13 October 2026, Baku: The Central Bank of the Republic of Azerbaijan has approved amendments to three regulations governing credit risk, asset classification and risk management at banks, aiming to improve assessments of borrowers’ ability to repay loans and bring prudential requirements into closer alignment with the risks involved. The amendments were approved by the Central Bank’s Management Board under Resolution No. 39/3, dated 15 September 2026. They cover the ‘Regulation on asset classification and creation of specific reserves for loan loss provisioning’; the ‘Regulation on prudential ratios and requirements related to credit risks, including large credit risk exposures’; and the ‘Regulation on credit risk management in banks’.

The changes strengthen the framework for assessing and managing credit risk and bring lending practices into closer alignment with borrowers’ risk profiles. They refine the requirements for lending decisions based on behavioral models and the provisioning arrangements for such loans. The aim is to support more reliable assessments of borrowers’ repayment capacity, ensure that risks are adequately reflected and make prudential requirements more proportionate to the risks involved. More effective risk management can also help banks sustain their lending activity.

The amendments also provide for a more comprehensive consideration of risk in asset classification and improve how information on the credit obligations of individuals engaged in buying and selling goods on credit is assessed. Requirements governing guarantees in consumer lending have also been revised to strengthen risk management, support the sustainability of borrowers’ debt obligations and improve the reliability of credit protection.

Taken together, the changes are intended to promote more reliable credit assessments, improve the management of risks associated with behavioral models and support sustainable lending across the banking sector.

The amendments will enter into force on 9 November 2026.

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