New regulations for commercial banks to protect consumer rights in Georgia
Tweet 
Share
New regulations on responsible lending practice set by the National Bank of Georgia (BOG) for commercial banks are coming into force today.
The regulations aim to protect consumer rights and bolster healthy credit portfolios at commercial banks.
Starting from May 7, 2018 commercial banks in Georgia will be restricted in issuing loans without meaningful analysis of consumers’ solvency. The total amount of these loans must not exceed 25 percent of the supervisory capital of commercial banks.
Also, the total amount of loans guaranteed by real estate must not exceed 15 percent of the bank’s supervisory capital without an analysis of the client’s solvency, while the loan to value ratio must not exceed 50 percent when issuing a loan, the NBG announced.
As explained, over the past years debts of individual households have been growing at high rates and additionally, the practice of crediting physical bodies with higher loan liabilities has also been growing. Many clients have overdue loans and the volume of responsible crediting has been diminishing recently in Georgia.
To overcome this challenge the NBG set regulations which have also received support from the finance ninistry of the country.
Finance Minister Mamuka Bakhtadze thinks that excessive indebtedness is a serious problem in Georgia and the situation should be improved through regulations.
Bakhtadze also said that the new regulations will not be set only for commercial banks but also for fast, online loan services as well.
Georgian banks lent 22.2 million GEL last month, which was 286.6 million GEL or 1.3 percent more compared to the previous month.
The volume of reserves of the National Bank of Georgia (NBG) has increased and reached $3.39 billion – the highest rate since 2013. The historic maximum of the NBG’s reserves rate was observed in October 31, 2013 when it totalled $3.110 billion.
The National Bank of Georgia (NBG) was praised for its use of stress test tools in the latest report of Basel Committee on Banking Supervision titled ‘Supervisory and bank stress testing: range of practices’, which sets out a range of observed supervisory and bank stress testing practices.
The National Bank of Georgia (NBG) is making further changes in its regulations, guaranteeing better secured services for the customers.
Georgia is taking actions to strengthen confidence in relationships between payment service providers and the customers and ensure the financial transactions are quick, safe and reliable for them.
Georgia’s Prime Minister Giorgi Kvirikashvili welcomes an amendment package for easing excessive debt burden in Georgia, saying "it is important for the economic and financial sustainability in our country”.
Central bank management claims that any amendments carried out by the NBG serve customers’ interests and the improvement of the financial sector portfolio.
Mamuka Bakhtadze has seven days to form a new government and present it to the parliament. If the parliament approves Mamuka Bakhtadze and his choice of ministers and their action plan, the new government will set to work.
Georgian Prime Minister Mamuka Bakhtadze has answered the questions of opposition MPs at today’s plenary session of the parliament of Georgia, where the main topics of discussion were the accumulative pension system, financial sector regulations, the TBC Bank issue, funding of State Legal Entity of Public Law and non-commercial legal entities.
What’s changing?
The National Bank of Georgia (NBG) has approved changes to lending regulations to individuals that will come into force on April 15, 2020.