The National Bank of Georgia (NBG) has published a draft amendment to the Regulation “on Determining and Imposing Monetary Fines on Commercial Banks and Their Administrators” for public consultation.

It should be noted that the application of appropriate supervisory measures and monetary penalties for the non-compliance or inadequate compliance of supervised entities with the regulatory framework, including requirements set by the regulator, is based on best practices established in developed and leading countries.

Consistent with these practices, the monetary penalties imposed by regulatory bodies for specific violations should be effective, proportionate, and have a deterrent effect. To ensure it, it is crucial that monetary penalties are determined in proportion to both the severity of the violation and the size and development level of the supervised entity.

Georgia's banking sector is growing rapidly, as evidenced by relevant indicators. This amendment aligns with international best practices and aims to increase the maximum potential amount of monetary penalties for significant violations such as non-compliance with banking activity license or any conditions or restrictions associated with a relevant legal act of the NBG. Also, it targets transactions prohibited under existing legislation (including NBG instructions, regulations, rules, and resolutions), and/or  with the requirements and written instructions of the NBG and/or non-compliance with restrictions, limits, requirements and prohibitions. For these instances, the NBG is authorized to impose a monetary penalty on a commercial bank in the amount of 0.5% or 1% of the supervisory capital existing as of the last reporting date when the violation was detected, in addition to the current 0.01%, 0.05%, or 0.1%.

The draft amendment is available on the NBG website for public consultation, and interested parties are invited to submit suggestions, questions, and feedback by November 27, 2024, via email to policy@nbg.gov.ge. Submissions should follow the provided attachment format. The NBG will consider and respond only to reasoned comments submitted through this form.