In 2019, the number of
microfinance organizations in Georgia decreased by 19, from 65 in early year
due to the introduction of lending regulations and stricter standards for the MFO sector.
According to Beso
Shengelia, Chairman of the Board of the Microfinance
Organizations Association, the process will stop and those who managed
to survive will be able to continue operating in the future.
Many MFIs and online lending
companies were not ready for new rules
and regulations , they were forced to close
down as were unable to adapt their
business model to new regulations. The costs of MFIs increased, while their competitiveness with banks decreased, ” Shengelia notes.
Banks benefit from the current situation as they have much more access to
finance, larger turnovers, and lower interest
rates on loans.
The head of the Association of Non-bank
Financial Institutions Givi Korinteli believes that a reduction in
the number of MFIs will continue to decline in 2020, and at least half of the MFOs
will not survive by the end of the year.
In Korinteli’s words, access to consumer
and quick loans has significantly decreased for the population, the role of
large players has grown, and everything in the financial sector depends on 2-3