Armenian banking system faces risk of crisis: paper
Alarming reports have been received about the state of Armenia's banking system, the Haykakan Zhamanak newspaper reported referring to Armenia Today news agency.
According to the newspaper, problems arose in the Armenian banking system which can cause a serious crisis.
In particular, there were problems with the return of loans. Debtors cannot fulfill commitments before the banks and re-lending began to increase. That is, debtors take a loan from a bank to reimburse the loan in another bank.
According to the Armenian legislation, such re-lending is disapproved of. However, the corresponding structures turn a blind eye because otherwise the system will collapse. However it is a short term solution and at some point such a financial cycle must stop.
Banks hope the central bank will find major financial sources to introduce funds into the banking system, but hope does not seem justified. According to some reports, four banks operating in Armenia face serious difficulties.