Home / Economy / Microfinance Sector to Halve Loan Rates

Microfinance Sector to Halve Loan Rates

Under new regulations, microfinance organizations will have to cheapen loans and create obligatory reserves on portfolio.

Starting September 1, top margin for efficient rate growth will be 50%.

Moreover, starting September 1 (2018), microfinance loans will be divided in categories and reserves will be determined due to corresponding rates: a) standard – 0%; b) for attention – 10%; c) nonstandard – 30%; d) doubtful – 50%; e) hopeless – 100%.

Mortgage loan is strongly guaranteed if the correlation to loan security price is (LTV) <75%. With gold and liquid security, the coefficient is 90%, with other movable property – LTV- 40%.

Restructured loan is classified negatively if it is not valuably secured by liquid asset.

As of H1/2018, the so-called online loans with high interest rate (71 organizations), have revenues of 30.4 million GEL (Q1/2018 – 13.2 million GEL), and from fines – 15.2 million GEL (7.4 million GEL in Q1/2018).