BAKU, Azerbaijan, Mar. 15
By Tamilla Mammadova – Trend:
Georgian commercial banks once again reduced interest on deposits, which should have also led to a decrease in interest on loans, Trend reports via Georgian media.
However, this did not happen - interest on loans not only decreased but also increased. In particular, this applies to loans in national currency.
The Association of Banks of Georgia states that the decrease in interest on deposits is not systematic, and currently it is minimal - a maximum of 1 percent.
“Only a few banks have reduced interest on deposits, so we cannot say that the entire banking system has made such a decision. In fact, this is the next stage of the de-dollarization policy, which provides for a reduction in the role of foreign exchange in the country's economy. The banks have very high liquidity in dollars, and taking into account the regulations, it was quite expected that the interest on deposits in foreign currency would decrease,” said Alexander Dzneladze, head of the Georgian Banks Association.
According to him, one of the problems of de-dollarization is that despite the low-interest rates, citizens continue to place their savings mainly in dollars, not lari, although the percentage of benefits in the national currency is much higher.
“Accordingly, one of the goals of reducing interest on dollar deposits is to increase the interest of clients in placing deposits in national currency. Now we expect an increase in activity in this area. As for interest, some banks have increased interest on loans based on their risks, and we cannot say that this is a systemic phenomenon that applies equally to all banks,” said the head of the association.
As he noted, the growth of loan interest was also facilitated by the fact that now, during the pandemic, lending activity has been reduced, and as soon as the situation normalizes, lending will begin to grow, then interest rates will begin to decline.
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