Six financial institutions have been authorized to provide loans under the conditions imposed by the Development Bank, with interest rates of 3% in dollars and in line with the passive base rate in colones.
Welmer Ramos, chairman of the Governing Board of the Development Banking System commented that "... 'These programs involve interest rates that are half the rates that currently exist for the same activities.'"
Slow growth is projected in El Salvador, very good performance in Nicaragua, stability in Panama, more competition in Guatemala and moderate growth in Costa Rica.
From a report by Fitch Ratings entitled "2015 Perspectives: Central American Banks":
Fitch Ratings has revised the outlook for the sector from positive to stable, because the agency does not anticipate substantial improvements in respect to the previous year. The system's profitability will remain low, with less than 1.0% ROAA. The results are limited because of the high dependence on net interest margin (NIM) and additional expenses in provisions for loan losses, due to regulatory changes that established gradual constitutions of general provisions for the best qualified loans. In addition, Fitch does not anticipate improvements in revenue diversification and also foresees a significant revenue exchange rate differential. This last factor has a significant influence on the results of the banks in Costa Rica.
A proposal has been made to create a program within the Banking Development System to allow tourism enterprises to readjust their debts with banks.
If the bill introduced in Congress thrives, a group composed of representatives from the Costa Rican Institute of Tourism, the Banking Development System and the Ministry of Planning (Mideplan) would analyze each case and determine which companies could opt for restructuring.
Using a levy on foreign banks the aim is to generate funds of up to $20 million in order to strengthen the Development Banking System.
According to the chief of the Ministry of Economy, Industry and Commerce (MEIC), Mayi Antillon, discussions have been initiated with the Ministry of Finance, to establish the parameters of the instrument. According to the official, the aim is to strengthen the capital of the National Development Trust (Finade), which provides an important share to the System.
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.
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 ".
The idea that the Central Bank of Costa Rica be a fund manager for the Development Bank has been rejected by its President Rodrigo Bolaños.
An article in Nacion.com notes that the strange idea originated in the office of the second vice president of Costa Rica, Luis Liberman, where it probably passed by the Economy Minister Mayi Antillon, who most likely presented it at the Development Bank Commission of the Legislature.
The intention would be to overcome the paralysis of $320 million from the Development Banking System of Costa Rica by giving over its management to the central bank.
The fund consists of 17% of current accounts of commercial banks in Costa Rica, known as the "bank toll" amounting to $320 million which is supposed to be used to grant loans to micro-entrepreneurs, within the Development Banking System.
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.
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