Licensing Requirements

    Core Licensing Legislation

     

    Those interested in obtaining a banking license must apply to the National Bank of Georgia and submit the information required by law. Licensing requirements are defined by the following legal acts: 

     

    • Chapter 2 of the Law of Georgia on the Activities of Commercial Banks;
    • Paragraph 4, article 48 of the Organic Law of Georgia on the National Bank of Georgia;
    • Regulation on Commercial Bank Licensing, approved under Decree of the Governor of the National Bank of Georgia No. 52/04 June 17, 2014.
    • Regulation on Setting the Level of Minimum Regulatory Capital for Commercial Banks, approved under the Decree of the Governor of the National Bank of Georgia No.61/04 May 3, 2017.
    • Regulation on Fit and Proper Criteria for Commercial Bank Administrators, approved under the Decree of the Governor of the National Bank of Georgia No.50/04 June 17, 2014.

     

    Basic Requirements for Licensing

     

    Capital

     

    Regulatory capital in the amount of GEL 50 (fifty) million, as stipulated in Regulation on Setting the Level of Minimum Regulatory Capital for Commercial Banks, approved under the Decree of the Governor of the National Bank of Georgia No.61/04 May 3, 2017.

     

    Business Plan

     

    The license applicant’s business plan is assessed in terms of the adequacy, feasibility and potential position in the banking sector, and that is one of the key aspects of the process.

     

    The business plan is expected to include the following information:

     

    • Business strategy;
    • Potential impact of the macroeconomic situation of the country on the business strategy of the commercial bank;
    • Description of the target market and assessment of its own competitiveness;
    • Budget plan and forecast of financial indicators;
    • Minimum of information technologies to be introduced at the initial stage and a plan for introduction in the next operational period (Article 3 of the Law of Georgia on the Activities of Commercial Banks).

     

    Fit and Proper of Administrators and Significant Shareholders

     

    The license application must include declarations of fit and proper for significant shareholders (both direct and indirect). For detailed information on fit and proper requirements, see Chapter IIof the Law of Georgia on the Activities of Commercial Banks.

     

    In addition, all administrators (members of the supervisory board, directors and other material decision makers) must meet the fit and proper requirements (Regulation on the Fit and Proper Criteria for Commercial Bank Administrators).

     

    Ownership and Group Structure

     

    The ownership structure/group structure of an entity seeking a banking license should be transparent and should not jeopardize the ability of the National Bank to exercise effective supervision, as well as the stability and sound functioning of a commercial bank and/or financial sector.

     

    Information on the ownership structure should include data on all levels of ownership, including direct shareholders, intermediate owners and beneficial owners holding significant shares. (For detailed list of information to be submitted, please refer to (Article 3 of the Law of Georgia on the Activities of Commercial Banks).

     

    Corporate Governance and Risk Management Framework

     

    When evaluating the potential for sustainable operation of the license applicant, the NBG considers, among other matters, the following:

     

    • Organizational structure and management job description;
    • Framework for managing credit risk, market risk, operational risk and other relevant risks;
    • The model for internal assessment of capital adequacy;
    • Calculation of capital adequacy in accordance with the requirements of the National Bank, based on the budget presented in the business plan;
    • Accounting policy.

     

    (Detailed list of the information required is available in Article 3 of the Law of Georgia on the Activities of Commercial Banks).

     

    License Fee

     

    The license fee is set at GEL 200 000 (In accordance with the Law of Georgia on License and Permission Fees).

     

    Digital Bank License 

     

    A digital bank, as per the National Bank of Georgia, is viewed as a banking business model that has the potential to increase access to finance, reduce the cost of financial intermediation and, at the same time, meet the technology criteria set under the Principles.

     

    In addition to the general licensing requirements, the National Bank has developed specific digital bank licensing principles to promote new technologies and innovative approaches in the financial sector leading to increased financial stability and financial inclusion of consumers.

     

    These Principles, detailed requirements for digital bank licensing, and process descriptions are available at: 

     

    • Principles for Digital Bank Licensing
    • Guide to Digital Bank Licensing Process

     

    Preliminary Consultation and Review of License Application

     

    Banking license applicants have the opportunity to consult with the National Bank before submitting a written application for a banking license. The purpose of the preliminary consultation is to guide applicants through the process, help them comprehend the requirements to be met and form the right expectations.

     

    The National Bank reviews a complete license application within 3 months after receiving a written application and notifies the applicant of the reasoned refusal or consent to the issuance of a banking license.

     

    To make a decision on issuing a banking license, the National Bank examines the compliance of the submitted documents and information with the requirements established by the legislation of Georgia, and assesses the adequacy and feasibility of the applicant’s business plan, its prospective position in the banking sector and potential for sustainable functioning.

     

    During the review of the documentation and information submitted for obtaining a banking license, the National Bank has the right to request, within its authority, any additional information necessary to make a reasoned decision in that particular case.

     

    Contact Information

     

    Interested parties who have questions regarding licensing, can contact the National Bank by the following e-mail:

     

    • Those interested in obtaining a banking license can apply in writing to the following address: BankingLicense@nbg.gov.ge
    • Those interested in obtaining a digital banking license can apply to the Financial Innovation Office of the National Bank: InnovationOffice@nbg.gov.ge