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IMF: Georgia's National Bank interested in further strengthening oversight of non-banking lending sector

Finance Materials 4 September 2020 14:08
IMF: Georgia's National Bank interested in further strengthening oversight of non-banking lending sector

BAKU, Azerbaijan, Sept.4

By Tamilla Mammadova – Trend:

The International Monetary Fund (IMF) has praised the measures adopted by the National Bank of Georgia (NBG) in the past two years aiming to strengthen the non-banking sector’s financial regulation, supervision, and oversight in Georgia, Trend reports via the IMF.

According to the IMF, currently, the non-banking sector of Georgia consists of micro-financial institutions (MFIs) and loan issuing entities (LIEs). In reforming the sector, the NBG has:

Amended laws and issued new and revised regulations on registration, capital, and liquidity requirements for MFIs;

Expanded supervisory powers and authorities and increased supervisory resources for the non-bank sector;

Registered 200 LIEs ;

Put in place consumer protection and responsible lending rules;

These new measures have helped to enhance the resilience of the non-banking sector, weed out those that are non-viable, and improved the reputation of the MFI brand.

The IMF says that Georgia's National Bank is interested in further strengthening the oversight of the non-banking lending sector and further promoting financial inclusion on both the asset and liability sides. The IMF says that it supports the NBG’s proposed new structure in the micro-lending sector.

"Under the proposed new structure, the top tier would be micro-banks, which would gradually be allowed to take deposits, have deposit insurance, like banks, and have access to lari from the NBG. Existing qualified MFIs would be allowed to apply to be licensed as micro-banks. The licensed micro-banks would have a clear mandate to function as a lender to underserved individuals, SMEs, and agri-businesses. Also, they would be required to implement capital and liquidity requirements per the Basel framework with proportionality, be subject to enhanced supervision, and put in place risk management and corporate governance frameworks", reads the report.

The IMF says that these measures would help to promote SME lending and reduce funding costs for the micro-banks, as well as achieving better safety and soundness of the financial system.

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