The government has approved a draft amendments to the Tax Code, according to which banks in Armenia are allowed to "forgive" the fines and penalties imposed on citizens for bad loans.

"These amendments refer only to those individuals whose loans have been recognized hopeless till May 31," said Atom Janjughazyan, Finance Minister of Armenia.

It was also mentioned that from now on banks are allowed to not pay income taxes on fines and penalties from which they will refuse, whereas before they had to do so irrespective of whether the penalty was charged or not.

The minister also underlined that the exemption from fines does not mean the release of the principal amount. The proposed initiative does not have a mandatory nature and banks are free to make a decision regarding the exemption from the payment of penalties to the borrower.

According to the draft, the agreement on exemption from fines and penalties is possible only if the principal amount is paid in 90 days.

Prime Minister of the Republic of Armenia Nikol Pashinyan, in his turn, noted that this decision was aimed at eliminating the negative phenomena of relations between banks and borrowers.

"We want the citizens to come to the initial state, which was confirmed by a contract between the bank and the borrower. That is to say, their negative history is being erased, and they try to start their relationship from a new page, "he said.

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