Approved by Board decision of National Bank of the Azerbaijan Republic of December 29, 2001 the Protocol No. 26

Rules about regulation of risks on one borrower or group of the borrowers connected with each other

1. General provisions

1.1. These rules are prepared according to the laws of the Azerbaijan Republic "About National Bank of the Azerbaijan Republic" and "About banks and banking activity in the Azerbaijan Republic" and are intended for decrease in the risks which are formed in all commercial (joint-stock and commercial) banks of the republic and branches of foreign banks (further - "bank") from accumulation of the debts which are available before bank for one borrower or group of the borrowers connected with each other.

1.2. The purpose of settlement of such debts and decrease in the formed risks is achievement of increase in financial stability, safety and reliability of banks, and also diversifications (distribution) of assets.

1.3. In these rules the following concepts are used:

1.3.1. The borrower - any physical person or legal entity which obtained the credit in bank or having debt to bank.

1.3.2. The group of the borrowers connected with each other - two and more borrowers who are economically interconnected with each other at the same time emergence at one of them of financial straits can entail emergence and in other borrowers of the problems connected with payment of debts to bank.

1.3.3. Borrowers are considered connected with each other in the following cases:

* if one of borrowers of bank has significant effect on other borrowers of bank;

* if the same person (irrespective of whether it is borrower of bank) has significant effect on two or more borrowers;

* if the founders of any company bearing subsidiary responsibility are borrowers of bank;

* if the same person (irrespective of whether it is borrower of bank) is the founder of two and more companies bearing subsidiary responsibility, being borrowers of bank;

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