Proposed regulatory changes for microbanks in Georgia are expected to increase competition and encourage more players to enter the financial sector, according to Ilia Revia, CEO of microfinance organization Crystal. Speaking on TV programme Business Course, Revia said easing licensing requirements and relaxing restrictions on loan portfolio composition would make the market more attractive to potential entrants.
Revia described the reform as a positive development, noting that reducing the minimum share of business and agricultural loans in microbanks' portfolios from 70% to 50% would allow greater diversification and lower barriers to entry. He said stronger competition would ultimately benefit consumers. He also noted that large microfinance organizations had previously considered transitioning into microbanks, and that the proposed changes could encourage them to pursue this option.
Under the amendments initiated in Parliament, microbanks will also be allowed to issue loans in foreign currencies, while the maximum lending limit for a single borrower or a group of related borrowers will double from GEL 1 million to GEL 2 million. The minimum share of loans issued for business purposes will also be reduced from 70% to 50%.
Revia added that Georgia's financial sector development and growth trends make the country attractive to international financial institutions, although he said he currently had no information about any specific international players considering entry into the market.
