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Giorgi Kepuladze: New Land Regulations will Complicate Mortgaging of Agriculture Lands

After enactment of new regulations for sales of lands to foreign citizens, commercial banks will limit crediting volume, Giorgi Kepuladze, head of Society and Banks nongovernmental organization, told Business Course.

According to the bill, commercial banks and microfinance organizations founded by foreign capital are entitled to own mortgaged lands only for a period of one year and then they are obliged to sell the lands.

A major part of commercial banks in Georgia are founded by foreign capital and therefore, the mentioned regulation will complicate mortgaging of agriculture lands, Kepuladze noted.

“In general, commercial banks follow quite conservative policy in relation to agriculture lands. They issue loans of only 50% of total value of a land plot. For example, if a land costs 10 000 GEL, commercial banks issue 5 000 GEL. A major part of Georgian banks are founded by foreign capital and therefore, they are expected to show more caution to mortgaging of agriculture lands. As a result, problems will arise in terms of crediting and clients’ interests will be harmed”, Kepuladze said.