“The early repayment fee when transferring a loan from one financial institution to another has been reduced, with the maximum amount now set at 0.5 per cent,” Lasha Gzirishvili, Head of the Consumer Protection and Financial Education Department at the National Bank of Georgia, told the GPB First Channel.

He explained that the early repayment fee when transferring loans between financial institutions was previously 2% but has been reduced to 0.5% as of May 1. However, this change only applies to new contracts signed after May 1.

“Amendments to the Consumer Protection Regulation came into effect on May 1. These changes reduce the early repayment fee when a loan is refinanced with a different financial organization. Its maximum amount is set at 0.5 per cent. This change applies to both individuals and legal entities, though for legal entities only when their total debt does not exceed GEL 2 million. This will promote competition overall, allowing consumers to transfer loans from one financial organization to another more easily and with lower costs,” said Gzirishvili.

“It’s also very important to note that until now, early repayment fees were not defined at all for documentary operations such as bank guarantees, credits, and so on. This has now been documented. The maximum limit for early repayment fees in the case of documentary transactions has been set at two per cent, though here too, it will be 0.5 per cent for individuals and for legal entities whose total debt does not exceed GEL 2 million.

As with loans, this change will promote greater competition and reduce costs for consumers when they want to transfer from one financial organization to another. This applies to any type of loan. Refinancing is the term used in this case when we transfer from one organization to another. We must also emphasize that these changes apply to contracts signed from May 1 onwards. So for new contracts that will be signed, in case of refinancing – meaning transfer from one financial institution to another – the reduced early repayment fee will apply,” Gzirishvili told the GPB First Channel.

According to the National Bank representative, this will help strengthen competition between financial organizations and offer more favourable terms to consumers.

“This is exactly the goal – when a consumer has a better offer from another financial organization, whereas previously they had to pay two per cent when transferring a loan, now they can pay only 0.5 per cent. This will apply to new contracts signed from May 1,” stated Gzirishvili.