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Statement of Human Rights Center about the suspension period offered the commercial banks

March 31, 2020
 
On March 11, 2020 the World Health Organization announced COVID-19 as pandemic. For the prevention of the spread of the infection, on March 21, the emergency situation was announced in the entire territory of Georgia. Enterprises were closed and many organizations reduced the number of personnel based on their requirements or unpaid vacations. Therefore many people were left without income – among them are those who have credits in the banks.

On March 13, the bank sector released a statement and offered three-month suspension period to the loaners. They said the period will last from March 13 until June 30. Part of micro-financial organizations also joined this initiative of the commercial banks. 

What are covered by the suspension period? 

All physical and legal persons, who have the below-listed credit products in any of commercial banks will be able to enjoy the suspension period: 

Mortgage 
Customer credit line
Fast customer loan
Auto loan
Fast installment 
Credit cards
Overdraft
Lombard
Standard business and agricultural loans

Those customers may also enjoy the suspension period, who have violated the terms of the loan payment however, the released statement clarifies that a bank shall individually consider the applications of the customers with penalties considering the number of the days of penalty overdue. 

The initial statement of the commercial banks was somehow vague and customers assumed it meant that they will be able to postpone their debts for three months and they will not have to pay additional interests, 

According to the information obtained by HRC, to enjoy the suspension period, customers shall have to pay the additional interest for the postponed period. Above that, the full term of the loan will be increased with three months. 

The monthly interest will increase after the suspension period is over (for example, if you have 12-month loan and have to pay 1000 GEL per month 200 GEL of which is monthly interest, you will not pay anything for the first three months. But, after the suspension period is over, you will have to pay the loan three months longer than as it was previously scheduled. At the same time, your total debt will increase with 600 GEL and it will be distributed on the remaining months). 

Another important factor is that unless the situation is improved and citizens will not be able to return back to their working places after the emergency situation is over, they will face additional problems because of increased debts in the commercial banks. 

HRC monitors the violation facts of the labor rights in the country and is ready to provide the citizens, who lost jobs during the emergency situation, with free legal aid. 

The organization hopes the commercial banks will provide the customers with detailed information and will allow them to make choice about the suspension period. 

Human Rights Center  

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