The consumer loans portfolio exceeds 2.3 billion GEL and this also amounts grows on monthly basis. Entirely, loans issued to physical bodies exceed 3.3 billion GEL. In the years foreign debts increased and the consumer loans increase turnover was balancing the level of GEL and USD, economic experts assert. Starting 2013, the Georgian government started intense payments of foreign liabilities. Therefore, maintaining the earlier flow of consumer loans fuels the financial exhaustion process in the united kingdom. In accordance with economic estimations, if consumer loans are restricted, commercial banks will need to draw business projects and invest benefit real sector within the economy.
Economic expert Shota Gulbani says similar tendencies will never bring favorable leads to either the state of hawaii economy as well as consumers. “Only commercial banks and lenders that issue consumer loans generate a fortune. The problem is the consumer loans mostly are devoted to essentials or paying off other financial liabilities, and also this process make consumers sink deeper in debts. Consumers will not launch business activities through these loans, they don’t make products and therefore, they cannot contribute to economic downturn and the growth. This factor aggravates the heavy social situation”, Shota Gulbani said and added our citizens buy imported products through bank loans and directly stimulate maintaining imports in the advanced permanently.
“Naturally, the harder merchandise is imported from abroad, the better currency will outflow from Georgia, that is certainly, the imports-exports balance will worsen this also factor will modify the GEL rate too. I do believe the Authorities should interfere in this situation and regulate the finance sector through efficient legislative regulations. No one Hopefully the recently established financial supervision agency will launch operation in the near future this also body should make target resolvig similar problematic issues”.
Economic expert Mikheil Dundua also confirms an excessive degree of consumer loans during the credit structure is actually a problem. A growth in refinancing loans portfolio can be a genuinely problematic issue, he said. Commercial banks use the money stripped away from the nation’s Bank of Georgia (NBG) for issuing consumer loans this also money will not go the best sector from the economy, Mikheil Dundua noted.
“The sum that is certainly supplied to commercial banks in the form of a refinancing loan will not opt for economic stimulation. These funds are employed for issuing consumer loans which scheme further finances an order of imports products and at last, this tendency is reflected on the currency operations. Naturally, this factor affects the GEL exchange rate and spoils the national currency. It would be expedient that your NBG launch macro-prudent management and restrict crediting the fields which aren’t associated with the efficient development. The NBG must also fulfill the IMF recommendations”, Mikheil Dundua said and added:
“The IMF has stressed that in 2014 1 / 3 of retail loan payers were spending over the part of their incomes on serving the loans this also process would be to be restricted and regulated”.
“The a year ago Kadagidze stressed that consumer laons were much burden to the economy and the human population. The National Bank insures a large-sale crediting of business banks through issuing refinancing loans, although the intent behind loans aren’t determined without any macro prudent policy has been formed. Therefore, we have the reality when money goes toward purchaisng imported products, making currency operations, to not crediting the economy” – Mikheil Dundua said.
It will probably be worth noting, based on the INterPressNews media agency, the NBG President Giorgi Kadagidze noted in 2014 how the main challenge consisted in? the growing nonbank finance sector.
“The nonbank finance sector is quickly growing. To position simply, ab muscles of fast installment payment schemes, unregistered credit unions and so on. A of pawn-shops is the reason for over 0.5 billion, various services of quick istallmet payment schemes exceed 100 million for example. Therefore, if you bear in mind so huge volume together with very high-interest rate loans and ordinary bank credits, we will see the debt burden on our population may be very heavy and also this factor develop into a heavy challenge for the whole economy” – Kadagidze noted.
The problem and unethical policy is outlined from the fact commercial banks offer new loans to the current family of our citizens for since the old loans, Kadagidze added.
“As a guide, the issue resolution is of temporary, not fundamental character. We are going to provide adequate step to similar cases. Concurrently, there is another factor and i also would like to ask alter their ways . and warn and urge them to read not just agreements wonderfully, but show maximum caution trying such products as installment payment schemes, credit lines, payment of loans”, Kadagidze noted.
The the truth is following: the challenge Kadagidze has emphasized is deepening, nevertheless the NBG hasn’t provided adequate reply to it. The Finance Ministry also proves the relevance of your problem, but nor the federal government has had any stages in this direction. Hence, the finance sector looks like it’s turned adrift.
Bank Sector’s Opinion
Otar Nadaraia?NBG Vice President
?A selection of a distinct person, however, an individual, is practical. When the consumers buy a product or service by using an installment payment scheme as well as pay later, they should have an opportunity. All at once, the crediting market’s current conditions really should be also taken into consideration. Activity has declined, while liquidity is high. Consequently, commercial banks issue credits for business projects easily. The lending company sector? can fully satisfy the need for both private and corporate clients. Adequately to your demand, commercial banks issue credits for any buying furniture and enterprising equipment without sectoral restrictions”.
Asmus Rotne?ProCredit Bank director general
“There are many sectors in Georgia that produce export products (wine, mineral waters, filbert) and commercial banks actively finance the items. The united states has real potential and also this list should increase, only commercial banks show an extremely desire along with the understanding different. Loan bags are issued due to the demand, including consumer loans. Borrowers’ risks are maximally insured in the loan-issuing process, in keeping with supervisory norms. The supervision mechanism satisfies the biggest standards in Georgia as well as country demonstrates special practice and knowledge of the spot during this respect”.
David Tsaava?Basisbank director general
“I see no problem in crediting physical bodies. The bank makes look at consumers. Hence, the availability is adequate to your demand. In case the client needs a payment payment scheme, your banker provides a corresponding bank product.?Together, I wouldn’t say the only consumer loans come in demand. The business crediting also grows, along with the micro loans portfolio. The growing demand is reported in every segments with various correlations caused by sectors”.
Shota Chkoidze Halyk Bank deputy director general
“Retail lending plays a vital role inside the development of economy of the united states, and the care have to be transported to ensure the appropriate lending standards are applied and borrowers’ solvency taken into account in such a way borrowers with the ability to face their budget. There isn’t any doubt that proper retail lending has never to become limited just as turn it develops business sector further. Mortgage and consumer loans in Halyk Bank Georgia are granted using balanced conservative approaches, thus making the portfolio in the bank usually the one excellent.”