Page 40 - GEORptJul20

Central bank introduces more flexible retail lending regulations
countries these days, the central bank said that it “significantly softened the supervisory requirements in order to give the banks maximum flexibility in deferring the installments”.
Georgia’s central bank, the National Bank of Georgia (NBG), has approved changes to lending regulations for individual borrowers that will come into force on April 15. ​The amendments aim to simplify the process of borrowing for solvent borrowers, reduce bureaucratic burdens, increase flexibility and, as a result, make the lending process more efficient.
The NBG said that an objective of the changes was to move from “a rule-based approach to a more principles-based” approach. Such an approach required less interference in the management of lending, something which would “increase the role of the financial institution's risk management function and increase access to finance for the solvent population”, read an NBG statement.
Under a key amendment, an analysis of a potential borrower's earnings will still be mandatory, but the financial institution will be able to itself define procedures.
The limit on the loan servicing ratio (payment-to-income, or PTI) will be cancelled. The PTI ratio will remain different for foreign currency loans, with the aim of protecting the borrower and fluctuations of the foreign exchange rate of the financial system from risks.
Mortgage maturity limits will increase: the maximum maturity for mortgages in the national currency, the lari, will increase from 15 to 20 years.
If an individual receives income from abroad, the loan-to-value (LTV) ratio (a financial term used by lenders to express the ratio of a loan to the value of an asset purchased) for buying an apartment will be expanded from 60% to 70%. Corporate governance requirements will be introduced for commercial banks and microfinance organisations.
8.1.5 ​Bank news
Georgia’s TBC Bank borrows $100mn from EBRD
Bank of Georgia slips into red amid
The European Bank for Reconstruction and Development (EBRD) has approved a $100mn senior unsecured loan for Georgia’s TBC Bank as part of its support in the country’s fight against the coronavirus outbreak, the EBRD said on June 23.
“The proceeds will be used for on-lending to eligible sub-borrowers, preferably small and medium-sized enterprises,” EBRD said in a press release.
The loan will be provided this year in two equal tranches.
The EBRD added that the loan would help to “ensure the resilience of the financial sector and to preserve competition in the sector and continued lending to the economy adversely impacted by the COVID-19 outbreak.”
TBC in mid-March allowed all its debtors to suspend repayment of bank loans for a period of three months and, like all other Georgian banks, built up provisions (4% of total assets) for the expected deterioration of its loan portfolio amid impacts of the pandemic.
LSE-listed Bank of Georgia has reported Georgian lari (GEL) 100mn ($31.2mn) of losses in Q1 compared to a profit a year earlier of
40​ GEORGIA Country Report ​July 2020 ​ ​www.intellinews.com