The National Bank of Georgia (NBG) has increased the maximum possible fine for commercial banks that fail to comply or inadequately comply with legislative and regulatory requirements.

The amendment, based on an analysis of best international practices, including those of Europe, was introduced by decree of the NBG Governor and incorporated into the "Regulation on Determining and Imposing Fines on Commercial Banks and Their Administrators."

Under the amendment, the maximum fine has been raised from 0.1% to 1% of a bank’s regulatory capital. As per current practice, the fine amount will be determined based on the severity of the violation, the damage caused to the bank’s assets, and/or the potential risk posed by the infraction.

The application of appropriate supervisory measures and sanctions-such as fines for non-compliance or inadequate compliance with legislation, including regulatory requirements-by supervised entities follows best practices established and proven in developed and leading countries worldwide. According to these practices, fines imposed by a regulatory body for specific violations should be effective, proportionate, and serve a preventive purpose. To achieve this, fines must be set in proportion to both the severity of the violation and the size and level of development of the supervised entity.

The Georgian banking sector is experiencing significant growth, as evidenced by key indicators. Given this rapid development, it has been deemed appropriate to increase the maximum monetary fines stipulated in the regulatory framework for certain violations.

Notably, an analysis of fine practices and average amounts applied in the European Union and other developed countries, including the United Kingdom and the United States, reveals that both the fixed and maximum possible fines set by the National Bank of Georgia are lower than those in other countries.