New Lending Regulations to Take Effect from January 1

Tightened regulations for taking the loans from banks will take effect in Georgia from January 1, 2019.

After tightening rules on lending, the banks will not be allowed to give their clients loans if they are not sure the client will be able to pay back.

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

The project reads that it is unacceptable for a financial institution issue a loan without a detailed analysis of the revenue, expenses and liabilities of the borrower in order to assess if the borrower is capable of paying back the debt.

According to the provisions of the regulations, it tightens rules for lending by guaranteeing real estate. 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 lease.

The regulations were proposed in order to reduce the high indebtedness level in the country.

By Thea Morrison