09.Jul .2021 12:00

The NBG Creates Credit Registry – “It May Not To be The Best Practice”

The NBG Creates Credit Registry – “It May Not To be The Best Practice”
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The National Bank is creating a new credit registry. The registry will combine quite detailed and extensive information about borrowings and income of the customer, as well as if a particular customer has been refused a loan approval, and so on.

Banks' participation in the credit registry is mandatory - they will have to submit detailed information on the loans of about 2.8 million and update it monthly. The list of data that a credit registry needs to integrate is quite large.

The Banking Association of Georgia declares, that it will take time to fold this amount of information, as in some cases such detailed information is not even collected by commercial banks.

"There is some information that is recorded individually, but it is not included in the report. In this case, information that has not been recorded at all is also requested. Some information on old loans will be sought, software changes will be made and, most importantly, another report will be added to the banks,” said Aleko Dzneladze, head of the Banking Association of Georgia.

According to him, they worked with the National Bank on the issue of creating a credit registry and there were questions and recommendations that the association had.

"It is still being debated whether it is the best practice to collect such detailed information at the NBG, because the National Bank can already find this information, it has the authority to do so. Of course, the preparation and delivery of additional reports will be an additional pressure. I do not think that this is a simple process, however, nothing is impossible,” said Aleko Dzneladze.

Engagement of microfinance organizations in the Credit Registry is not voluntary. As Gia Petriashvili, the founder of the microfinance organization MBC says that the regulator is already provided with information about the loan portfolio, however, in this case we are talking about more detailed data, which will increase expenditures for the business further.

"As one of the major players in the microfinance market, we often have to go through inspections and provide a lot of detailed information to the National Bank. Against this background providing additional information to the credit registry will not be a fundamental change, however, we are not really happy with the new regulation.

Preparing any report requires resources, so we may need to find additional staff, or we may need to increase the number of employees, which is related to the salary growth," - said Gia Petriashvili.

The founder of the microfinance organization says that he understands why the National Bank wants to create a new registry, however, he has questions whether the goals and functions of this registry and the existing credit info will be duplicated:

"We have one question: will the purposes and functions of Creditinfo and this registry be duplicated? Could the information requested by the NBG be obtained not directly from financial institutions, but transferred from Creditinfo, since most of the information we have submitted to Creditinfo. This would alleviate the bureaucratic burden on financial organizations, ”said Gia Petriashvili.