As of Q3, 2020, a total of 7,000 active online loans have been issued in Georgia, with a total value of 2.7 million GEL. For comparison, 2 years ago a total number of such loans exceeded 358 thousand, the whole loan portfolio was 172 million GEL.
However, as a result of changed rules on the credit market from 2019, online loans as a product have virtually disappeared.
The gradual tightening of regulations for the online loan market began in 2017. The first significant change in this regard came into force on January 15, 2017, which banned 100% interest rate on loans in the country. Moreover, in January 2017 it was prohibited to accrue interest that exceeded the nominal annual loan interest rate of 150%.
These requirements were primarily intended to limit online loans, as prior to these changes, the "market" rate for online loans often exceeded 700% per year.
However, responsible lending was launched on January 1, 2019, which prohibited loan issue without proof of income.
On the background of the changed credit regulations, along with the online loan market, the profitability of the microfinance sector as a whole has also decreased. In 2019, the total profit of microfinance organizations decreased by 278 times and it amounted to 112 thousand GEL.
