Banks in Azerbaijan remain cautious about accepting assets created through lending as collateral, Elkhan Mikayilov, chairman of the Food and Agriculture Working Group at AmCham Azerbaijan, said at the 3rd International Agribusiness Forum in Baku Friday, Report informs.
He explained that the approach is known internationally as project financing, but Azerbaijani banks have so far shown limited interest in using such instruments.
"For example, a loan should be provided to build a greenhouse or establish a processing facility. The processing facility itself or the greenhouse under construction can serve as sufficient collateral," Mikayilov noted.
He stressed the need to develop guarantee mechanisms in Azerbaijan.
Although the Entrepreneurship Development Fund and the former Credit Guarantee Fund offer guarantee instruments, farmers and the agricultural processing sector have not made sufficient use of them, he said.
Mikayilov also welcomed the expansion of loan subsidies and credit insurance mechanisms.
"A subsidy mechanism exists in Azerbaijan, and we believe that introducing a credit insurance instrument could also make a significant contribution to eliminating this imbalance between supply and demand," he said.