Requirements for Dollar Loans Made More Flexible

In order to try to stop the deceleration in the issue of loans in dollars, authorities in Costa Rica have decided to soften the rules required of banks who grant loans in this currency.

Thursday, July 19, 2018

The National Council of Supervision of the Financial System (Conassif) has decided to temporarily reverse the stricter measures that banks must comply with when granting loans in foreign currency to those who generate income in Colones, with the aim of counteracting the deceleration that has been seen in the issue of bank loans.

Luis Carlos Delgado, president of the Conassif, explained to that " ...'The initiative does not aim to release the resources (of the supervised entities), but to transiently adapt the regulations to the national economic-financial reality.'" 

The modification made by the Conassif last May involved reducing the countercyclical estimate from 7% to 5% of the monthly profit of each entity. Conassif's plan is to raise this proportion again to 6% in June 2019, and in the year 2020 to raise it to 7%.   

Anabelle Ortega, executive director of the Chamber of Banks and Financial Institutions, said that " ... 'the reform will allow for there not to be a substantial reduction in the the result and the indicators of the supervised entities, as more adequate provisions are created for profitability. The change allows an institution to grant loans in dollars to sectors that previously had a higher credit estimate. In the current conjuncture of lower growth, it does not make much sense to continue making countercyclical (provisions) to a strong rhythm; on the contrary, it slows down growth even more and thereby negatively impacts the economy.'"

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