Responsible Lending Policy at Bank “BTB” OSJC
- General provisions
- Responsible Lending Policy (hereinafter Policy) at Bank “BTB” OSJC (hereinafter Bank) defines general principles, aims and procedures of responsible lending by summing up the measures directed to the prevention of excessive borrowing of consumers.
- This Policy has been prepared upon “The Methodological Guidance (hereinafter Guidance) on responsible lending at banks and non-bank credit institutions” recommending the carrying out the relevant measures for the purpose of the defense of rights of bank service consumers and the preparation of its effective mechanisms, the application of behavioral standards on responsible lending. The aim of Policy consists of the prevention of the excessive borrowing of Bank customers, increasing financial literacy and credit culture, the development of responsible borrowing habits in debtors, as well as the prevention of the cases that can cause to customer dissatisfaction in future by analyzing financial, personal information and other indicators of debtors within existing opportunities and conditions by considering the preservation of financial stability of Bank, increasing public confidence of Bank, as well as forming healthy loan portfolio during the formalizing consumer loans at the Bank.
- The execution of this Policy shall be checked by internal audit department at least once a year and the report on the results of check shall be discussed with the Supervisory Board of Bank.
- The responsible lending policy consists of the followings:
- Prevention of the conflicts of interests;
- Collection and checking of information from debtor related to the loan order;
- Assessment of debtor’s solvency;
- Assessment of the compliance of loan with assignments;
- Disclosure of the results of the assessment to debtors;
- Provision of customer satisfaction;
- Prevention of unsatisfactory cases.
- Prevention of the conflicts of interests
- The Bank always reviews internal control systems for the purpose of the prevention of the conflicts of interests at the process of loan product marketing, underrating and loan service. It provides the independence of various types of function and/or activity for avoiding the conflicts of interests from such types of function and/or activity.
- The Bank provides the addition of relevant provisions to responsible lending and remuneration policy for avoiding the deviations from the principles of responsible lending and remuneration of employees.
- Collection and checking of information from debtor related to the loan order
- The Bank obtains relevant information related the loan order either orally or through the filling of relevant inquiries. All necessary measures are carried out for the verifying the authenticity of the information provided in Bank inquiry after filling and signing of inquiry by the debtor.
- The Bank shall inform the debtor of incorrect assessment of compliance with the solvency and/or the assignment at the result of submission of incomplete or incorrect information and so of that such customer can be excessive borrowed.
- Assessment of debtor’s solvency
- 1 Debtor’s solvency is assessed before issuing of each loan.
Non-assessment of solvency comprehensively can result in borrowing the amount of loan more than that the debtor can pay and so, excessive borrowing.
- 2 DTI (Monthly debt-to-income ratio) coefficient is used during the assessment of solvency. DTI coefficient is calculated by the following formula:
DTI coefficient=Monthly debt+monthly payment on new loan X 100%
Incomes of Debtor
- 3 The followings are considered during the calculation of DTI coefficient:While defining the monthly debt at least the monthly debt of debtor that is natural entity upon the information
- 3.1 Centralized credit registry of the Central Bank of the Republic of Azerbaijan;
- 3.2. While defining the incomes of debtor monthly official incomes and other incomes are considered in the monthly incomes;
- 3.3 In case of other periodic incomes are provided in the documents certifying the incomes of debtor instead of monthly income, the monthly incomes are calculated by dividing these incomes to the number of the months of this period..
- 4 The calculated DTI coefficient is considered satisfactory in case of being at sufficient level for implementing the commitments on new loan of the debtor.
- 5 The identification of solvency is carried out by the assessment of the information provided by the debtor and collected on the debtor. The assessment of information means the analysis separately and as a complex of the factors both related to the financial position and unrelated to the financial position of debtor, but may (can) influence the solvency.
- 6 Factors related to the financial position of debtor:
- 6.1 The amount and source of income
The amount and source of income – the fixed monthly income certified by the relevant documents (reference from workplace on salary, tax declaration certifying remaining incomes after deducting the charges, reference from educational institution on scholarship, reference on payment of pension and allowances to consumer by social protection bodies, bank reference certifying interest incomes on existing deposit accounts of consumer or other documents certifying fixed incomes) of debtor.
