LAW IN AZERBAIJAN

Under the USAID-funded Partners for Financial Stability Program, EWMI provided support to the Azerbaijan Credit Unions Association (AKIA) to host an international round table discussion in Baku January 14-15, 2008 to review the best practices in regulation of credit union activities in the region and globally. International guests from credit union associations in Poland, Belarus, Russia, Ukraine, as well as the World Council of Credit Unions (WOCCU) represented by the Filene Research Institute attended. Azeri participants included the leadership of Azerbaijan Credit Unions Association, as well as members of Parliament of Azerbaijan, representatives of the State Agency of Agricultural Crediting under the Ministry of Agriculture, Ministry of Justice, State Committee for Equities under the President of Azerbaijan and others.

Operating as credit only system, Azeri credit unions need to reform their legislative base to achieve sustainability and competitiveness in the market. The current law severely constrains the activities of credit unions and does not reflect the potential that these small-scale financial institutions may play in providing access to financial services for lower income clients. During the round table the international experts and practitioners presented examples of best practices in legislation and suggested modifications in accordance with international standards, including WOCCU norms for the further development of Credit Unions in Azerbaijan. Following the workshop, the deputy chairman of National Bank of Azerbaijan announced that AKIA will lead a working group to amend the credit union law in Azerbaijan in order to bring it in line with international standards. This initiative will develop a regulatory and legislative framework that will allow the credit unions to grow while the regulators will gain necessary risk management tools to ensure the transparency and soundness of the system.