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Prime Minister says Government may soften Banking Regulations

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BM.GE
21.03.19 20:50
698
“Not enough time has passed since the adoption of the system of responsible crediting for us to make conclusions about it.”, stated Prime Minister of Georgia during his facebook live. 

According to the head of the government of Georgia, detailed analysis is being done by the National Bank of Georgia, as well as the Ministry of Finance and Ministry of Economy and the analysts will publish their report soon. 

In case the analysis shows that numbers need to be corrected, PM is sure that relevant individuals will make logical decisions. 

“The crediting system in Georgia was completely irresponsible, which has brought us devastating results and we couldn’t have continued this way. We have set the new and fairer standard of crediting. We used the best European experience for this in order to be sure that the interests of every citizen, as well as creditor is defended. Moreover, we have freed 600 thousand of our citizens from heavy load. In regards to what positive changes responsible credit system might bring to Georgian economy, naturally the number of crediting will be reduced and it makes sense, however, we should understand that such regulation is necessary in order to make sure that the system does not allow issuing of loans which are toxic or destined to make someone broke. Existing system created a lot of risks for national economy”, stated PM. 

On November19, 2018 Prime Minister of Georgia made an official announcement regarding the deal with the banks and non-banking lender companies to write off small debts of 600 000 Georgians. With this agreement citizens would also be removed from the so called “blacklists” of the lender companies or banks. Since the decision was announced during the pre-election period, it was labeled as voter-bribery be several local watchdog organizations. 

Minister of Economy and Sustainable Development of Georgia, Giorgi Kobulia also commented on bank regulations saying that these changes serve to protect the citizens, especially those with lower income, from the credit obligations, which they can’t understand. 

“Our aim with these regulations is to protect the citizens, especially those with lower income, from getting into the blacklist so that this part of society doesn’t take the credit, which they don’t understand”, stated Kobulia. 

According to the report carried out by TBC research, the pace of issuing non-mortgage loans amounted to 0.3% in February 2019, which is the record low throughout past 6 years. This means that the market of non-mortgage loans for individuals has basically stopped working. 

These are the kind of loans, which majority of population uses, e.g. rents, credit cards or microloans.