Survey of the Legal and Regulatory Environment for Microfinance Institutions in the Republic of Armenia

This survey outlines the legal and regulatory environment for microfinance institutions (MFIs) in the republic of Armenia. It states that currently microfinance in Armenia consists mainly of lending activities.

The paper discusses the various ways in which microfinance activities are conducted in Armenia. It states that:

• The operational microfinance programs and institutions work within the existing legal and regulatory framework, though most fall under bilateral agreements and are therefore shielded from excessive governmental interference;
• Various parties (governmental, parliamentary and others) have become active in drafting legislations;
• There exist at least 5 draft laws which could potentially affect the microfinance sector in Armenia;
• There is concern that at least one of the draft laws could make it difficult for certain existing MFIs to continue operating under their current legal structure, or cause non-deposit-taking MFIs to become subject to an inappropriate legal and supervisory system.

The paper discusses the:

• Various kinds of legal forms and their different aspects;
• Lending activities and collateral;
• Financial sector laws and regulations;
• Taxation.

The paper concludes by stating that in times to come, the MFI sector should become involved in harmonizing the various proposals and making sure they integrate clearly with the surrounding legal and regulatory environment described in the survey.