BANK CANNOT RUN RISKS
Azat Artsakh – Nagorno Karabakh Republic [NKR]
23 May 05
Susanna Balayan: `What loaning policy does the bank carry out?’ Kamo
Nersissian: `The bank grants loans to such branches of economy as
building, agriculture, food production, services, trade, consumer
sector, etc. Since 2004, in accordance with the government programme,
the bank loans money to small and medium-size businesses increasing
the sums significantly in 2005. It is planned to increase the volume
of mortgage loans.’ S.B.: `Will the population benefit from this? Why
cannot the rural population benefit from the loans? Aren’t the
conditions of the bank too tough?’ K.N.: `The economic development
determines the improvement of the quality of life, unemployment
decreases, salaries rise. People will be able to afford better forms
of leisure connected with the development of services. As to loaning
of agriculture, do not forget that Artsakhbank is a commercial bank
and must defend the rights of its shareholders and creditors. In
loaning the bank does not discriminate between rural and urban
inhabitants. Any type of loan is granted on security. Whereas, the
rural inhabitants do not have `suitable’ property to offer as
collateral, as it is required by the bank. The bank does not have the
right to run risks, it is possible only in cooperation with the
government. Today such attempts are made, but again it is mainly
Artsakhbank that runs risk, therefore the bank is cautious in granting
loans agriculture. Besides, the tough conditions in loaning are
determined by the regulations maintained by the Central Bank of
Armenia forall the trade banks, which is the main reason for the tough
loaning policy of the bank.’ S.B.: `Are there privileges for you
permanent customers?’ K.N.: `Certainly. Over several years of
cooperation good relationships have been set up with many of our
customers, and the bank offers more favourable conditions to them,
because the bank can estimate the degree of risk. Besides, the
department of loans regularly analyzes the financial state of the big
creaditors, and as a result surprises are excluded.’ S.B.: `How would
you evaluate the dynamics of loan investments of the bank?’ K.N.: `By
January 1, 2004 loan investments in the NKR economy totaled 3728.9
million drams, while by January 1, 2005 they had amounted to 5163.8
million drams growing by 38.4 per cent. For NKR this is a significant
growth.’ S.B.: `What is the situation on the loan market in NKR like,
what banks are involved in the market, and are there other
organizations likely to be involved in this sector?’ K.N.: `Today it
is pointless to speak about a loan market in NKR, for the monopoly of
the bank is obvious. We do not have competitors (there are small local
branches of Armenia which do not have great possibilities and conduct
an even more cautious policy of loaning). Unfortunately it is so,
whereas free competition would improve banking services, as well as
relieve our work, for efficiency is impacted by a large number of
customers, especially in the departmentof loans. In the nearest future
we do not expect appearance of serious banks because of the lack of
investments caused by geographic and political reasons. We still live
and work in an area of risk.’ S.B.: `Does the lack of the institution
of insurance affect granting loans negatively?’ K.N.: `A system of
insurance in NKR would be an ideal variant and would considerably
reduce the credit risk.’
SUSANNA BALAYAN.
23-05-2005