Minister: Bank Loan Regulations Will Not Change

Georgia’s Minister of Economy and Sustainable Development, Giorgi Kobulia says that the government is not going to soften tight banking regulations, according to which banks are not allowed to give their clients loans without studying their solvency.

The minister says banking regulations serve to protect the population with the lowest income, and they may have some amendments, but it is not planned to change the principal part.

"These regulations are adequate and serve to protect the people from taking loans without realizing the possible consequences…But of course, we are holding consultations with the private sector and banks about this issue,” he added.

He noted the government always monitors the results of the regulations and if necessary, some corrections can be made.

President of Association of Banks Alexander Dzneladze says the consultations with the National Bank of Georgia (NBG) and commercial banks over the regulations will continue.

According to him, at the meeting with the National Bank, it was discussed which fields were mostly influenced by the regulations.

“The regulations most of all affected quick loans, installments and mortgage loans, mainly of newly constructed flats,” Dzneladze said.

The President of the Association of Banks also said that despite the fact that the regulations decreased the sales, their introduction was quite adequate.

New banking regulations came into play on January 1, 2019. They became necessary after it was revealed that debts of individual households have been growing and additionally, the practice of crediting physical bodies with higher loan liabilities has also been increasing.

The decree was issued by the Head of the NBG, Koba Gvenetadze.

The regulations apply to all entrepreneurial entities where more than 20 individuals have a loan or credit obligations.

As a result of the regulations, rules for lending by guaranteeing real estate have also tightened. In particular, such a loan is issued if the borrower owns more than one residential property and, at the same time, these properties are not on the lease.