The proposed reforms involve, among other things, extending the scope of the law to include financial institutions which were not previously covered by it.
Friday, April 11, 2014
The proposal by the Financial System aims to apply a limit on interest rates that can be charged on loans to other entities which until now were not considered in the original law.
Victor Ramirez, head of the Financial System (SSF) commented that there are financial brokers who charge 181% in some segments. He added that "the law of usury has rates, margins, which are extremely high in some segments," but that should be corrected directly in law and not just in the regulation. "Sometimes when legal bodies are made, one does not realize that in practice things 'dance' differently; but I think it requires some reform to improve the application, " he said.
Marcela Jimenez, director of the Salvadoran Banking Association (ABANSA), explained in an article on Laprensagrafica.com that as a union they have not considered any reform. "The law was studied a lot by all participants," De Jimenez explained. "It was a result of analysis and we are convinced that legislation which is made in a technical way, in time, will give good results", said the of director of ABANSA .
Setting a maximum usury rate and preventing clients from getting into debt to the extent of reducing their income below the minimum wage line are some of the changes that have arisen due to the application of the new law that has been in force since June 20.
On June 20, 2020 the Usury Law was published in the scope number 150 to La Gaceta number 147, which establishes the methodology to be used to set the maximum interest rate, from which the crime of usury will be considered to exist, details an official statement.
As of January 1, 2018, new maximum legal interest rates are in force in application of the law against usury and its reforms.
From a statement issued by the Central Bank of El Salvador:
The new Maximum Legal Rates (Tasas Máximas Legales or TML in Spanish) will come into effect on January 1, 2018, which correspond to the tenth calculation made since the entry into force of the Law Against Usury, reports the Central Reserve Bank.
The business sector is opposed to a bill which aims to regulate interest rates on bank and nonbank loans, including credit cards.
In the opinion of the private sector the usury bill that is being promoted by the executive branch "... contradicts the laws governing financial activity."This is the view of the Honduran Council of Private Enterprise (COHEP), who presented several comments on the text to the Presidential House and Congress .
Usurious practices by any creditors are sanctioned according to maximum rates set by the Central Reserve Bank.
A statement by the Legislature:
The Legislature approved with 77 votes, in Plenary, the usury law, regulations that prohibit and punish usurious practices by all kinds of creditors, whether individuals, corporations, institutions of the financial system, trading houses, pawnshops, dealers goods and services and pawn shops, among others.
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