Bank, loan, microfinance, card debit: what to do under Georgian law

What to do

1. Loan: recalculate the claims. The effective annual rate on a loan must not exceed 50% (Civil Code of Georgia, Art. 625). The same ceilings are mandatory for a bank loan (Art. 868). Penalties and other sanctions must not exceed 0.27% of the outstanding principal per day (Art. 625). For a single delay, the total must not exceed 1.5 times the outstanding principal (Art. 625). However, for banks and MFOs, the National Bank may set other rules for sanctions (other than interest) and early repayment (Law on the National Bank of Georgia, Art. 64¹). Expenses not included in the calculation of the annual rate are not reimbursed (Civil Code of Georgia, Art. 868).
2. Early repayment: the fee for early repayment must not exceed 2% of the outstanding principal (Civil Code of Georgia, Art. 625). Mortgage: before the auction, the owner may pay off the claim and avoid a sale (Art. 304). If the creditor is not supervised by the National Bank, the sale of the mortgaged property discharges an individual’s debt even if the proceeds were insufficient (Art. 301). Request restructuring in writing and before any delay.
3. Card debit: block the card. Report theft or unauthorised use of the card to the bank in writing, without unjustified delay (Law on Payment Services, Art. 30). You may demand correction if no more than 13 months have passed since the debit (Art. 32). The bank bears the burden of proving authentication and the correctness of the operation (Art. 32). The bank must refund no later than the end of the next business day (Art. 33). The client is liable for a stolen or lost card up to a maximum of GEL 100 (Art. 33), and fully in cases of his own fraud, intent or gross negligence (Art. 33).
4. Complaint about a payment operation: a reply to the complaint must come within 15 business days (Law on Payment Services, Art. 41¹). Then, free of charge, go to the Dispute Resolution Commission of the National Bank, no later than 6 months from the complaint (Art. 41¹). The Commission hears disputes up to GEL 100,000. One may also go to court without the Commission (Art. 41²). In case of fraud, file a police report.
5. Where to apply: bank or MFO; the National Bank of Georgia (საქართველოს ეროვნული ბანკი; for payment operations, its Dispute Resolution Commission); the court; the police.
6. Evidence: contract and repayment schedule; statements; the creditor’s debt calculation; SMS notifications; time of card block and of contact with the bank.
7. Traps: delay in notifying the bank of a disputed operation; giving an SMS code to a “bank employee”, which risks a finding of gross negligence; paying “penalties” above the lawful ceilings without checking the calculation; ignoring notices of the sale of pledged property before the auction.

Be sure to check

• lawful ceilings on interest and sanctions, with the caveat that the National Bank’s rules apply to banks and MFOs
• for an unauthorised debit: immediate notice and block, deadline for the claim, burden of proof on the bank, refund, and the limit of the client’s liability
• complaint procedure: bank, then the Commission or the National Bank, then court; police in cases of fraud
• evidence: statements, notices, time of contact