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Georgian Banks Talk about Active Restructuring of Loans

As reported, the National Bank of Georgia has recommended commercial banks to develop measures to alleviate the situation for the customers who have income in local currency and loans – in foreign.

How do commercial banks perform these instructions? At this stage there are no statistics on how many customers applied to the bank with a request on restructuring because of the devaluation of the lari, and how many requests were satisfied. However, bankers say that customers actively apply to the banks with the relevant requests, and banks actively meet them. According to Vice President of the Association of Banks of Georgia George Tsutskiridze, the country’s two largest banks – “Bank of Georgia” and “TBC Bank” were the first who responded to the call of President of the National Bank. Then their example was followed by other financial institutions.

“With this step, the banking sector once again showed its solidarity with the interests of customers and intends to defend them as much as possible. Since that time, customers actively apply to banks and, accordingly, the banks are restructuring debts. Consumers are satisfied with these proposals, and actively use them. Basically we are talking about those who earn in the national currency and pay loans in foreign. They found themselves in the most difficult position as a result of the crisis. Sometimes people say that the banks refuse to restructure debts, but it should be noted that the restructuring does not apply to problem loans appeared before the devaluation of the national currency. Accordingly, the banks refused them restructuring,”- he says. According to the expert Gigi Bedianashvili, despite the fact that some customers prefer to pay loans on the existing schedule, it is obvious that the majority of consumers are forced to go to restructuring, so there is no doubt that the statements of banks on customer activity are real.

“In a situation where revenues in GEL fell, and loans in dollars remained the same, there are two ways out – either to lower interest rates or extend the repayment period. Banks certainty will not lower interest rates ; restructuring of loans is also unwelcome for banks, as it worsens their loan portfolio and increases maturity of the loan, etc. Especially when risks of banks are growing because of the economic slowdown and the devaluation of the currency. In this situation, the restructuring is also undesirable. Business is a business, and it does not bear social responsibility. When bankers say that they are responsible, there are doubts about their sincerity. But at the same time, banks are on the front lines before the economic shocks, and they have to make certain concessions to customers ,”- he notes.