4. 6.2.Commitments and charges
Commitments and charges are included at least general and monthly debt of debtor upon the information from the Centralized credit registry (hereinafter CCR) of the Central Bank of the Republic of Azerbaijan.
- 7 Factors unrelated to the financial position of debtor
- 7.1. Personal qualities of debtor – honesty, reliance, responsible approach and etc. indicators;
- 7.2. Credit history – timely and complete execution of credit commitments obtained from this of other credit institutions earlier upon the information of CCR;
- 7.3. Marital status and the persons under his/her responsibility;
- 7.4.Current residential place and residing period there.
- 8 In case of the followings are found during the assessments, the debtor is considered insolvent:
- 8.1 Debtor cannot execute the commitments on credit product without selling pledge (mortgage) or other property;
- 8.2.Debtor cannot execute the commitments on credit product without involving additional borrowed funds (credits);
- 8.3.Debtor cannot execute other commitments completely or duly as the result of credit product to be obtained.
- 9 In case of the debtor is considered insolvent in the result of the assessment the credit order may not be provided.
- Assessment of the compliance of loan with assignment
- 1 The bank carries out the assessment of compliance of loan with assignment on the basis of information collected and verified correspondingly.
- 2 While assessing the compliance of credit product with assignment the Bank reviews and documents the compliance of credit product and its conditions to be offered on the basis of submitted information with the necessity and aims of debtor.
- 3 If it is defined that the conditions of loan will not meet the demand, aims and necessities of debtor, the loan is considered incompatible with assignment. At this time more appropriate loan types are offered by explaining the reasons if applicable. Otherwise discrepancy factors, possible risks that can occur by lending are explained and relevant guidelines are given in case of possible conditions for eliminating the discrepancy to debtor.
- Disclosure of the result of the assessment to debtor
- 1 Positive or negative decision may be made related to the application on documentation of loan depending on the result of the assessment.
The Bank provides disclosure of information and giving explanations before the signing loan agreement for the purpose of making well-judged decision of debtor.
- 2 In case of positive decision related to loan application, the debtor are given the following information: rights and duties defined by the loan agreement;
- 2.1.Interest and commission fees on loan;
- 2.2.Advantages of executing loan commitments in time and sanctions intended for the unexecuted commitments in time;
- 2.3.Conditions and advantages of returning loan prematurely;
- 2.4 Opportunities for joining additional services (if any), amount of commissions for them and waiving ways from them.
- 3 In case of negative decision to loan application, the reasons of refusal are explained to debtor and the information on the measures that may be taken by debtor for elimination these reasons if possible.
- 4 In case of refusal from issuing loan to the persons applied for documentation of loan, the application of person submitted Bank order is answered in written, orally or electronically by indicating the reason of the refusal.
- 5 The Bank keeps the report on documentation of the results of the assessment of the compliance with solvency and assignment for at least 5 years.
- Provision of customer satisfaction
- 1The Bank may assign commission fee and interest rate at the lowest level as possible for the loan of responsible debtor (customer) having positive business istory.
- 2 The Bank regularly informs the debtor of delay through different contact ways (SMS, phone call) since delay day.
- 3 The Bank avoids to offer amount higher than the one the debtor needs and offers product or service the most appropriate to his/her financial necessities.
- 4 The Bank creates extensive opportunities for the payment of loan debts to debtor. Loans of Bank may be paid by MilliOn terminals, eManat terminals and all service networks of Bank.
- 5 The Bank treats flexibly and sensitively to technical problems occurred during the payment of loan (payment to wrong account, not reaching of transferred fund in time and etc.). The information is investigated promptly after receiving by the Bank; loan history is restored by compromising possible financial loss and delay days (if any).
- 6 The Bank takes measure for the provision of the security of information consisting of bank secret of customers and ensures the bank secret.
- Prevention of unsatisfactory cases
- 1 The Bank accepts questions, suggestions and complaints received from the customers by corporate website, social network page of Bank and complaint and suggestion box in Head Office and branches of Bank.
- 2 The Bank ensures the information security during the usage of payment terminals, cash dispensers, other technological devices and internet banking services by using all possible opportunities of modern devices.