Technical Assistance to the Republic of Azerbaijan for Developing Collateral Framework and Microfinance Regulations

This paper discusses the technical assistance (TA) provided to the Government of Azerbaijan by the Asian Development Bank (ADB) to develop a collateral framework and microfinance regulations.

The paper discusses:

• The main features of Azerbaijan at that time:
  • The financial sector was in the early stages of development;
  • Many banks had collapsed;
  • The Government requested ADB assistance for strengthening debt enforcement and establishment of an effective collateral registration system;
  • There were 11 microfinance institutions (MFIs) in operation.
• The technical assistance: Its goal was to promote the development and outreach of commercial banks and MFIs in Azerbaijan;
• The objectives:
  • To create an effective collateral and debt enforcement network. This entailed: Reviewing the existing legal structure and recommending amendments; developing recommendations for establishing a centralized public registry for fixed and movable collateral; training judges;
  • To improve the regulatory and supervisory framework for MFIs. This entailed: Developing regulations for implementing the New Law of Microfinance; developing supervision processes for MFIs; drafting internal manuals for NBA, and compliance guidelines for MFIs; conducting training programs for implementing regulations and supervision of NBA and MFIs.
• Cost and financing;
• Implementation arrangements;
• The President's decision.

The paper also provides details of the TA framework, its design summary, performance indicators and targets, monitoring mechanisms, assumptions and risks and the different kinds of consultants involved in the project.