Approved by Board decision of National Bank of the Azerbaijan Republic of December 18, 2000

Rules about single rating system of banks

These rules are prepared according to the international practice for the purpose of ensuring effective implementation by National Bank of the Azerbaijan Republic functions of control over bank system.

I. General provisions

According to requirements of this document the National Bank of the Azerbaijan Republic to each bank on the basis of the analysis of the corresponding factors of quantity and quality assigns scores.

Main objective of single rating system is:

* establishment of the banks with financial and operational shortcomings requiring special attention from body of bank control;

* careful and comprehensive analysis of observance by banks of the laws, regulations and instructions, and also their financial position.

Assessment of banks on the basis of single system shall promote orientation of attention of body of bank control in the following directions:

* on banks at which the available financial, operational and managerial shortcomings put their future financial activities under serious threat and threaten them with bankruptcy or insolvency;

* on banks which potential weakness can cause more serious damage to quality and efficiency of functioning of financial system.

The single general score based on 5 components consisting of standards of financial and operating activiies is assigned to each bank. From the point of view of the problems connected with bank, the rating is based on 5-ball scale in the accruing procedure. So, "1" is the highest rating and according to it the lowest level for concern about control, and "5" - the lowest rating reflecting the critical level of work of bank and therefore the highest level for concern.

To some extent each bank can have problems, specific, other than other banks, however at the same time the single rating system is based on general for credit institutions of all categories factors of quality and quantity.

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