ArmInfo.Edmon Marukyan, MP of the National Assembly of Armenia from the ''Yelk'' faction, introduced amendments to the RA Civil Code to the parliament, aimed at prohibiting banks, credit companies and pawnshops from imposing fines the total amount of which exceeds the principal amount of the loan.
According to the current legislation, taking into account the period of validity of the claim (3 years), the amount of the fine alone can reach 300% of the principal debt, while the proposed amendments envisage not more than 50%. The bill proposes this restriction to apply to mortgage loans and loans of up to 3 million drams.
It is known that fines-penalties provided for by credit or other similar agreements ultimately multiply the loan originally received by citizens, not taking into account counting commissions and other payments, which significantly increase the actual annual interest rate.
Needless to mention the price of collateral, which is several fold lower than the assessed value. In the current edition, this article states that a court or ombudsman has the right to reduce the amount of fines payable only if the consequences of the violation of obligations are evidently disproportionate simultaneously with at least one of the cases provided for by law. In other words, according to the law in force, only an obvious disproportion cannot serve as a basis for reducing the amount of the fine, which is already unfair.
As a result, the draft law provides the court or ombudsman with the opportunity to apply all the grounds provided for in this article separately i.e. each of them serves as a separate basis. The law is not retroactive, since in this case the general principle of legal certainty applies. In exchange, it is proposed to establish, if possible, the shortest time for the entry into force of the law, so that it extends to transactions concluded from the moment of its operation.