Page 34 - GEORptApr20

8.1.4 ​Bank specific regulations, issues
Georgia’s central bank introduces more flexible retail lending regulations
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 obtains $50mn financing from OPEC Fund for International Development to back foreign trade clients
London-listed TBC Bank Group, which operates as one of Georgia’s two largest banking providers, announced on March 23 that its subsidiary, Georgia-registered bank TBC, signed a three-year loan agreement for $50mn from the OPEC Fund for International Development. ​The funding is to be used primarily to finance international trade activities of TBC customers. “With this new facility, TBC Bank will continue to more actively support local businesses to expand their import and export activities and engage in international markets," said Vakhtang Butskhrikidze, CEO of TBC Bank.
TBC Bank and the OPEC Fund enjoy a longstanding partnership, the group said. In 2012, the OPEC Fund approved a $10mn trade finance loan to TBC Bank, mostly related to the import of goods. In 2017, the OPEC Fund participated with a further $25mn in a syndicated term loan to TBC Bank, arranged by FMO, the Dutch development bank to support the international trade of Georgia.
“International trade is important to the global economy, and it is crucial to a small country such as Georgia,” said OPEC Fund director-general Abdulhamid Alkhalifa. “We are pleased to work with TBC Bank once more. Our loan will support international trade and ultimately improve employment opportunities and economic growth in Georgia.”
34​ GEORGIA Country Report ​April 2020 ​ ​www.intellinews.com