In February 2023, the Parliament of Georgia approved the Law On the Activities of Micro-banks and subsequent legislative amendments, thus adding a new entity, micro-bank, to the supervisory authority of the NBG.

The same law sets the July 1, 2023 deadline for the NBG to publish legal acts regulating micro-banks.

The NBG worked intensively to meet the above commitment and develop the appropriate supervisory framework for micro-banks. The substantial portion of the legal acts regulating micro-banks has already been developed as of now.

The NBG offers a part of the draft legal acts to the sector for consultation and invites stakeholders to share their opinions and comments on:

• Licensing rule of micro-banks;
• Regulation on fit and proper criteria for micro-bank administrators (with annexes);
• Regulation on the acquisition of a significant share of the micro-bank;
• Draft Act on Amendments to the Code of Ethics and Professional Conduct of Banking and Securities Market Participants;
• Regulation on capital adequacy requirements of micro-banks;
• Regulation on leverage ratio requirements for micro-banks;
• Corporate Governance Code for micro-banks;
• Real Estate Appraisal Instruction for micro-banks (with an annex);
• Regulation on determining risk categories of financial instruments and expected credit losses for micro-banks.

 

Requirements for micro-bank licensing (except for the amount of minimum regulatory capital), corporate governance (except for remuneration matters), fit and proper criteria for administrators and significant shareholders do not differ substantially from the requirements imposed on commercial banks and are based on the requirements of the relevant European Union Directive (2013/36/EU Directive, CRD) and the guidelines of the European Banking Authority (EBA). The draft act related to capital adequacy standards also combines the Pillar 1 and Pillar 2 standards defined for commercial banks and is largely similar to the requirements defined for commercial banks, although, under the draft act, micro-banks will be subject to the requirements of only two out of five capital buffers defined by Pillar 2. The draft act that sets the leverage requirements is also based on the leverage requirements defined for commercial banks, which in turn is based on the standards of the Basel Committee on Banking Supervision, the requirements defined by the relevant EU Directive (2013/36/EU Directive, CRD) and the guidelines of the European Banking Authority.

Draft acts are published on the website of the National Bank of Georgia for consultation and feedback. Suggestions, comments and questions can be sent to microbanksupervision@nbg.gov.ge before June 5 of this year. The NBG will publish other draft regulatory acts as well in the near future.