AZE.US
Azerbaijan’s Supreme Court has warned about the legal risks associated with repeatedly lending money to individuals at interest.
Interest-bearing loans between private individuals are not automatically prohibited, AZE.US reports.
Under Azerbaijan’s Civil Code, a lender may collect interest if the amount and payment terms are established in an agreement.
The court stressed, however, that a one-time loan to a particular person is legally different from systematically lending to multiple borrowers for profit.
When repeated interest-bearing loans effectively become a business activity, the arrangement may move beyond an ordinary private debt relationship and expose the lender to legal liability.
The Supreme Court also advised borrowers and lenders to formalize such arrangements in writing. Contracts should clearly state the principal, interest rate, calculation method, repayment deadline and payment schedule.
The warning is particularly relevant amid the spread of informal lending, in which financially vulnerable people borrow from private individuals at high interest rates without transparent contracts or meaningful consumer protections.
AZE.US