The bureaucratic requirements contained in a bill advancing in Congress would continue to hamper access to credit for entrepreneurs.
A few days ago Congress ruled on the Law for Strengthening Development Banking, under which sureties are not required, interest would be low and deadlines for payment would be longer. However, among other things, entrepreneurs who wish to take out a loan would be required to take a training course at the National Training Institute (INA by its initials in Spanish) in order to get a certificate which would allow them to make the appropriate application.
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.
Increased credit is available for mini, small and medium enterprises in the Banco Popular and Banco Nacional in Costa Rica, bringing the amount available to $740 million.
Banco Nacional now has ¢ 250,000 million ($493.66 million) for the productive sector, 50,000 million colones ($98.7 million) more than in 2011, said Victor Eduardo Acosta, director of the entity’s Development Bank.
The Bank of Costa Rica is the new administrator of the National Trust for Development, having secured the tender created for that purpose.
The Governing Board of the Banking System for Development (SBD) awarded by unanimous vote the administration of National Development Trust (FINADE), to the Banco de Costa Rica (BCR), following a tender.
Several objections were made to the Controller General of the Republic, requiring the conditions to be reviewed and the whole process to be restarted.
The conditions of tender were contested by Banco Popular and Bancrédito.
"According to Arnoldo Trejos, Bancrédito’s deputy general manager, they questioned the fact that a small amount of the weighting given to experience and that more weight was given, for example, to the number of branches the bank has, when in reality, the administrative operation is centralized.
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.
Based on consultations and technical studies, it was determined that this is the adequate maximum amount for SMEs to loan.
Additionally, the system should begin to operating in the first few days of December, even though it just has half of the necessary funds as the transfer and settlement of previous trusts have not been completed.
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.
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.
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