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Responsible lending policy of OJSC Bank of Baku

1. General provisions

1.1 Responsible Lending Policy of OSC Bank of Baku (hereinafter – the Policy) identifies overall principles, objectives and procedures for responsible lending in the Retail area of OJSC Bank of Baku.

1.2 Objective of the Policy is to take into consideration existing opportunities and conditions in consumer lending, develop a sound loan portfolio through analyzing indebtedness, financial, personal liabilities and other parameters of borrowers, maintain Bank’s financial sustainability, increase public trust in the Bank, prevent excess indebtedness of Bank’s clientele, develop responsibility and borrowing habits in the borrowers, increase financial education of the borrowers, and prevent factors causing deterioration of customer satisfaction in the future.

2. Evaluating creditworthiness of borrowers

2.1 Prior to formally documenting every loan for loan application, the borrower’s creditworthiness shall be evaluated.

2.2 Evaluation of borrower’s creditworthiness is performed through collection and assessment of borrower information. This envisages individual and comprehensive analysis of information about borrower’s financial standing, as well as other non-financial status factors.

2.3 Factors related to borrower’s financial situation include:
2.3.1 Amount and source of income– borrower’s monthly income (including employment certificate, tax declaration verifying income after expenses, statement from educational institutions confirming student scholarships and stipends, statement of pensions and other allowances from social protection authorities and other documents verifying fixed income), as well as interest income on existing deposits with the Bank;
2.3.2 Liabilities and expenses – borrower’s monthly and overall indebtedness according to Central Credit Registry data;
2.3.3 Demand for and purpose of credit facility;
2.3.4 expected major changes affecting borrower’s financial status in the future – sustainability and stability of every source of income, seasonal or temporary sources of income which may cause possible deviations during loan maturity.

2.4 Factors not related to borrower’s financial status include:
2.4.1 Personal qualities of the borrower – decency, honesty, reliability, responsible attitude etc.;
2.4.2 Credit history – timely and full implementation of credit liabilities with other credit institutions according to CCR data;
2.4.3 Marital status and dependents;
2.4.4 Current place of residence and time of residence.

3. Compliance of the loan with its purpose

3.1 Prior to lending the loan officer collects information on the purpose, objective, amount, maturity and suitable repayment schedule for the borrower.

3.2 In the event if the loan is inconsistent with its purpose, when possible, alternative credit types are offered along with explanation of causes. Otherwise, factors causing inconsistency and possible risks generated by the loan are explained to the borrower and directions are given to the borrower, when possible, to eliminate such inconsistencies.

4. Disclosing results of evaluation to borrower

4.1 Depending on the evaluation results, positive and negative lending decisions can be made.

4.2 In case of positive decision, borrower is provided with following information:
4.2.1 Rights and responsibilities as set by the loan agreement;
4.2.2 Loan interest and commission fees;
4.2.3 Advantages of timely loan repayments and sanctions applicable for failure to perform such liabilities in a timely manner;
4.2.4 Terms and conditions and advantages of premature loan repayment;
4.2.5 Additional services (if available), related commission fees and rejection options.

4.3 In the event of a negative decision, reasons for rejection are explained to the borrower and, when possible, advice is provided to the customer on ways of eliminating such causes.

4.4 In the event of loan rejection to loan applicants, the Bank shall provide a clear and comprehensive written response to the applicant indicating reasons for rejection.

5. Ensuring customer satisfaction

5.1 The Bank shall assign lowest possible loan commission fee and interest rate for responsible borrowers (customers) with positive history.

5.2 The Bank shall notify (SMS, phone calls etc.) the customer about arrears within 3 business days of the overdue day.

5.3 The Bank shall offer customers products and services most suitable to their financial needs, and avoid offering borrowings in excess of needs of the customer.

5.4 The bank shall create vast opportunities for customer loan repayment. Loans can be repaid 24/7 through the Bank’s corporate webpage, and payment portals, internet banking and telephone banking services, or MilliÖn terminals, eManat terminals and Bank’s payment terminals without any commission fees for payment.

5.5 The Bank is cautious of technical difficulties (payment to incorrect account, failure of timely debiting of funds to the account etc.) occurring during loan repayments. After receipt of relevant notification, the Bank’s special work group investigates the problem, and may restore the borrower’s credit history by taking into account possible financial losses and days in arrears (if any).

5.6 The Bank shall take all necessary measures to ensure safety of customer information considered as bank secret.

6. Preventing inappropriate situations

6.1 The Bank shall receive and collect any questions, proposals and complaints from its customers through “145 Call Center”, official webpage, social network page and recommendations and complaints boxes in branches.

6.2 The Bank shall ensure information security in all of its payment terminals, ATMs, other technological devices and internet banking through most advanced means.

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