Panama: Proposal to Regulate Credit Cards

A bill has been submitted to the National Assembly proposing to prohibit the practice of advance discounts for late payments.

Thursday, January 30, 2020

The document also provides that banks agree to enter into a payment arrangement with the debtor when the customer is more than 90 days late in paying the loan.

See "Panama: Loan Portfolio Still Rising"

The Assembly's statement notes that "... Among the measures, the draft bill of Deputy Marylín Vallarino, proposes to favor the mechanisms for the consolidation of debts, suppressing the collection of interest for more than 90 days and prohibiting the practice of discounting interest in advance.

In the explanatory statement, the parliamentarian argued that citizens have a high level of debt and that there is an aggressive campaign by companies that are responsible for issuing credit cards worsening the financial situation of Panamanians.

Samuel Moreno, president of the National Association of Economists, told that "... Entering the business of collecting interest rates from banks with a law is not the ideal solution because we could be intervening in activities of the private initiative."

Moreno added that "... legislation can be made in which technical criteria can be established so that interest rates are more adequate to economic reality, that is, to put limits."

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Last December 2, the new Credit Card Law proposal received a favorable opinion from the Economy Commission of the Guatemalan Congress, and now it should be discussed in the plenary session.

This is the second attempt made in the country to regulate the credit card market, since on March 8, 2016 a law came into force, which was suspended weeks later, because the business chambers, card issuers and the Bank of Guatemala filed legal appeals before the Constitutional Court (CC). At the beginning of 2019 the law was definitively declared unconstitutional by the CC.

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After the law seeking to regulate the credit card market in Guatemala was declared unconstitutional, a new proposal was presented.

The Credit Card Law that was declared unconstitutional at the beginning of 2019, entered into force on March 8, 2016, however, after the business chambers, card issuers and the Bank of Guatemala filed legal appeals before the Constitutional Court (CC), was suspended on March 31 of that year.

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The Financial Committee of the Legislative Assembly in El Salvador has began to study a bill which will apply to "all financing operations related to the procurement of goods and services."

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The proposed modifications, recently introduced before the National Assembly, intend to better regulate credit cards.

They are based on the law regulating increases in credit card interest rates in the United States.

"It also refers to the use of debit cards, pre-paid ones and financing or electronic payment cards", reports

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