NBCO Loan Portfolios Can Serve as Collateral for Long-Term Bank Financing

Transparent and well-governed loan portfolios of non-bank credit organizations (NBCOs) can function as eligible collateral to secure larger, long-term funding from commercial banks, according to Zahid Afandiyev, Head of Financial Institutions and Services Industry at PASHA Bank and Board Member of the Azerbaijan Microfinance Association (AMFA).

Noting that commercial banks and NBCOs act as complementary financial intermediaries rather than competitors, Afandiyev explained that lenders evaluate asset quality, management robustness, and liquidity alongside standard solvency metrics. Citing Central Bank data, he highlighted that bank borrowings accounted for 48% of NBCO liabilities at year-end 2024, reaching 155 million manats.

Afandiyev endorsed regulatory initiatives prioritizing proportional, risk-based oversight to enhance institutional resilience and diversify microfinance funding structures.