National Bank issues rules to mitigate dollarisation risks, increase unsecured consumer loan maturity
The NBG made a number of decisions in order to “further mitigate the risks of dollarisation” and increase the maximum maturity of unsecured consumer loans. Photo: Nino Alavidze/Agenda.ge
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The Financial Stability Committee of the National Bank of Georgia made a number of decisions on Wednesday in order to “further mitigate the risks of dollarisation” and increase the maximum maturity of unsecured consumer loans.
The Bank highlighted “significantly” reduced trends of dollarisation across the country, but said it had still decided to impose an additional requirement on regulated financial institutions operating in the country that would come into effect on January 1.
For individuals with a total debt of up to ₾300,000 ($111,538), financial institutions will issue a new foreign currency loan only under hedged currency risk conditions under the new rules.
The Bank also decided to increase the maximum maturity of unsecured consumer loans to four years.
Considering that the high growth rate of unsecured consumer loans recorded in 2022 is reduced, and the activity remains at a sustainable level, from November 1 of this year the maximum term limit for this type of loans will again increase from three to four years”, it said.
The Bank said the annual growth of loans, excluding the effect of the exchange rate changes, amounted to 14.6 percent as of August.
Over the last two years, the ratio of loans to gross domestic product has been decreasing, which was facilitated by high economic growth and strengthening of the exchange rate”, the body added.
In the second quarter of 2023, the ratio of loans to gross domestic product will continue to lag behind the long-term trend, [however] it is expected to approach its long-term trend in 2024 if the current trend of credit activity and economic growth is maintained”, the statement also noted.
The NBG’s 2023 financial stability report, presented at today’s meeting of the Committee, said the Georgian financial sector “maintained stability” and “continued lending to the economy without interruption”.
The next meeting of the Committee is scheduled for November 29.
Natia Turnava, the Acting Governor of the National Bank of Georgia, on Tuesday met heads of the Banking Association of Georgia and commercial banks operating in the country to discuss challenges in the financial sector and future plans.
The National Bank of Georgia and the Georgian office of the German Sparkassenstiftung fund on Monday hosted a workshop promoting sustainable finance development and implementation of the environmental risk management processes in the Georgian financial sector.
Natia Turnava, the Acting President of the National Bank of Georgia, on Friday met representatives from local commercial banks to discuss cooperation for ensuring more resource investment in the domestic economy and ensuring access to finance for bank customers.
Natia Turnava, the Acting President of the National Bank of Georgia and the representatives of the country’s banking sector and the Business Association of Georgia on Wednesday reviewed the current situation in the banking sector and discussed the future plans, which will create an additional impetus to the economy.
Natia Turnava, the Acting Governor of the National Bank of Georgia, on Wednesday said individuals would be able to take out loans of “any amount” in the currency of their income with the existing ₾200,000 ($74,358) limit set to be removed starting January 1, 2024.
The National Bank of Georgia on Thursday said an annual publication of the European Covered Bond Council had confirmed the compliance to European Union legislation of the country’s regulatory framework of mortgage-covered bonds.
The National Bank of Georgia on Friday said the domestic financial system was maintaining “stability” and continued lending to the economy, while banks maintained “healthy” capital and liquidity ratios as of January, and credit activity was at a “sustainable” level.