The FINANCIAL — Bank of Georgia, one of the leading Georgian banks, has reduced interest rates to 17% for micro loans. Previously this figure was 20%. The Bank has also resumed giving out express and agro loans. This is due to positive predictions about the micro loan sector, Bank of Georgia officials told The FINANCIAL.
“Recently we have been seeing that the risk factors in micro business are getting fewer. We offer one of the lowest interest rates to our customers on the market.”
On the Georgian market, the micro loans with the lowest interest rates are offered by Procredit Bank Georgia. The minimal sum being 16%. Bank Republic, SocGen Group, provides micro credits at 18%. BasisBank – 22%, KOR Standard Bank – 18%, and VTB Bank Georgia – also 18%.
Recently Bank of Georgia has decided to increase limits on micro business financing. The management of the Bank considers micro business less risky.
“For several months following the beginning of the global recession the monthly limit on micro credits was GEL 5 million. We increased this limit by 2.5 percent. Presently we plan to launch credit lines to the amount of GEL 12.5 million per month. The average amount of micro credits will be from GEL 500 to GEL 150,000,” says Nika Gilauri, CEO of Bank of Georgia.
“Our decision to increase the limit was due to several reasons. The first is that risks have reduced in micro business. We can also see that macro economical activity is rising,” Gilauri told The FINANCIAL.
Bank of Georgia has also started giving out small sized micro credits; Express Loans. The minimum sum for an Express Loan is GEL 10,000 and the term 18 months. This type of loan is acceptable for financing consumer costs, current expenses and so on.
Bank of Georgia has resumed giving out agro loans. The maximum amount for that is USD 100,000, in the terms of 18-36 months.
As Gilauri notes, the Bank is continuing the reduction of interest rates on different types of credits. “Presently we consider the micro crediting sector to be becoming less risky. This direction has likely potential of further growth.”
Gilauri’s assessment of the total economic situation in Georgia is generally positive. He states that the Bank greatly cares about the accuracy of their loan portfolio.
“Unused capital is the main motivator for the Bank to start giving out loans.”
“We had planned to increase limits on different types of loans. The limit on hypothec credits was USD 50,000 which we have now increased to USD 150,000. That will increase the demand for hypothec credits. According to our evaluations, demand for mortgage loans is high and we will be able to satisfy our customer’s demands,” Gilauri says.
He notes that the monthly limit on hypothec credits will be USD 4.5 million and will be unlikely to increase in the future.
Bank of Georgia has also shortened interest rates on hypothec credits, from 18% to 16%.
“The overall tendencies are positive. Demand for credit from good payers continues to rise,” Gilauri mentions.
In August 2009, Bank of Georgia fixed an unprecedented increase of its deposit portfolio. In July, the sum of deposits was GEL 43 million and in August it rose by GEL 72.6 million and reached GEL 996 million.
“These figures are unprecedented in the history of our bank,” Gilauri declares. “Our individual, as well as corporate customers have raised the number of deposits. The sum of deposits of individual clients was over GEL 50 million. Accordingly we are thinking of offering more flexible terms and increased limits on different types of credits.”
In October Bank of Georgia has also stated a reduction of interest rates on deposits from 0.25% to 0.5%. Interest rates will be shortened on all types of deposits in any currency. New conditions of deposits will be launched from October 15.
“The surplus capital and enhanced number of deposits that reached its peak in August made us shorten interest rates on deposits,” Gilauri says.
Written By Madona Gasanova
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