Online loans face question marks, gambling taxed more

The Prime Minister of Georgia, Giorgi Kvirikashvili, has announced that the Government, with the National Bank of Georgia, are planning to ban the issue of online loans.

Kvirikashvili stated that the motivation behind the step was “public demand.”

Later, Minister of Finance Dimitri Kumsishvili stated that the micro-finance companies involved in issuing of fast online loans offered “very high interest rates” must be regulated.

There are more than 40 companies in Georgia which are issuing online loans.

The biggest part of the companies refrained from making any comment until the Government and the National Bank made a joint statement over the issue.

However, some of them told the Georgian media the decision was a “surprise” for them, especially when there was a “demand on their product” in the market and the business was legal.

They said it will simply not be right if the Government and the National Bank ban their businesses.

Economic analyst Emzar Jgerenaia says a complete ban of the business will be a negative signal to business people, and it would be better if the Government and the National Bank think about setting certain restrictive regulations as the first step.

It is a fact that the number of micro-financing organizations is increasing I them and not the banks, which have better – but more complicated – procedures.

It is also the reality that at the exchange of the fast service and “easy money”, the organisations set high interest rates that lead to negative consequences for many.

It would perhaps be a better step for the Government and the National Bank to set strict regulations for such organizations for them to think more about the consumers’ rights.

With regards to gambling, the Government decided to gain more money from the business in the situation when thousands of juveniles and others in Georgia are engaged with online gambling, and many of them over the past several years have committed suicide due to their huge debts

No genuine restrictions on gambling has led to the splitting of families, the selling of properties and various disasters for many in the country, despite the fact one of the pre-election promises of the current Georgian Dream leadership concerned imposing restrictions on gambling businesses.

As it appears, attracting more money for the state budget has become more important for the state leadership rather than the fate of many of its citizens, especially those of the younger generations.