Costa Rica's Development Bank born with severe weaknesses

Costa Rica's development bank system was created with obvious weaknesses, such as inheriting a portfolio of problem loans and the obligation to charge interest rates that are so low that they don't allow for creation of a bad loans reserve.

Wednesday, June 11, 2008

As well, it carries with it the sad history of various aid programs, especially in agriculture, that make up a chain of failures and misuse of funds.
The requirement of ensuring that at least 40 per cent of the portfolio comes from the agriculture sector limits the potential for expansion goals.

More on this topic

Development Banking Requirements Made More Flexible

April 2013

The definition of the conditions and requirements for customers will be the responsibility of each entity, as determined in its policies and risk analysis.

The National Council of Financial System Supervision (CONASSIF) approved from Tuesday, 15 to 10 changes to the standard established by the Superintendent of Financial Institutions (SUGEF) under the Regulation for qualifying borrowers with resources granted by the Banking System Development Act 8634, which states: "It is the responsibility of the Board of Directors or equivalent governing body of each financial institution, to approve the policies, processes and controls which will be used to identify, measure and manage the risks associated with credit operations, and resources granted by the Banking System Development Act 8634 ".

Costa Rica: Development Banking Remains Paralyzed

August 2012

After having missed the deadline for renewing the period for the committee to analyze changes in order to make the System for Banking Development more diligent, the project remains stalled in Congress.

The work of the committee dates from May 2010 and the aim was to decide how to use the $320 million. This fund is made of 17% of bank’s current accounts.

Costa Rica: Development Banking Still Stuck

September 2011

The reform proposal submitted by the Government does not have the full backing of the Legislative Assembly.

The way that resources obtained from the banking system are to be used is the main point that could further delay the implementation of the system of development banking (SBD in Spanish), which aims to provide financing to small and medium enterprises who do not have access today to traditional bank loans.

Development Bank System off to partial start

November 2008

The Development Bank System (SBD) will start to function in December, but a great part of it is still incomplete and will take at least six months to complete.

The Government confirmed that the system will start with the Nacional, Popular and Credito Agricola de Cartago banks. The last of these three will administrate two of the main funds of the SBD.

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