Small Loans in Georgia

Recent data published by the National Bank of Georgia highlights a significant trend in the country’s banking sector: nearly half of the population takes out loans of no more than 1,000 Georgian lari. As of February 2025, 48.22% of all loans issued by commercial banks in the national currency fall into this small-scale category. In absolute terms, this translates to 1,715,809 loan agreements, each addressing relatively modest financial needs.

The first striking observation is the imbalance between the number and the volume of loans. Although loans ranging from 0.01 to 1,000 lari are the most numerous, they account for a considerably smaller share of the total volume. The overall amount of loans issued in the national currency has reached 35.583 billion lari, clearly indicating that large-scale loans constitute a significant portion of the total value, even as the most prevalent category remains small loans.

Nevertheless, the large share of small loans should not be overlooked. This trend directly reflects the country’s broader social and economic landscape. Put simply, a substantial portion of the population relies on banks to meet everyday expenses—whether for utility bills, food, medicine, or other ongoing costs. The prevalence of small loans often serves as an indicator of financial vulnerability, unstable incomes, and broader economic precarity.

At the same time, this pattern may also be interpreted as a positive economic signal. The willingness of banks to extend small loans could indicate an expansion of financial inclusion. Greater access to financial products typically stimulates small-scale entrepreneurship, raises personal consumption levels, and generally enhances economic circulation.

However, the risks are substantial. When small loans become a systemic part of meeting basic financial needs, it can lead to a “debt trap” effect. Such loans are often issued with relatively high interest rates, increasing the risk of default. A large portion of the population may resort to taking out multiple, successive small loans, creating a cycle of indebtedness where new loans are needed to repay previous debts.

The data also show a decline in the number of medium and large loans, suggesting that large businesses and middle-income segments either have less demand for bank financing or are pursuing more cautious borrowing strategies. For instance, there are only 49,958 active loan agreements for loans ranging between 100,000.01 and 1,000,000 lari, accounting for just 1.4% of the total number of loans.

Ultimately, Georgia’s loan statistics reveal that a significant portion of the economic burden is concentrated in the small loan segment. On the one hand, this reflects improved access to financial services; on the other hand, it underscores persistent economic inequality and financial vulnerability. Policymakers at the National Bank and across the financial system must carefully analyze and regulate these trends to prevent the escalation of debt-induced social pressures and economic stagnation.