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Obtaining a license for microfinance organization in Georgia in 2020
Advantages of ordering a license for a microfinance organization in this jurisdiction:
- Georgia is one of the most economically developed countries of Eurasia;
- Favorable conditions for creating small and medium-sized businesses;
- The ability to provide a wide range of services, including microleasing, insurance, money transfers and collateral-based lending;
- A relatively fast procedure for preparing the necessary documents.
Recently, Georgia has become a popular jurisdiction for entrepreneurs, wishing to register a Georgian microfinance organization, to obtain a license for a MFO in Georgia. According to some estimates, for half of a world population, banking and financial services are unavailable. They cannot open a bank account and cannot agree on a loan to start a business or buy any kind of insurance. Access to these financial services can have a fundamental impact on millions of people. If people have the appropriate access, this allows them to gradually build up their assets. It also helps to improve the capacity, to create jobs and to provide a financial support in the future.
The microfinance sector of Georgia is developing rapidly. You can see, that over the past three years there has been a 100% increase in this sector. Government subsidies and the support for small businesses have increased. A microfinance development in Georgia is crucial for the local economy.
Although there is still a long way to go, so that everyone has the access to financial services and that this opportunity is supported by the government. A microfinance organization has proven its worth in offering financial services to people with different income levels on an ongoing sustainable basis. In some markets, microfinance organizations have become licensed banks, which allows them to expand the range of services for companies of different sizes and forms of ownership, provide loans and attract funds from the public. As the microfinance sector becomes integrated into major financial systems, it also solves many of the problems faced by companies working in different directions.
A scope of activities
As a financial services’ provider, if you intend to open a microfinance organization in Georgia, you should know, what work you have to do:
- To provide microloans.
- To invest in government or public securities.
- To make money transfers.
- Act on behalf of the insurance agent.
- Provide advice on microcredit.
- To get loans from legal entities and individuals, both residents and non-residents.
- To own a 15% of the authorized capital of a MFO.
- To provide a micro leasing, the factoring, a currency exchange, the issue, a sale, the refinancing of bonds and bills, other operations related to this.
Requirements for opening a microfinance organization in Georgia
Planning to open a microfinance organization in Georgia, you need to know the relevant requirements, established by the current legislation of Georgia:
- The regulatory capital of a microfinance organization should be at least 1 million Georgian lari (about 330,000 Euros). A regulatory capital is calculated as the sum of a total capital, subordinated liabilities and convertible loans net of reserve assets. Regulatory capital is created for microfinance activities in order to protect against expected / unexpected financial losses.
- The owner of an MFO must have a minimum capital of 250,000 lari.
- The maximum amount of a microloan cannot exceed 100,000 lari.
- You must register a joint stock company (JSC) in Georgia or establish a Georgian limited liability company (LLC).
- The owner must provide relevant certificates from the register of companies to the National Bank of Georgia (NBG).
- The administrative staff of the company must provide a criminal record.
- The information on a significant shareholder (10% or more) is also required to be provided during the registration process.
The audit, an accounting, reporting requirements
A microfinance organization is responsible for:
- A maintaining a transparent financial and tax accounting and applying the principle of publicity.
- The development and implementation of internal control procedures.
- The engaging an external audit every year in accordance with Georgian law.
- The accounting and financial reporting in accordance with international standards and legislation of Georgia.
- A reporting to the National Bank of Georgia. The form and deadlines for submitting the report are determined by the administrative act of the National Bank of Georgia.
- A guarantee of the truthfulness and accuracy of the information and financial statements presented.
- The annually publish the financial report for the reporting year and the external audit report in a periodical.
IQD Consulting specialists provide comprehensive professional services in support of registration of a company in Georgia and obtaining a license of a microfinance organization in Georgia.