By the Decree No. 90/04 of the President of the National Bank of Georgia dated 10 April 2024 and addressing the procedure of issuance of up to GEL 400,000 loans/bank credits by loan issuing institutions (the “Decree”), to became effective from 1 May 2024, it has been established that commercial banks, micro banks, non-banking deposit institutions – credit unions, microfinance organizations, loan issuing entities as well as payment service providers shall issue up to GEL 400,000 loans/bank credits only in GEL. Furthermore any loan/bank credit attached or indexed, in any form, to a foreign currency shall not be considered as having been granted in GEL.

The Decree also provides for exemptions from the above referred requirement, such as, for instance, issuance of a loan/bank credit to non-Georgian citizens and/or legal entities set up outside Georgia or cases where a borrower receives sufficient income for repayment of a loan/bank credit in the same foreign currency in which a loan/bank credit has been extended.

It should also be noted that the limit of GEL 400,000 to be introduced by the Decree is a continuation of the policy of dedollarisation/larization of the National Bank of Georgia. The limit of GEL 100,000 was put in place on 20 January 2017 that has been increased to GEL 200,000 on 23 January 2019 followed up by setting a new limit of GEL 300,000 (until 1 May 2024) and GEL 400,000 (from 1 May 2024).

Furthermore it should be underlined that from 1 January 2024 the requirement related to loans/bank credits to be necessarily issued in GEL also applies (taking account of a few exceptions) to a surety securing repayment of a loan/bank credit.

In addition to the above it is to note that the number of exemptions, where the limit of a loan/bank credit to be issued in GEL does not apply, has been multiplied. For instance, from the outset the exemption applied solely to those bank credits that were designed for non-Georgian citizens, however, from 1 January 2024 such exemption extends to all those persons who have income in a foreign currency notwithstanding whether they are citizens of Georgia or not.

Currently we are unaware whether the National Bank of Georgia will further revise the limit established for loans/bank credits to be issued in GEL and should it decide to do so, then what will be the timeline.

Prepared by: Natalia Babakishvili