arket-oriented reform and the privatization process.
Still the banking system is considered an important element of financial system of Azerbaijan. An advanced two-stepped banking system, which is based on market principles, (the Central Bank of the Republic of Azerbaijan in the first step, in the second one commercial banks and other non-bank credit organizations) functions in the republic.
Since 2002 important stage of restructuring of banking system started to be carried out. Taking into consideration entry of big oil revenues in the country, as a logical result of successful oil strategy, and in this base, as the banks were ready to an effective transfer of their financial resources to the strategic goals, development strategy was made for 2002–2005. Far-reaching reforms of the banking sector are conducted in the country. The main challenges are due to the slow privatization rate of the state banks, a weak financial market and a lack of bank transparency. However, the reforms have started showing positive resu lts and competition among the leading banks is increasing.
By April 1, 2010, 47 banks, 631 bank branches function in Azerbaijan. One of banks was founded with participation of state capital, 23 of foreign capital. To the same date, 98 non-bank credit organizations operate in the republic along with banks. Growth of real money incomes of population, development of trust in bank system, improving the legal bases of protection of interests of creditors and depositors, in particular launch of ‘Deposits Insurance Fund’ were the criteria characterizing rapid growth of deposits of population. As of April 1, 2010, bank deposits of population were equal to 2,4 billion AZN. 33,3% of them were long-term deposits (higher than a year). Along with population, bank deposits of corporative customers increase dynamically. By April 1, 2010, bank deposits of corporative customers is 2,1 bn AZN. Dynamic development of volume of special and involved
