ArmInfo.Armenia's commercial banks and lending agencies will from now on issue loans in AMD terms only. The Standing Committee on Financial-Credit and Budgetary Affairs, RA Parliament, approved the draft amendments to the Law on currency control proposed by a number of MPs.
Committee Chairman and co-authors of the draft Gevorg Papoyan said that foreign-exchange mortgage loans can only be issued to nonresidents, whereas consumer and mortgage lending to residents both affords opportunities and poses risks.
"The policy of Armenia's Central Bank and government is aimed at dedollarizing the country's financial sector. Interestingly, the recent period has seen a trend of mortgage lending in Euro while Armenian citizens get their incomes in Armenian drams. As a result, citizens effect high-risk Euro transactions as they take out loans at an exchange rate of AMD 400/EUR 1 and have to repay loans at an exchange rate of AMD 420 to 430/EUR 1," Mr Papoyan said. The document is aimed at reducing exchange rate risks for citizens.
The loan repayment problems are mostly the result of exchange rate risks. "This is a most dangerous trend, as the exchange rates could rise in the near future as well," the MP said.
The non-performing AMD loans constitute 1.5 to 2 percent in Armenia's banking system, foreign-exchange loans, 4.5-6%. In shock periods, especially in 2014, the share of non-performing foreign-exchange loans reached 12%, with that of AMD loans remaining 4.4%.
