Citizens considered borrowing money from a pawnshop a simpler operation compared to taking out a loan from a bank. However, this credit institution engages in actions or inactions that are not based on legislation and result in the unjustified appropriation of citizens' property.
Citizens complain about high interest rates, premature sale of pledged items, pledged items being valued significantly below their real worth, non-transparent contract terms, and violations of their rights. It was also openly stated in parliamentary discussions that pawnshop managers “harass” citizens and that there are serious regulatory gaps in the field.
Experts, on the other hand, state that some pawnshops operate virtually unregulated, which leads to citizens incurring financial losses.
Regarding the problem, Milli Majlis member Vugar Bayramov told Modern.az that there is a need to draft and adopt a new law on pawnshops:
“There is a need for this law to more closely regulate pawnshop activities. In many cases, misunderstandings and even serious problems arise between this organization and the borrowing party. We also observed that some pawnshops do not fulfill their obligations and sometimes create problems related to pledges."
The deputy noted that there is a necessity for regulating the amount of the loan provided in relation to the pledge, protecting the rights of citizens borrowing from pawnshops, and regulating interest rates (using methods other than administrative ones would be appropriate):
"Currently, pawnshop loan interest rates are quite high, which leads to increased borrowing by the population. In many cases, the repayment of debts reaches an impossible level. Citizens cannot retrieve their pledged items. All these listed issues will be regulated by legislation and eliminated".
Lawyer Ramil Suleymanov told Modern.az that current regulations concerning pawnshops are excessively lenient:
“Physical or legal entities engaged in this form of credit often deviate from the requirements of legislation in their relations with citizens. There are serious gaps in the actions of these individuals, as well as in the regulation of interest rates.”
According to the lawyer, when drafting the law, the Milli Majlis should first conduct a public discussion. After this, it will be possible to formulate a detailed draft law or legislative act:
“Currently, pawnshop activities should be carried out directly under the supervision of the Central Bank. The existence of interest, pledge, and mortgage relations necessitates the creation of a separate law concerning pawnshop activities. Currently, pawnshop organizations continue their activities by paying income tax," the lawyer added.
