‘Larisation’ program launched in Georgia

Under the so-called ‘Larisation’ bill, natural persons, who received mortgage loans in foreign currency before January 1, 2015, can voluntarily join a 2-month program and have their loans converted into Lari.

Citizens will be able to convert a loan amounting up to US$40,000 at a preferential rate – by GEL0,2 less per US$1 than the current rate. The difference between the exchange rates will be reimbursed by the government.

The subsidy will not apply to individuals whose sum of outstanding loans as of November 28, 2016 exceeded US$100,000

The loaners can either wait 5 days for the bank’s notification on ‘larisation’ of their loans, or apply to the bank for joining the program.

According to the National Bank of Georgia (NBG), the ‘Larisation’ program will concern approximately 27,000 people.

Alongside the ‘larisation’ of loans, the package also offers some other novelties:

• Maximum limits on effective interests rates on e-loans should not exceed 100%.
• The price of the offer and/or advertising of sale of property and / or supply of service in Georgia made by the entrepreneur shall be quoted only in GEL
• The total amount of commission, interest rate, any loan-related financial expenses, as well as penalties or any other financial sanctions for violation of loan agreement, shall not exceed two-fold the residual principal amount of the loan.
• It is prohibited to issue loans denominated in foreign currency to the amount less than GEL100,000, whereas from the next stage – less than GEL200,000

A drop in Lari exchange rate, which has recently reached its peak, is the main reason for adoption of the legislative package. According to the NBG exchange rate, today’s US$ to GEL rate made 1/ 2,70.