Georgia to tighten loan requirements for lower-income borrowers

Georgia will tighten the rules governing consumer loan affordability from 1 February 2027, with changes to the income thresholds used to calculate the maximum share of a borrower’s income that can go towards monthly loan payments.

Under the current rules, borrowers with monthly income of less than GEL 1,500 are subject to a maximum debt-service ratio of 25%, meaning their monthly loan payments cannot exceed GEL 375.

For borrowers earning more than GEL 1,500 per month, the permitted maximum is currently 50% of monthly income, or GEL 750 at a GEL 1,500 income level.

Under the revised rules, the 25% threshold will apply to borrowers earning up to GEL 2,000 from 1 February 2027. From 1 September 2027, the threshold will increase further to GEL 2,500.

The National Bank of Georgia’s Financial Stability Committee said the recalibration was necessary because wages and other nominal economic indicators have increased significantly in recent years, meaning the existing fixed income thresholds no longer adequately reflect the current distribution of borrowers’ incomes and debt burdens.

The committee said the original debt-service ratio thresholds were based on 2017 statistical data and were updated in 2022. The latest recalibration is intended to bring the framework into line with current economic conditions while maintaining the initial stance of macroprudential policy.

The National Bank said the gradual implementation would avoid a sharp one-off impact and help mitigate the risk of excessive indebtedness among borrowers while supporting the stability of the financial system.