The high percentages of loans offered by Armenian banks could not remain without consequences. Naturally, the vulnerable society must be affected by those percentages.
Although there is much talk about the digital indicators of high economic growth in different fields, we cannot ignore the actual situation, which is far from the announced statistical digital indicators.
Let us analyze Arazap community of Armavir marz, that is adjacent to the river Araqs and contains 350 rural farms. Those have been benefiting from agricultural loans offered by banks for more than 10 years now. Nevertheless, they were able to pay the loans back despite the high percentages.
Between 2008 and 2010, this part of marz was damaged by hail, and all the surrounding lands were flooded by the river Araqs. As a result of that natural disaster, the peasants lost 60-80 % of the expected yield and earning daily bread was extremely terrible. Consequently, it was too hard to think about paying back those debts.
Hence, the bank representative suggested that the farmers should obtain new loans under other people’s names so that they could repay their old debts. Many villagers responded, but they were deprived of the expected harvest because of the cruel whim of nature which resulted in that hail.
Farmers’ loans were doubled and tripled because of overdue penalties; and creditors started to use legal means to get the money back.Thus, 80 % of the community borrowers are facing the same situation: they cannot repay their loans; moreover, they were summoned to court.
Recently, the court has already transferred those cases to the Court of Judicial Enforcement, that started to evaluate the peasants’ real estate.
Arazap rural farms are suggesting their own ways to solve the problem: asking the bank to stop the application of overdue penalties, and reformulating the loans in a 10-year period. In addition, peasants resorted to the Prime Minister of Armenia, but have not received any positive responses yet.