Law of Georgia on the Activities of Micro Banks
On 22 February 2023, new Law of Georgia on Micro Banks was adopted. It will enter into force from 1 July 2023.
The purpose of the Law is to regulate the activities of micro banks, to develop the adequate environment for their operation and to ensure free competition on the market.
While explaining the reasons for adopting the Law, the Explanatory Note emphasizes the diversity of the banking sector in the country, including both, small and large companies, with various financing structures and different possibilities of accessing the resources of foreign financial institutions. The goal of establishing micro banks is to increase the access to financing for population in entrepreneurial and agricultural sectors.
There are 35 microfinance organizations registered in Georgia. Due to the inability to receive deposits and open accounts for the customers, such organizations have restricted access to the financing segment in the country. After adoption of the law, new economic opportunities are created for those microfinance organizations that intend to transform their activities and increase their market presence.
Legislator also explains that due to the lack of availability of Georgian Lari resources and direct access to National Bank monetary instruments, the need for hedging foreign currency financing increases the cost of the funds and therefore, price of credit products. To address this matter, microbanks will be granted the right to open correspondent accounts in the National Bank. As a result, micro banks will have significantly lower costs and their access to local and international market resources will be increased as compared to the microfinance organizations.
As per the Law, micro banks have the following major operational restrictions:
- At least 70% of the credit portfolio should be comprised of the business loans or the loans payable using the income from the business activities;
- Loans may be issued only in Georgian Lari;
- Deposits obtained from physical persons shall not be less than GEL 100,000 (or equivalent in foreign currency) per physical person;
- The maximum total amount of credits and other obligations issued to one borrower or a group of interconnected borrowers should not exceed GEL 1,000,000.
Micro bank license is issued by the National Bank of Georgia within 12 months after filing the relevant application.
The Law determines special regulation for microfinance organizations willing to obtain the micro banking license until 1 January 2024.
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- 醿♂儛醿欋儬醿斸儞醿樶儮醿� 醿炨儩醿犪儮醿め償醿氠儤醿� 醿愥儬醿愥儨醿愥儥醿氠償醿� 70% 醿ａ儨醿撫儛 醿ㄡ償醿撫儝醿斸儜醿濁儞醿斸儭 醿♂儛醿涐償醿儛醿犪儧醿斸儩 醿涐儤醿栣儨醿樶儣 醿掅儛醿償醿涐儯醿氠儤 醿♂償醿♂儺醿斸儜醿樶儭醿掅儛醿� 醿愥儨 醿樶儧 醿♂償醿♂儺醿斸儜醿樶儭醿掅儛醿�, 醿犪儩醿涐償醿氠儣醿� 醿撫儛醿め儛醿犪儠醿樶儭 醿儳醿愥儬醿濁儶 醿♂儛醿涐償醿儛醿犪儧醿斸儩 醿♂儛醿メ儧醿樶儛醿溼儩醿戓儤醿撫儛醿� 醿涐儤醿︶償醿戓儯醿氠儤 醿ㄡ償醿涐儩醿♂儛醿曖儛醿氠儤醿�;
- 醿♂償醿♂儺醿斸儜醿� 醿ㄡ償醿♂儛醿儦醿濁儛 醿掅儛醿樶儶醿斸儭 醿涐儺醿濁儦醿濁儞 醿氠儛醿犪儴醿�;
- 醿め儤醿栣儤醿欋儯醿犪儤 醿炨儤醿犪償醿戓儤醿♂儝醿愥儨 醿涐儤醿︶償醿戓儯醿氠儤 醿撫償醿炨儩醿栣儤醿⑨儤 醿愥儬 醿ａ儨醿撫儛 醿樶儳醿濁儭 100 000 醿氠儛醿犪儢醿� 醿溼儛醿欋儦醿斸儜醿� (醿愥儨 醿斸儱醿曖儤醿曖儛醿氠償醿溼儮醿� 醿ａ儶醿儩醿ａ儬 醿曖儛醿氠儯醿⑨儛醿ㄡ儤) 醿斸儬醿� 醿め儤醿栣儤醿欋儯醿� 醿炨儤醿犪儢醿�;
- 醿斸儬醿� 醿涐儭醿斸儭醿償醿戓償醿氠儢醿� 醿愥儨 醿ａ儬醿椺儤醿斸儬醿椺儞醿愥儥醿愥儠醿ㄡ儤醿犪償醿戓儯醿� 醿涐儭醿斸儭醿償醿戓償醿氠儣醿� 醿儝醿ａ儰醿栣償 醿掅儛醿償醿涐儯醿氠儤 醿欋儬醿斸儞醿樶儮醿斸儜醿樶儭醿� 醿撫儛 醿♂儺醿曖儛 醿曖儛醿氠儞醿斸儜醿ａ儦醿斸儜醿斸儜醿樶儭 醿涐儛醿メ儭醿樶儧醿愥儦醿ａ儬醿� 醿儛醿涐儯醿犪儤 醿濁儞醿斸儨醿濁儜醿� 醿愥儬 醿ａ儨醿撫儛 醿愥儲醿斸儧醿愥儮醿斸儜醿濁儞醿斸儭 1 000 000 醿氠儛醿犪儭.
醿涐儤醿欋儬醿� 醿戓儛醿溼儥醿樶儭 醿氠儤醿償醿溼儢醿樶儛醿� 醿掅儛醿♂儶醿斸儧醿� 醿♂儛醿メ儛醿犪儣醿曖償醿氠儩醿� 醿斸儬醿濁儠醿溼儯醿氠儤 醿戓儛醿溼儥醿� 醿ㄡ償醿♂儛醿戓儛醿涐儤醿♂儤 醿掅儛醿溼儶醿儛醿撫償醿戓儤醿� 醿ㄡ償醿⑨儛醿溼儤醿撫儛醿� 醿愥儬醿愥儯醿涐償醿⑨償醿� 12 醿椺儠醿樶儭 醿曖儛醿撫儛醿ㄡ儤.
醿涐儤醿欋儬醿濁儭醿愥儰醿樶儨醿愥儨醿♂儩 醿濁儬醿掅儛醿溼儤醿栣儛醿儤醿斸儜醿樶儭醿椺儠醿樶儭, 醿犪儩醿涐儦醿斸儜醿♂儛醿� 醿♂儯醿犪儣 醿涐儤醿樶儲醿濁儨 醿涐儤醿欋儬醿� 醿戓儛醿溼儥醿樶儭 醿氠儤醿償醿溼儢醿樶儛 2024 醿儦醿樶儭 1 醿樶儛醿溼儠醿犪儛醿涐儞醿� 醿欋儛醿溼儩醿溼儤 醿愥儞醿掅償醿溼儭 醿♂優醿斸儶醿樶儛醿氠儯醿� 醿犪償醿掅儯醿氠儛醿儤醿愥儭.