First Microbank Expected to Launch in Georgia's Financial Sector by Year's End

In a promising development for the Georgian financial landscape, the Chairman of the Microfinance Association has announced that the country's first microbank is expected to emerge by the end of the year. Nino Devdarian revealed that three potential applicants affiliated with the association are in the process of submitting their license applications to the National Bank of Georgia.

"Pending current consultations, we anticipate that these license applications will be filed between late October and December. The specifics are still being ironed out, but we are optimistic about the transformative effects this development could have on the sector," said Devdarian.

Although the Chairman did not disclose details about possible foreign investment opportunities in these new financial institutions, Devdarian mentioned that the success of the initial entrants would likely influence other organizations' decisions to transition into microbanks.

It's worth noting that the National Bank of Georgia has already formalized regulations for microbank licensing, publishing the requisite orders in the Legislative Gazette in July. The guidelines specify that the capital requirement for establishing a microbank is set at 10 million GEL, a sum that is tenfold higher than that required for microfinance organizations.

When it comes to distinguishing features, microbanks differ from microfinance organizations in several key aspects. Unlike their microfinance counterparts, microbanks will have the capacity to issue larger loans, with portfolios extending up to one million GEL. Additionally, microbanks will be permitted to accept deposits in their fundraising efforts, capped at 15,000 GEL.

Importantly, only microfinance institutions that source at least 70% of their loans from the business sector will be eligible to transition into a microbank, as per the newly approved guidelines.