In 2019, the number of microfinance organizations in Georgia decreased by 19

In 2019, the number of microfinance organizations in Georgia decreased by 19

access_time2020-01-27 14:55:18

In 2019, the number of microfinance organizations in Georgia decreased by 19, from 65 in early year to 46 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 large banks.

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