Regulation on Capital Adequacy Requirements for Commercial Banks

Setting prudential standards for commercial banks in the Republic of Georgia
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This document presents the Law on capital requirements for commercial banks in the Republic of Georgia. It states that the commercial banks, and branches of foreign banks operating in Georgia, will have to comply with the capital adequacy norms set by the National Bank of Georgia.

Further, the Law covers the following aspects:

  • General provisions, outlining the role of this Law and the National Bank in ensuring sustainability of the country's banking system;
  • Definition of terms used in the document;
  • Meaning of 'capital' and its functions in the context of banking;
  • Meaning of 'regulatory capital' and its composition into Tier I and Tier II capital;
  • Types of risk weighted assets that form the regulatory capital:
    • Credit risk weighted assets;
    • Market risk weighted assets.
  • Classification and calculation of credit and market risk weighted assets;
  • Obligations of commercial banks with regard to compliance to the capital adequacy requirements;
  • Directives that guide the National Bank with regard to the steps to be undertaken in case of non-compliance to the Law by banks.

Finally, the document lays down the conditions in relation to capital adequacy requirements, under which the National Bank may revoke a banking license.

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