Baku — The Central Bank of Azerbaijan has introduced strict new regulations on credit card lending, capping borrowing at no more than five times a borrower’s net, after-tax income. The cap also takes into account existing debts across other financial institutions.
The move comes amid growing concerns over the rapid rise in consumer lending. According to the Central Bank, as of June 30, 2025, non-mortgage consumer loans reached 8.9 billion manats — up nearly 1.3 billion in a single year. The number of credit cards in circulation has almost doubled over the past five years, now exceeding 2.1 million.
Financial analyst Elmin Nematli told Kaspi newspaper that unchecked lending had begun to threaten both household budgets and banking sector stability.
“The expansion of consumer credit increases unhealthy debt burdens and risks weakening banks’ capital positions. Rising overdue loans force banks to set aside more reserves, reducing profitability. At the same time, consumer borrowing fuels inflation,” he said.
The new rules tie a bank’s ability to issue consumer credit lines directly to its capital strength, effectively curbing excessive exposure. Nematli added that without limits, some banks were granting credit far beyond repayment capacity, pushing non-performing loans higher.
Economist Eldaniz Amirov also supported the measure, noting that consumer loans had grown by 90% between 2021 and 2025.
“Most problem loans come from consumer credit, especially through credit cards. Many people misjudge their financial strength and take on debt they cannot repay. These restrictions are aimed at protecting both the banking sector and ordinary citizens,” he said.
Experts agree that while the changes may cut into short-term bank profits, they will reduce systemic risk and encourage citizens to make more responsible financial decisions. However, analysts stress that regulation must be paired with public financial education to be fully effective.
