Starting January 1 the National Bank introduced new regulations as part of a program to introduce responsible lending and reduce the excessive indebtedness of the population.
From now on insolvent citizens will not be able to take loans. Apart from that, loans will be issued based on the financial condition of borrowers – they will not be able to borrow more than they can pay.
The regulations introduce such concepts as the debt-to-income ratio – a certain percentage is set for income above which a loan cannot be issued. The limit differs depending on the level of income – if a borrower earns GEL 3,000 per month, the maximum loan amount should not be higher than that for which the loan repayment will require more than GEL 1,350 for 15 years, and GEL 1,650 for 5 years.
The same restrictions apply to all incomes and loan maturity.
New regulations also prohibit the issuance of loans to citizens without a fixed income while they can work in the informal sector and get a good income in cash, bypassing the banks and the official system, but in this case, such a salary will not be taken into account. Those who wish to get a loan must have an official income.
At the same time, regulations do not limit getting loans if income is confirmed. In the case of money transfers from abroad, it will be enough to submit an official document on receipt of this money through money transfer systems.
A ban is also imposed on the only living space of the borrower as a pledge and the bank will not be able to sell a single apartment in payment of the debt.
The central bank notes that the regulations apply to all who issue more than 20 loans – including private money lenders as well as banks, MFOs, online companies and pawnshops.