Georgian police crack down on pawnshops

On 1 March, Georgian police conducted a mass inspection of Tbilisi’s pawnshops, which resulted in the confiscation of mobile phones, TV sets, and other electronic equipment. According to an official statement from the Interior Ministry, the confiscated items had been accepted by the pawnshops without the necessary documentation.

OC Media talked to Zviad Kakteladze, owner of one of Tbilisi’s pawnshops. He believes that such inspections and other measures are an orchestrated attempt to undermine the pawnshops.

‘There is a campaign to shut down pawnshops and let the banks take over. I barely manage to earn my living. My pawnshop is my only source of income. How will I go on living if all of this continues?’ Kakteladze said.

Kakteladze admits that it is indeed plausible that pawnshops accept items without necessary documentation, but notes that the difficult economic situation in Georgia is to blame.

‘The situation in the country needs to improve. If you don’t have money to buy medicine for your child, you’ll be forced to commit crimes. This includes stealing and accepting items without documents’, he added.

According to Georgia’s National Statistics Agency, legal action was taken against 1031 pawnshops in 2013. The agency estimates that the annual number of pawnshop customers in Georgia is 682,000, 18% of Georgia’s total population, amounting to loans worth ₾311 million ($123 million).

In an interview with Georgian daily Rezonansi, banking specialist Lia Eliava said that the population’s high dependence on pawnshops was alarming.

‘The government and the Central Bank need to take action, so pawnshops and other forms of shadowy banking are subject to regulations. Such an approach will eventually correct the problem and reduce the demand [for such loans]’, Eliava said.

According to separate research conducted by both Ilia State University and Georgia’s National Statistics Office, the average interest rate for loans from pawnshops is many times higher than in other financial institutions, such as microfinance organisations and commercial banks.