Georgia’s new retail lending regulations will affect the growth rate of banks’ loan portfolios and economic activity, but the banking sector is ready to reassess its products, David Rusia, analytical director of the Banking Association of Georgia, told BMG. Retail lending has historically accounted for the largest share of the banking sector’s loan portfolio, reaching around 38.3% in August.
Rusia said the National Bank of Georgia (NBG) likely introduced the measures in response to International Monetary Fund recommendations on credit-based macroprudential policies. He welcomed the decision to postpone the rules’ effective date from November to February, saying the additional time will allow banks to reassess products and risks and minimize the impact on customers.
The new rules will directly affect borrowing limits for individuals. Rusia said lending growth could slow temporarily before the market stabilizes, while some borrowers could turn to microfinance organizations or other lenders. However, he said banks will seek to retain customers by offering new products in a highly competitive market.
Rusia also called for regular publication of median wage data alongside average wages, saying the median better reflects households’ actual purchasing power. He added that tighter lending could indirectly affect financing in other sectors and said the measures may reflect the NBG’s efforts to anticipate global economic challenges and potential recession risks. “The dialogue with the National Bank is open,” Rusia said, adding that the sector will assess how the loan portfolio responds and revisit the issue at the beginning of next year.
