Foundations of Peer-to-Peer Lending Regulation
Peer-to-peer lending platforms in Georgia fall, in their capacity as loan-giving entities, within the supervisory scope of the National Bank of Georgia. Under article 52-2 of the Organic Law of Georgia on the National Bank, the National Bank is authorised to supervise the activity of a loan-giving entity, and the supervision comprises the registration and deregistration of such an entity, its inspection and regulation, the issuance of written instructions, and the imposition of requirements, restrictions and sanctions. The loan-giving entity itself is obliged to register with the National Bank and to satisfy the requirements established by it. The rules of registration, deregistration and regulation are laid down by a legal act of the National Bank, so before launching a platform the detailed requirements of those acts must be studied and built into the operating model from the outset.
Sanctions and Exceptions from the Registration Duty
In the event of a breach of the law, the National Bank may impose a sanction on a loan-giving entity, including a monetary fine, in the procedure it has established; the amount of the fine is directed to the state budget of Georgia. At the same time, the registration duty does not attach to every lender: by operation of the statutory exception, the obligation does not extend to a representative of the financial sector, or to a loan granted by an entrepreneur entity to a partner, shareholder or employee of the enterprise. The sanctions apparatus is broader towards microfinance organisations, which the same law places under the supervision of the National Bank under its article 50: the Bank may suspend or limit their operations, prohibit the distribution of profit and the accrual and payment of dividends, require the attraction of additional capital, suspend the signing authority of an administrator, impose a monetary fine on him and even demand his dismissal from office.
Record-Keeping for Property Taken as Security
A loan-giving entity that takes movable property as a means of securing a monetary claim carries additional special obligations: it must comply with the requirements connected with safety and with the possession and operation of a special electronic program for the record-keeping of such property, requirements established by an order of the Minister of Internal Affairs of Georgia. This norm directly concerns those platforms and lenders that secure loans with unregistered property: the record-keeping must be conducted through the prescribed electronic program, which leaves a trace of every instance of taking a movable item — for example equipment or jewellery — and reduces the risk of illegality. The exact list of requirements is contained in the order of the Minister of Internal Affairs, and its study is indispensable when planning the operational model of the platform.