-When the Larization process begins?
-Larization process begins on January 17, 2017 all of which will last Sixty days. Our citizens are going to cover due commercial banks under this system. Loans must have been issued before January 2, 2015 and has to have been guaranteed by USD or real estate.
The one-time program is jointly implemented by National Bank of Georgia (NBG) and Government of Georgia.
Government will subsidize expenditures for Larization of loans under preferential exchange rate, while NBG will furnish USD to commercial banks for Larization of loans and can ensure support through GEL liquidity.
The program won’t make a call for taking additional expenditures by commercial banks or borrowers, including no advance payment or refinancing commission fees shall be utilized on similar loans.
Commercial banks are obliged to see all potential beneficiaries with regards to the program. The course also enables borrowers to carry out porting of their total loans, i.e. take optional decision on where bank to carry out loan Larization.
Subsidies won’t be utilized on high-income bodies, whose annual revenues exceed 100 000 GEL or whose remaining level of the financial loan exceeds 100 000.
The program does apply to around 27 000 physical bodies. Averaged number of loans is 15 000 USD.
-If NBG tightens monetary policy amid inflation expectations, what exactly are government’s expectations and forecasts? Will our citizens indulge in the program?
-The program is optional and enables borrowers to take pleasure from preferential exchange rate for loan Larization. Borrowers is not going to pay advance payment commission fees. Moreover, this program participants’ revenues will never be determined by exchange rate difference your domain serve loans from the currency in which they receive revenues.
Difference between mortgage rates of GEL and USD makes expenditures which the borrowers buy insuring currency risks. GEL-denominated loan enables to insure from currency risks. It also makes loan service costs foreseeable. The borrowers will probably be also exempted from paying conversion fees.
-Is it actually possible to convert GEL-denominated loans to USD again?
-Starting January 15, 2017 finance companies are banned to issue foreign money denominated loans under 100 000 GEL. In the western world higher amount loans, similar loans could possibly be issued in USD.
-Will this software be applicable to restructured loans?
-Similar loans will likely be included as well from the program in accordance with other criteria.
-Why the earliest of January of 2015?
-Objective of your mentioned scheme could be to alleviate loan service burden amid exchange rate change. Under existing calculations, this mechanism will most concern loans issued before January 1, 2015/ This initiative won’t consider all who have taken loans after considerable change in exchange rate. However, they may be at liberty to negotiate their loans with commercial banks and join the Larization process.
-What mortgage rates will run for issuing GEL-converted loans?
-Commercial banks will issue GEL-converted loans beneath existing market interest rates.
-Conversion of USD-denomanted loans into GEL will shrink requirement for USD. In contrast, commercial banks will keep demand for USD, mainly because they have got loans in foreign money. Has Government taken into account this factor and in what way negatively will this moment affect GEL exchange rate?
-Main objective of Larization process will be to shift currency risks onto those instances that are able to manage them. With regards to physical bodies, this category contains the least capability achieve this.
NBG will directly supply required number of USD to commercial banks for Larization process. Consequently, this method cannot affect either exchange rate or currency positions of business banks.
-Will Larization program increase money mass?
-This program are not going to increase money mass.