NBG loan regulations decreasing consumer loan portfolio

New regulations on responsible lending practices that came into force on January 1, 2019 have reduced financial stability risks, reports the Financial Stability Committee of the National Bank of Georgia (NBG).

The committee says that as a result of the regulations credit portfolio growth slowed down to 13.1% annually in April 2019, excluding the exchange rate effect.

Starting 2019, consumer credits keep reducing while mortgage loans continue increasing. The share of loans issued in the national currency lari is characterised by the growing tendency”, says NBG.

In the light of reduced consumer credits, the resource is increasing for lending to legal entities.

The annual growth of loans issued to legal persons by April has reached 12.8%. The interest rates on credits issued in lari are decreasing, which is a contributing factor for economic growth”, says the NBG.

Regulations on responsible lending practice mean that commercial banks in Georgia are restricted in issuing loans without meaningful analysis of consumers’ solvency. The total amount of these loans must not exceed 25 per cent of the supervisory capital of commercial banks.