Georgia’s National Bank raises maximum fines for commercial banks

The National Bank of Georgia (NBG) has announced an increase in the maximum fine that can be imposed on commercial banks for failing to comply with regulations. The adjustment raises the cap from 0.1% to 1% of a bank’s regulatory capital.

The NBG said on Wednesday the amendment had been developed based on an analysis of international “best practices”, particularly from Europe, and had been incorporated into the Rules for Determining and Imposing Fines on Commercial Banks and Their Administrators.

A statement from the National Bank emphasized that fines issued by regulatory bodies must be “effective, proportionate, and have a preventive effect.” The regulator stressed the importance of ensuring that penalties correspond both to the nature of the violation and the size and level of development of the supervised financial institution.

“The Georgian banking sector is developing at a fairly rapid pace, as confirmed by key indicators. Given this, it was deemed appropriate to increase the maximum monetary fines set out in the regulatory framework for specific violations,” the NBG said.

Despite the increase, the central bank noted that both the fixed and maximum fines imposed in Georgia remained lower than those in many other countries.