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Upper limit of consumer loan in Armenia to be raised to 15 million drams

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On May 7, the RA National Assembly concluded the discussion of the draft amendments to the "On Consumer Lending" law proposed by the Bright Armenia faction.

According to MP Mane Tandilyan, the current law was adopted in 2008  and over the past 11 years there have been major changes in the  market, primarily related to inflation, which averaged 5% per year.  And if in 2008 it was possible to attract a consumer loan for the  purchase of a car in the amount of $ 30 thousand, then today these  same goals will require $ 40- $ 45 thousand from the lower limit of  the consumer credit of 100 thousand drams, and raise the upper limit  from the current 10 million drams to 15 million drams.

In turn, the Deputy Chairman of the Central Bank of Armenia Nerses  Yeritsyan noted that, in principle, not opposing the submitted  document, the Central Bank at the same time believes that the sum of  10 million drams and above cannot be considered a consumer loan. As  for the lower limit, as Nerses Yeritsyan noted, the country's  government initiated its draft law, which aims at lending to  agriculture and small businesses, according to which it is proposed  to also remove the provision on the lower limit of consumer credit.

According to him, according to the directive of the European Union,  the size of consumer credit should be compatible with the calculation  of per capita income. Consumer credit can not be twice the size of  the average income. In Armenia, this figure is several times higher.  Meanwhile, the law should be aimed at protecting vulnerable segments  of the population.  The deputy head of the Central Bank stressed that  the share of consumer loans in the total portfolio of the banking  system and credit organizations is about 10%. At the same time, in  industry it is equal to 17%, in agriculture and the processing sector  also 17%. In general, as Nerses Yeritsyan assured, today the interest  rates of the country's banking system do not exceed 24%.  Voting on  the submitted document in the first reading will be held tomorrow, on  May 8.  To note,, according to the data of the Financial Rating of  Banks of Armenia, prepared by ArmInfo Investment Company, the volume  of consumer loans as of January 1, 2019 made 789.1 billion drams or $  1.6 billion. Taking into account mortgage loans, consumer crediting  at the reporting date amounted to 1.1 trillion drams or $ 2.2  billion, having increased by 37.5% over the year. According to the  Central Bank of Armenia, consumer lending rates decreased in 2018  from 13.5% to 11.7%, while taking into account mortgage rates,  consumer credit rates dropped from 12% to 10.9%. 


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