Azerbaijani banks to switch to Basel III standards by 2025

Basel III is a set of reform measures in banking regulation, developed by the Basel Committee. The main purpose of Basel III is to improve the quality of risk management in banking, which must in turn enhance stability of the financial system as a whole.

Introduction of the Basel III standards and availability of a credit bureau that provides high-quality information will allow financial institutions assess the potential losses on non-performing and overdue loans in advance, as well as improve the underwriting and monitoring system, according to the Road Map authors.

The current economic conditions have increased banks’ sensitivity to risks and led to the emergence of new risk areas, which makes it necessary to improve the banks’ experience in risk management, reads the document.

The existing prudential requirements will therefore be gradually brought in line with the principles defined by the Basel Committee, according to the document.