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National Bank Simplifies Crediting Procedures for Physical Bodies

Clients to Get Services of Revenue Service and Public Registry under Single-window Principle at Commercial Banks.

A joint project by National Bank of Georgia (NBG), Government and Revenue Service ensures an exchange of information on borrowers. The document  will come into force in October 2018. According to the NBG, for the purpose of promoting a healthy crediting standards and portfolio at commercial banks and bolstering responsible crediting relations, the NBG is providing active job to establish a responsible crediting platform. Namely, in the lending process, income verification will become an obligatory procedure. At the same time, a top margin for the loan service will be determined so as clients could serve credit liabilities  without financial difficulties. Efficiency of this platform can be ensured though improvement of Credit Information Bureau and incomes inspection infrastructure.

It is worth noting that the authority for regulation and supervision of the crediting bodies was conferred to the NBG under amendments made to the Georgian organic law on National Bank of Georgia. The amendments were approved by Parliament of Georgia at the end of 2017 and the bill came into force on January 11, 2018. Under the same amendments, the NBG was obliged to pass a legal act for regulation of supervision over crediting bodies till October 1, 2018 and carry out a supervision over the crediting bodies starting January 1, 2019.

‘To this end, as a result of cooperation between the National Bank and Government of Georgia, a real time information exchange system will launch operation between Revenue Service of Ministry of Finance and commercial banks. The mentioned system will simplify the borrowing process for physical bodies, who have declared incomes.

Namely, when an employee (incomes in salaries) and physical bodies receiving other taxable incomes (dividends, service fee, interest rates and other legal incomes) submit a loan application to a crediting organization, the consumer has the following option: a) submission of salary reference and a bank extract, standard document requested by a commercial bank for verifying the applicant’s income sources, in material form and b) in case of desire and consent, the mentioned system will provide a supply of information on the clients’ declared incomes to commercial banks on monthly basis. The mentioned scheme will simplify the borrowing process and save the borrower’s time  and expenditures. As a result., the consumers will receive faster and higher-quality services.

We also remind you that, by the initiative of the Georgian Government, according to the amendments to the Tax Code, starting July 1, 2018, for citizens engaged in small business with no more than 500 000 GEL consolidated revenues, the turnover tax considerably decreased to 1%. As a result, if a body is registered as a taxpayer and this body obtains the status of the so-called small business, thanks to the mentioned system, the client will pass easier process, cut expenses and submit a credit application. In case of desire and consent, the system will supply information about the client’s monthly declared incomes to a commercial bank and this system will make it easier for commercial banks to discuss loan applications and pass corresponding decisions. It is worth noting that declared incomes represent positive factor for analyzing a crediting project and taking a positive decision.

Citizens will be able to ask to pass registration as a taxpayer/individual entrepreneur simultaneously without visiting National Agency for Public Registry and Revenue Service, under single-window principle and they will obtain the status of a small business.

Modern electronic programs are used for the mentioned procedure, which ensure uninterrupted information exchange between administrative bodies and commercial banks  involved in this process and this process will save time and finances of the consumer, the NBG representatives noted.

It is worth noting that after obtaining the status of a small business, the body is obliged to submit a monthly declaration of incomes tax for a small business entity no later than 15th day of the next month of the reporting month. It should be noted that bodies of such professions as nanny, taxi driver, tutor and similar ones, with no more than 30 000 annual turnover, are able to apply to Revenue Service for the micro business status. And this status frees from payment of incomes tax. In this case commercial banks will receive information on the client’s status. At the same time, representatives of the mentioned professions are able to apply to Revenue Service for the small business status and pay 1% of the turnover, create the history of taxpayer and incomes as a precondition for drawing credits from commercial banks in a simplified manner.

Initially, only commercial banks will be able to apply the project, while other crediting organizations will join the system stage by stage.