TA-9658 AZE: Support for the Development of Non-Bank Finance and Alternative Financial Instruments to Develop Economic Diversification

MSL performed the following activities:

1. Mobilization and Preparatory Activities: Mobilization of the Team and set up of the TA management system; Initial introductory meetings with ADB and the client; Identified a financial inclusion diagnosis methodology and tools to be used for the assignment; Reviewed and modified (if needed) the methodology, work plan and schedule; Submitted the revised methodology, work plan and schedule along with the financial inclusion diagnosis methodology and tools for approval.
2. Assessment Report: Review and assess the current legal and institutional framework; Reviewed and assessed the policy, legal, and regulatory environment; Reviewed the supply and demand data; Review consumer and creditor protection policy and laws; Reviewed regional and international good practices; Identify critical success factors, including mechanisms to boost demand and recommend options; Assessed FIMSA’s regulatory and supervisory framework; Identify FIMSA’s capacity needs, including required resources, timeframes, expected benefits and impact of expanded credit union and cooperatives financial services and financial leasing services in manat; Identified current financing options and financing constraints at all stages and across all scales of enterprises in the sector; Identified financing needs and current sources of financing and characterize the financing gaps for different sets of actors; Interview and review existing financial institutions (public and private) to define constraints in product innovation, new financial instruments and mechanisms; Prepare Assessment Reports
3. Action Plan: Develop five priority alternative financing instruments; Assisted FIMSA to address policy and risk issues including the options relating to uncollateralized lending and financial institution guarantee to underwrite or share risk of new products; Assisted FIMSA in drafting amendments to the current laws, new regulations, adapting guidelines and standard operating procedures as needed; Provided advice for transitional arrangements for the new or amended laws and regulations; Reviewed and assessed the current regulatory and supervisory framework and compare and contrast this against international and regional good practice; Recommended international and regional good practices and short, medium and long term measures; Developed a realistic and achievable reform action plan.
4. Draft Guidance Notes, Standard Operating Procedures and Process Maps: Prepared guidance notes, standard operating procedures and process maps.