Soviet Deposit Refunded in Azerbaijan

Soviet Deposit Refunded in Azerbaijan

Azerbaijan to start return of USSR-period banking savings. Returning process of bank savings of Soviet period started in Azerbaijan from June 1. So, one topic on Azerbaijan’s economic agenda that has attracted recent attention is the return of the savings of Azerbaijani citizens that were deposited in the Savings Bank of the USSR during Soviet period. There have long been questions about whether such deposits would be returned or not. Finally, after the President’s decree on on returning the deposits of the former Savings Bank of the USSR to the population passed in March 2012, depositors of the USSR Savings Bank will be paid lump–sum compensation from June 2012 to December 2013 by OJSC Kapital Bank (“Kapital Bank”).  The index system of the savings refund is as follows: 500 rubles = 1 qepik or AZN 0.01

Deposits will be returned according to the following scale:


1 to 2.000 rubles 1 ruble = 15 qepik (AZN 0.15)
2.000 to 5.000 rubles 1 ruble = 10 qepik (AZN 0.10)
5.000 to 10.000 rubles 1 ruble = 8 qepik (AZN 0.08)
Amounts greater than 10.000 rubles 1 ruble = 5 qepik (AZN 0.05)

Deposits for the sum of up to 2000 rubles (AZN 0.04 ) will be returned at an exchange rate of AZN 75 per qepik

The exchange rate for amounts deposited over 2.000 and less than 5.000 rubles is 10 qepik per ruble. – (AZN 0.04- AZN 0.1) – AZN 300 +AZN 50 for each excess qapik ( AZN 0.01) over AZN 0.04 sum.

The exchange rate for amounts deposited over 5000 and less than 10000 rubles is 8 qepik per ruble. (AZN o.1- AZN 0.2)  600 manat + 40 manat per each excess qepik

The exchange rate for amounts over 10.000 rubles is – (AZN 0.2) – AZN 1.000+AZN 25 for each excess AZN 0.01 over AZN 0.2 sum.

As an example, if a depositor had deposited 15.000 rubles at the Savings Bank of the USSR, she would receive a return of AZN 1250.  The first 2000 rubles would be refunded as 300 Azerbaijani manat (2000 x 0.15).  The next 3000 rubles would be refunded as 300 Azerbaijani manat (3000 x 0.10).  The next 5000 rubles would be refunded as 400 Azerbaijani manat (5000 x 0.08). And the final 5000 rubles would be refunded as 250 Azerbaijani manat (5000 x 0.05). The deposits of the Savings Bank of the USSR totaled 4.8 billion rubles.

Ethnic Armenians can also apply for the refund of the deposits

Vugar Bayramov, the head of the Center for Economic and Social Development, said that because the Presidential decree on repayment of deposits does not prohibit ethnic Armenians living in Nagorno Karabakh from applying for refunds, they have the right, like any other citizens of Azerbaijan, to claim the refund of amounts deposited in the Savings Bank of the USSR before January 1,1992. According to the Presidential Decree, in the first stage Armenian citizens who want the refund of their deposits must apply for Azerbaijani citizenship for one of the required documents to apply for the refund is an Azerbaijani idetity card.

Deposits shall not be returned to refugees.

The Presidential decree does not include the return of the deposits of the Azerbaijani refugees from Armenia simply because it is not possible from a legislative point of view. As these people were the citizens of Armenia at the time and deposited their money in the area of Armenia, it is the responsibility of Armenian government to refund their savings, even though they are now Azerbaijani citizens.  In addition to the legal and political obstacles, it is not possible from a practical perspective to determine the amounts deposited by current Azerbaijani citizens in the Savings Bank of USSR in Armenia.

Internally displaced persons who lost their Books of Saving  will also recieve a refund.

One remaining question in the public mind is whether the deposits of internally displaced persons will be returned. As Vugar Bayramov puts it, all the information about the deposits of internally displaced persons are in the archives of Kapital Bank. Those persons who had their Books of Savings lost or burned can apply to the new established Special Commission of the Capital Bank. Applicants should provide information about their deposit books: the name of the owner of record, the amount of the deposit, the date and the area of the placement of the deposit. Given those records, the Special Commissian will make a final decision based on the provided information.

Azerbaijan pays lower than Baltic countries

According to V.Bayramov, the exchange rate applied in Azerbaijan provides the highest value of rubles to dollars among the CIS countries. “For example, only 2.4 cents was paid per ruble in Kyrgyzstan and 8 cents per ruble in Moldova. In contrast, Azerbaijan pays approximately $385 per 2000 rubles or 19.25 cents per ruble, which is by far the highest exchange rate for the return of Soviet deposits among the CIS countries. However, this rate is still lower than that of Baltic countries. Starting from 1992 and completing the process at the same year, Baltic countries paid about 80 cents per one ruble. As can be concluded, the rate applied in Baltic countries was much higher than it was in CIS countries.

It would be well recieved by the depositors to have their deposits returned at a similar to the Baltic  exchange rate.  However, it is impossible for the Azerbaijani government to determine the exact equivalent of ruble to manat because of fluctuations of the exchange rate of ruble to dollar.

Mr Bayramov then talked about the expectations about higher refunds: “Depositors were expecting to receive 1 manat per ruble, however, it would not make a sense from an economic point of view, because it would have a number of negative effects on the whole economy, including an increase in the prices of consumer goods and increase currency circulation which would lead to a increase in the inflation rate

Depositors who hold more than one bank account

The calculation of savings deposits of citizens with a more than one bank account is also questionable. Mr. Bayramov says that the calculation of the refunds of depositors with several  bank accounts will not be calculated separately, but rather their total deposits will be aggregated first and then converted in accordance with the exchange rate scale. Therefore, if a depositor had 3 bank accounts with 2000 rubles in each account, the return will not be AZN 900, calculated seperatly (2000rubles =300manat). Instead, the deposits will be added together (2000+2000+2000 rubles), and then the final figure (6000 rubles) will be calculated according to indexation system. As a result, instead of recieving 900 manat for three 2000-ruble (2000 rubles = 300 manat) bank accounts, the depositor would be paid 680 manat as if they had only one 6000-ruble deposit.

Members of civil society organizations should be involved in the Special Commission

According to Mr. Bayramov the commosition of the Special Commission is important: “In some CIS countries in the first stage, the Special Committee was made up of only the employees of state agencies.  Later, however, as a result of public dissatisfaction, the Commission had to include representatives of civil society. Therefore, Azerbaijan should follow this example [from the beginning] and involve civil society representatives in order to ensure objectiveness and transperency of the Commission’s examinations of appeals and complaints.”  ”It should be also noted that in some CIS countries most cases of corruption in the process of returning deposits were observed while the Special Commission was considering appeals.”

© CESD, 2012


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