What has our government most bragged about and still does? It is proud of its “developed and strengthened” banking system. They always speak about this but especially started to actively speak about this at the dawn of the global crisis. Maybe you all remember that our banking system should have become an island of salvation due to its drawback of not being integrated to the world financial system. Similar to floods, when people are trying to find a spot to stand on, during the crisis all the financial resources should have been directed to our “stable harbor” – to our banking system. But this didn’t happen and because the reason was that the rich ones of the world didn’t have an occasion to hear the Armenian authorities. As a result the Armenian government confessed that the Armenian banking system is isolated from the world financial system. And there was no use from this as the practice showed. But this is not an obstacle to brag about our banking system even nowadays. It is the most stable, developed and most transparent… indeed compared to all the other sectors of the economy. 14 out of the 22 banks of Armenia wrapped up the crisis year with profits. This is not bad at all. But our today’s article doesn’t relate to that. It is up to them to decide what kind of relations they had with the world financial organizations or what revenues they have had. We are more interested in the relations of the Armenians with our banking system regardless of whether those are good or bad. If we judge from the data of the official statistic the relations are not too bad and people gradually start to trust the banks of Armenia. The population trusts the banks. According to the NSS data at the end of March 2010 the deposits of the population in the banks amounted to 313752 million AMD, which is 39.3% more compared to the same period of the previous year. The number of customers also increased and the volume of loans as well. As of the business credits then the situation is not that smooth especially when alluding to the small and medium businesses. We have numerously had the occasion to mention that the government in the framework of its anti-crisis measures mentions the increasing support to the development of small and medium businesses and as a component of that brings up the provision with credit. It means that part of the loans taken from the Russian loan, the European Bank of Reconstruction and Development were directed to crediting of small and medium businesses. Let us try to understand this. Due to the crisis the mall and medium businesses suffer; their revenues decrease and they start to have big losses in their businesses; the means are not enough to cover the debts. And in order to get back on feet the small-size enterprises apply to the banks to get loans. And here the banking system (and not only) shows them its real face. A part of the banks works in a fully robotic way. They compile a pile of documents and demand that the potential credit-takers fill those out. It may for example imply information and predictions on the financial flows for the coming 4 or 5 years. Shortly said, only the requirements of the filled out documents and other paper work is enough to intimidate the credit takers and the latter end up quitting their idea of getting a credit. As an example let us mention that at any rate the banks demand documentations from the Tax Service about the obligations to the budget. Simply said, they wish to know how much the potential credit taker pays the state in the form of taxes. They also try to discover the debts. This is already a big headache because the tax body gives this document with “clumsiness;” they try to stretch and delay the provision of this document. They claim that little tax was paid, etc. Moreover, if the credit taker is denied in one bank he will have to get the same documents and even new ones when applying for credit in another bank. In addition to the document from the tax service they have to take a new document from the State Register, which would state that the founders and the stakeholders haven’t been changed. When speaking of adjacent bodies we should not forget that during this period an additional inventory may be necessary to be conducted. Then they are required to submit an affidavit from the State Cadastre Committee; then they have to go to the notary bureau and back to the State Cadastre again. All this requires quite expenditures and the credit taker needs to take care of this all by himself. However, these are resolvable issues. The worst thing is that they demand that the business has been working at least a year and should have stable incomes at that. And the incomes should have a motive of growth otherwise the crediting committee may determine that this is a “diminishing business” and the credit won’t be provided. In addition to this they demand mortgage mostly in the form of real estate and mandatory obligation in Yerevan. Moreover, the value of the property should be twice larger from the requested amount of the credit. Simply said this is absurd. It turns out that you are applying for a credit to help your failing business grow but they demand that everything should be OK in your business to get a credit. From the point of view of the bank this is normal. The bank tries to get maximum warranties from possible damage. But this is not understandable how this kind of crediting can be called a component of an “anti-crisis program” to support small and medium businesses. This kind of approach leads to a simple reality – the ones, who have growing businesses, will get loans. And the ones, who have appeared in a temporary slump or wish to start a new business, they should cope with the prospects of failure and plummet if they don’t succeed to borrow money from the friends and relatives. The state and the banking system in our country only help the ones, who have sustainable revenues and growing businesses. The state doesn’t communicate with “new starters” or “losers” but they wish to pay the taxes till the last cent. Furthermore, even the credit is not a help because of high interest rates and short acquittal terms. The most interesting thing is that the government intends to receive new loans from abroad to stimulate the development of business in Armenia.
