Commercial banks must bring relief to borrowers, says NBG

NBG is asking commercial banks to amend repayment options for customers with loans in the US dollar., 25 Feb 2015 - 16:29, Tbilisi,Georgia

The National Bank of Georgia (NBG) is asking commercial banks to introduce plans to bring relief for individuals who have loans in the US dollar and earn an income in the Lari, Georgia’s national currency.

NBG president Giorgi Kadagidze made this plea when met with directors of Georgia’s commercial banks today.

"We have discussed several issues. Out of them, the most important is to bring relief to the people who have taken out loans in the US dollar and earn an income in the Lari. This is a task for the commercial banks. Loan extension is one of the ways to reduce the amount of money which borrowers have to pay monthly,” Kadagidze said.

While this effort would be useful for borrowers, Kadagidze believed this was not a fundamental solution to the problem.

He said all banks should have an individual approach to their customers as this was a process that "cannot be standardized”.

Kadagidze said this initiative would only apply to commercial banks, as micro-financing organisations were outside NBG’s competence.

At the meeting Kadagidze reminded all the commercial businesses in Georgia about their corporate social responsibility.

"[Caring about your customers] is a part of the corporate social responsibility and Georgian commercial banks have no claims against the initiative which NBG introduced to them today,” he said.

"Moreover, some of them had already had the same ideas about bringing relief to their borrowers,” he said.

Meanwhile, TBC Bank CEO Vakhtang Butskhrikidze said TBC would try to set a new payment schedule for affected customers.

"We will set up plans individually for each borrower of our bank. We will try to offer them a new payment schedule where they will be able to pay the same as they did before the Lari depreciated,” Butskhrikidze said.

"Now we face a currency shock which is bad for the banking sector. But the banking sector will try to have a smaller loss while overcoming this problem. The good thing is that the majority of loans are in Lari,” Butskhrikidze said.

The TBC Bank official believed the best option would be for the Government, businesses and banks to work together in 2015.

"I mean to work together in order to attract more tourists, more money to be spent on infrastructural projects and to contribute in attracting more Foreign Direct Investments in the country,” he added.