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Property appropriated by Georgian MFOs as payment of debts on loans down

Finance Materials 18 January 2021 17:21
Property appropriated by Georgian MFOs as payment of debts on loans down

BAKU, Azerbaijan, Jan. 18

By Tamilla Mammadova – Trend:

Georgian microfinance companies appropriated 7 million lari ($2.1 million) less borrowers’ property as payment of debts on loans, Trend reports via the National Bank of Georgia (NBG).

At the same time, the microfinance sector, based on the Central Bank’s new regulations as of October 1, created an additional loan-loss reserves which amounted to 108 million lari ($32.8 million).

Large companies account for about half of the property appropriated in the amount of 7 million lari, but the exact distribution can’t be made due to the lack of specifics in the reporting of Rico Credit, Georgia’s largest MFI (microfinance institution).

Rico credit management says that it does not appropriate property in payment of debts – property of chronic non-payers immediately is sold by the National Bureau of Enforcement and Rico Credit gets the value of the sold object but doesn’t formally re-registers it.

The complex regulations introduced by the National Bank for the financial sector, including MFIs and private moneylenders, are constantly reducing the number of microfinance organizations.

The regulations came into force on January 1, 2018.

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