The National Bank of Georgia’s decision to change loan service ratio requirements aims to maintain responsible lending practices amid rising wages and economic growth, while keeping the debt burden of low-income borrowers at sustainable levels, said Davit Utiashvili, head of the NBG’s Financial Stability Department.
Until now, the 25% loan service ratio requirement applied to borrowers earning up to GEL 1,500. The threshold will rise to GEL 2,000 from February 1, 2027, and to GEL 2,500 from September 1, 2027. The NBG says the changes will help mitigate over-indebtedness risks and support financial system stability.
According to Utiashvili, the current approach has been in place since 2018 and determines the maximum share of income that can be used to service a loan. In 2018, when the average salary was below GEL 1,000, the maximum ratio was set at 25% for those earning less than GEL 1,500 and 50% for those earning more. As incomes increased, the threshold was raised from GEL 1,500 to GEL 2,000 in 2022.
“Average salary is approaching around GEL 2,500, and we believe it is time to raise the existing threshold from GEL 2,000 to GEL 2,500. Our goal is to ensure that low-income households do not face a debt burden that would be difficult to service without causing financial stress,” Utiashvili said. The NBG expects the gradual implementation to limit the impact on lending while keeping borrowers’ debt burdens at an optimal level.
