Registering a Lender in Georgia: Microfinance Organisation or Loan-Issuing Entity
Georgia has two registrations for businesses that lend to the public, and picking the wrong one costs either a year of unnecessary burden or a scramble when the threshold is crossed. How the two differ, what the National Bank's file requires, and the obligations that start with the first loan.
Lending to the public in Georgia is a supervised activity, and the National Bank runs two registrations for it: the microfinance organisation, for lenders at scale with a wider set of permitted activities, and the loan-issuing entity, a lighter registration for lenders below the microfinance threshold. The first decision is which one you are, and it is decided by what you will actually do rather than by which sounds more impressive.
2
Registration routes
Microfinance organisation, or loan-issuing entity
NBG
One regulator for both
Non-bank supervision at the National Bank of Georgia
Day one
When lending rules apply
Consumer-lending requirements attach to the first loan, not the first inspection
Two registrations, one regulator
| Loan-issuing entity | Microfinance organisation | |
|---|---|---|
| Who it is for | Lenders operating below the microfinance threshold | Lenders at scale, or wanting the wider permitted activities |
| Permitted activity | Issuing loans, within the defined scope | Lending plus a defined set of related financial services |
| Capital | Statutory minimum - confirm current figure | Higher statutory minimum - confirm current figure |
| Ongoing burden | Reporting and conduct rules | Reporting, prudential requirements, conduct rules |
| The usual mistake | Staying registered here after crossing the threshold | Registering here before the scale justifies it |
A microfinance organisation is a legal entity registered as such by the National Bank of Georgia, which may carry out the activities the Law permits to it and is subject to the National Bank's supervision, reporting requirements and the normative acts adopted under the Law. Entities issuing loans below the threshold for microfinance registration are registered and supervised under the National Bank's rules for loan-issuing entities.
What the file has to contain
- 1
The right entity, correctly formed, with the charter reflecting the regulated activity.
- 2
Evidence of capital: the amount, its lawful origin, and that it is actually paid in rather than committed.
- 3
Fit-and-proper material for significant owners and administrators - identity, history, absence of disqualifying matters.
- 4
Policies the regulator will read against practice: lending, interest and fee disclosure, collections, complaints, and consumer protection.
- 5
An AML/CFT programme proportionate to the business, with a named responsible person.
- 6
Reporting arrangements: who prepares the periodic returns, from what system, on what dates - set up before the first one falls due.
Georgia regulates consumer lending closely - the effective interest rate, permitted fees and collections conduct are all governed. These rules attach to the first loan issued, not to the first supervisory contact, and a lender that discovers them later has usually already breached them.
The fintech lender that crossed the threshold without noticing
A digital lender registers as a loan-issuing entity with a modest book. Growth is faster than planned, and within eighteen months its portfolio is well above the level at which microfinance registration is required.
- 1The registration it holds is the right one for the business it was, and the wrong one for the business it has become.
- 2Nothing external flags the crossing; it surfaces in the lender's own reporting, if anyone reads the figure against the threshold.
- 3The lender has to register as a microfinance organisation - a full application with higher capital - while continuing to operate, and to explain the period during which it was over the line.
- 4Had the threshold been on the deadline board from registration, the transition would have been planned six months ahead rather than forced in a quarter.
Register for the business you are, and put the threshold for the next tier on the calendar the day you register. Thresholds are crossed by growth, which is the one thing nobody wants to slow down to notice.
Illustrative. The threshold and the consequences of exceeding it are set by law and should be confirmed.
The registration that was granted and the programme that was never run
A lender registers successfully with a complete file, including an AML/CFT programme drafted for the application. Two years later the supervisor asks to see it operating.
- 1The programme exists as a document. Customer files show identity documents and nothing that the programme says should be there: no risk rating, no source-of-funds enquiry, no screening record.
- 2The supervisor compares what the lender said it would do with what the files show it did, and the gap is the finding.
- 3Having documented a standard and then not met it puts the lender in a worse position than one whose programme was thinner but operated.
- 4Remediation means re-papering the book - every active customer - against the programme that should have been applied from the start.
The file gets you registered. The programme, operated every day and evidenced in every customer record, is what keeps you registered. Write the procedure you will actually follow, and keep the record that proves you followed it.
Illustrative. Supervisory findings depend on the entity, the sector and the facts.
After registration
- Periodic reporting to the National Bank, on the dates set for the registration held.
- Conduct-of-business compliance on every loan: disclosure, effective rate, fees, collections.
- AML/CFT operated and evidenced, with the responsible person actually responsible.
- Notifications when owners, administrators or the business itself change.
- A watch on the threshold for the next tier, because the registration has to match the business as it grows.
What this article does not decide
Which registration fits your business, and the capital and threshold figures that apply, depend on the current Law and National Bank acts and on what you will actually lend, to whom, and at what scale. Those figures are omitted here deliberately, because they change and because a client should never take them from an article.
General information, not legal advice. Registration requirements, thresholds and conduct rules are set by the Law of Georgia on Microfinance Organisations and the National Bank of Georgia's normative acts, and change.