Only 40 companies continue to operate in the Georgian microfinance sector

Only 40 companies continue to operate in the Georgian microfinance sector

access_time2021-01-12 13:00:01

Only 40 companies continue to operate in the Georgian microfinance market. After the central bank tightened regulations for the financial sector in 2019, including MFOs, the companies which could not adapt to the new standards went into liquidation and became bankrupt.


Currently, 8 microfinance organizations are in liquidation process.


In 2019, 67 MFOs operated in the market, which were mainly engaged in taking loans from commercial banks and issued them to clients at a significantly higher interest rate.

 


The regulator says this process is not unexpected as it was evident  that many MFIs would not be able to follow  the regulations, and only the largest and strongest companies will continue operating  on the market.

 

According to the President of the National Bank Koba Gvenetadze, a large number of microfinance organizations does not mean competition as  competition can be only in a healthy market, between healthy microfinance organizations.


As of August 2020, the loan portfolio of the microfinance sector totals GEL 1.3 billion, profit amounts to GEL 13 million.

 

The microfinance sector employs 4,035 people.

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