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There exists an institute of lending money to one another in the entire world where each party pursues its own benefit. The more accomplished the country is, the more accomplished and flexible this mechanism works. The country which is in the development and transitional stage such as Armenia, is in the stage of formation.

On the one hand a lender (banks, pawnshops, individuals) is cautious when signing a contract and on the other hand a citizen is compelled to do so for the satisfaction of his or her own social and economic needs (agriculture, small business, purchase of real estates) and wishes to borrow money. Not having a business and stable income corresponding to the needs of banks, the latters refuse to grant money used by some people and for a citizen under extremely disadvantageous condition enter into a contract by pledging the latters’ house. As a result, becoming a debtor a citizen is lawfully deprived of his own house some time later. Unfortunately, a country citizen is not protected on state level. A citizen who is lonely and unprotected before natural and artificial incidents is compelled to enter into contract under disadvantageous conditions and in the beginning they become victims, then lawful homeless.


It is necessary to point out that under the code of law of Mkhitar Gosh it is forbidden to seize the property against the debt which relates to the satisfaction of the latter’s needs.

Numerous citizens who have applied to the editorial staff are interested in the legal norm which regulates loan procedures and the legal norm, the violation thereof will result in a penal action.


Intergovernmental legislation entitles the parties to enter into loan contract according to which a lender is entitled to receive interests against the loan providing that the interest amount does not exceed the double interest amount of the bank determined by RA Central Bank at eh time of signing the contract. (In other words, if bank interest is determined to be 1 percent per month, then the udder the loan contract it shall not exceed 2 percent).

It is necessary to know that in signing a loan contract, after receiving the amount the borrower ought to return the receive loan value within the time and procedure stipulated by the contract.


The root of the word means benefit, interests. The intergovernmental legislation imposes limitation on lending money at the rate of the double interest rate determined by RA Central Bank, the excess of which shall be regarded as usurious loan and publishable by way of penalty and imprisonment for the period of maximum four years.