New regulations will soon be implemented in the Georgian non-bank lending industry. These regulations, which have been approved by the National Bank of Georgia, set a limit for encumbered (pledged) assets rates.
The new regulations in Georgia put a cap on the encumbered assets of non-bank lenders at 90% of their capital. This effectively means non-bank lenders are no longer allowed to pledge their assets in a meaningful amount in favour of their creditors. The regulations come into effect on January 1, 2019.
Because of this, there will be some changes to Lendo’s investment structure. The investment structure for loans issued by Lendo is the indirect structure. The indirect structure means that you obtain exposure to a borrower’s loan by investing in a loan issued by a Mintos group company to Lendo, where repayments depend on the borrower’s payments.
Previously, all loans issued on Mintos by Lendo were secured by a pledge on its loan portfolio. Under the new regulations, instead of pledging its loan portfolio, Lendo will now pledge 100% of its shares, to secure the loans it issues on the marketplace.
Overall, the changes in regulation have a minimal impact for you, as an investor, but we will ensure cooperation with the Loan Originator is in compliance with regulations