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.
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.'"
In April 2013 the credit card portfolio in the country grew at a rate of 24%, well above the 10% growth recorded in the same month this year.
The slowdown in economic activity, greater awareness in the use of debt and changes in the regulations requiring risk ratings from the banking system are some of the reasons behind the decline in the growth rate of the number of plastic cards circulating in the country.
72% of the credit and debit cards circulating in the country have interest rates in colones ranging from between 40% and 50%, while the default interest varies from 24% to 65%.
The Solis administration is relaunching a bill which aims to set the maximum allowable interest rate for any type of loan.
Although the so called usury rate is part of Costa Rican law, it is not specified how much the rate should be. Because of this, "... the Costa Rican financial market offers various loans with very high rates that could be punishable, but the gap in the law does not allow the courts to determine what is a high or low rate."
Mortgage inventories, cash flow, contracts, intellectual property, trademarks, among others, can be used as an alternative option to traditional collateral on real estate.
Additionally, the law passed by the Legislature on April 30, also allows for current assets or rights given in contracts, equipment, accounts receivable, chattels, crops, tourist bookings and even future rights to the value of timber to be taken into account.
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.
Between April 2012 and the same month this year, the credit card portfolio of state banks grew by 8.5%, while among private banks the increase was 33%.
The increase in the private sector is not surprising, since Banco Promerica alone has 35 types of credit card rates, being the issuer with the most diversity in the country. The dynamism is also reflected in income from fees which the banks charge for the use of plastic, accounting for 46% of total revenues.
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 ".
In the first half of 2012 the volume of loans to micro, small and medium enterprises reached ¢243,000 million ($485 million) in the first half of 2012.
The figure represents an increase of just 1.36% compared to the same period in 2011, lower than the inflation rate, and 39% of the projections of the Ministry of Economy, Industry and Trade for all of 2012.
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.
The Economy Ministry presented the quarterly survey on credit and debit cards, through October 2010.
Regarding credit cards during for this period, there were 29 issuers with 403 types of plastic.
If debt was distributed equally among the economically active population, it would represent a per capita debt of $ 837, which is almost double the minimum wage.
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