On the 11th of November the National Bank of Georgia hosted an international conference funded by the KfW development Bank and European Fund for Southeast Europe (EFSE ).

The conference about “Responsible Finance” aims at increasing responsibility in the financial sector and sharing experiences of central banks in different countries in this respect. 

The conference was opened by the President of the National Bank Giorgi Kadagidze: “Defending of the customers’ rights is one of the main priorities for us. We developed a comprehensive action plan that should play an important role in promoting the increased responsibility in the financial sector. The speed of the economic development greatly depends on the financial decisions by the economic institutions. The more transparent the decision taking process is the more stable the financial system gets. Financial institutions should take care to provide transparent and precise information and give the customers professional advice, at the same time, the customers should analyze the financial consequences of their action and take a wiser decision.

The defense of customers’ rights became an issue of more importance after the financial crisis. The Georgian banking system has lately been developing rapidly, however, the public awareness has been significantly lagging behind. The number of the financial products offered by the sector makes it inevitable to defend the customers’ rights, since a customer does not have the information, the financial knowledge and resources that are necessary preconditions for comparing different products,” - Giorgi Kadagidze stated in his speech.

The events of the kind take place every year in Europe by the help of the central banks of some country. The conference in Georgia is the fifth in the row. Responsible finance will ensure a balance among the welfare and interests of different stakeholders. The increase of responsibility in the financial sector helps to strengthen the financial system, increase customers trust and feeling of justice, therefore countries should develop mechanisms to defend the customers. 

According to one of the presenters to the conference, the head of the financial and private sector development department of KfW Michel Morshcel, responsibility is the precondition for the development of healthy business practices. “The confirmation of hopeless loans, non-observance of loan schedule on the part of customers significantly damaged the quality of the portfolio in many European countries. The phenomenon can not be attributed to the financial crisis only; it originates earlier than that. We are glad Georgia is not among the countries that was most severely affected by the financial crisis. Therefore the financial institutions existing in Georgia are in a better position to strictly select the clients to increase transparency of states of loans in the future and to raise the financial awareness in the clients,” – Mickel Morchel noted. 

The president of the National Bank spoke of a new initiative obligating the commercial banks stating in the contract all the conditions connected to taking out and paying back credits . 
 
“Caring about the customers rights is one of the main initiatives of the National Bank. The introduction of the hotline of the National Bank is a first step in this direction and it served to identify the problem. Next significant step was the project connected to “CreditInfo.” Now we are preparing a very important decision directly obligating commercial banks to make all the ambiguous and unclear statements in the contracts as transparent  as possible, especially in case of small credits. All the potential costs, each Tetri that a customer will be responsible to pay, should it be a fee for  services, cashing, advance payment or insurance,  need to be clearly reflected  in the contract. The financial institutions are responsible to take care to provide true and transparent information and professional advice to the customers,”- the National Bank president, Giorgi Kadagidze stated.

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