Friday, December 6 2019 17:11
Alina Hovhannisyan

Armenian Central Bank intends to introduce new risk containment  regulations for increasing consumer loans

Armenian Central Bank intends to introduce new risk containment  regulations for increasing consumer loans

ArmInfo. The Central Bank of the Republic of Armenia intends to introduce new regulation to contain risks associated with an increase in consumer lending. On  December 6, Nerses Yeritsyan, Deputy Chairman of the Central Bank of  the Republic of Armenia, stated this from the parliamentary tribune.  According to him, this does not concern the containment of growth in  consumer loans, and it is about risk management.

"Especially since the country has formed new infrastructures for  this, particularly a national credit bureau.  Regulation is based on  the analysis of the ratio "loans-incomes", from the point of view of  ensuring the conformity of loans borrowed by citizens to their  incomes, in order to avoid substantial and excessive debt burden. The  new regulation will also affect the ratio of assets-loans>. With an  increase in the value of assets, it will be possible to provide loans  in large volumes. In any case, risk assessment is carried out by  commercial banks. The Central Bank intends to introduce a number of  adjustments in this process>, - N.  Yeritsyan explained.

It should be reminded that earlier, on November 29, at the conference  organized by the initiative of the NA Standing Committee on  Financial-Credit and Budgetary Affairs, the Head of the Department  for Sustainable Development of the Financial System of the Central  Bank of the Republic of Armenia Andranik Grigoryan stated that the  Central Bank of Armenia was considering introducing a calculation  coefficient maximum debt load of individuals for commercial banks and  credit companies of the Republic of Armenia.

As he noted, the need to introduce a debt burden indicator (in  international practice - PTI, payment to income - Ed. note) s  explained by the intention to protect borrowers from over-lending. In  particular, during the processing of consumer loans of all types,  including "quick" loans, mortgages, payments on them subsequently  become unbearable for borrowers. As A. Grigoryan explained, PTI is  the ratio of monthly loan payments to monthly income. In this regard,  he drew attention to the fact that when approving a loan, the  borrower himself is often not able to assess what kind of debt load  he ends up with.

According to the CBA, the volume of consumer loans in the banking  system of Armenia by November 2019 accelerated annual growth from  34.5% to 35%, amounting to 875.3 billion drams ($ 1.8 billion). And  the volume of mortgage loans accelerated annual growth from 22% to  39.7%, amounting to 331.2 billion drams ($ 696 million). By November  2019, the share of consumer loans in the total loan portfolio of  Armenian banks amounted to 28.2%, and mortgage loans - 10.7%. 

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