A few months before the expiration of the law that establishes a moratorium on loans granted by banks, cooperatives and public and private financial institutions in Panama, the banking sector expects that these benefits will not be extended.
Between July and October 2020, the number of people in El Salvador exploring mortgage options online increased by 18%, and the number of Costa Rican consumers looking to buy credit cards decreased by 60%.
CentralAmericaData's interactive platform Consumer Insights monitors in real time the changes in consumer habits in all markets in the region and in other Latin American countries, with fundamental information to understand their behavior, new trends and anticipate eventual changes in their purchase patterns.
The Monetary Board approved the changes to the Credit Risk Regulations, which were proposed by the Superintendence of Banks and seek to simplify the requirements for loans not exceeding $160,000.
In this scenario of economic crisis resulting from the outbreak of covid-19, the objective of the endorsed modifications is to favor SMEs and individuals to gain access to credit lines offered by commercial banks.
Suspension of contracts, uncertainty about the economic future and reduction of salaries, are some of the factors that have affected the banks in Panama to place fewer loans in this context of health crisis.
The amount of new loans granted by Panamanian banks was $589 million during May this year, a 26% reduction compared to what was reported in April 2020.
Given the outbreak of covid-19 and the imposition of restrictions on economic activity, between February and June of this year the amount of loans granted by the banking sector reported a 1.2% drop.
Data from the Superintendence of the Financial System (SSF) indicate that between February (the month before the beginning of the health and economic crisis) and June of this year, the credit portfolio contracted by $149 million, from $13.276 million to $13.127 million.
In the countries of the region, more than 8 million people are looking for credit on the Internet. Of this group of consumers, approximately 9% explore options for taking out a student loan.
The interactive information system developed by CentralAmericaData monitors in real time the changes in consumer habits in all markets of the region, with fundamental information to understand the new commercial environment that has emerged in an accelerated manner.
Following the entry into force of the Usury Law, the Central Bank published the maximum annual interest rates, which for credit operations in colons amount to 37.69% and 30.36% in dollars.
The law that was published on June 20, 2020 establishes the methodology to be used to set the maximum interest rate, and stipulates that the Central Bank of Costa Rica must publish on its website and on The Gazette, the maximum usury rates in the first week of January and July each year.
A law was published in the Official Journal establishing a moratorium on loans granted by banks, cooperatives and finance companies, both public and private, until December 31, 2020, for natural and legal persons affected by the pandemic.
The law promulgated on July 1 in the Official Journal, states that the benefits of the moratorium will be available to persons whose employment contract has been suspended or terminated, independent workers and traders whose activity has been affected by the health measures applied by covid-19.
After President Cortizo partially banned the moratorium bill, the National Assembly discussed the initiative in a second debate, which was unnecessary for the Superintendent of Banks, who said that the banks had already implemented the necessary measures.
Despite the fact that on May 4 President Laurentino Cortizo and the representative of the Panamanian Banking Association, Aimee de Grimaldo, signed an agreement to extend the moratorium until December 31, 2020 due to the economic crisis caused by covid-19, the deputies declared themselves in permanent session to discuss the moratorium project (already banned by the president) in second debate in extraordinary sessions from June 15 to 18.
The coronavirus has left an economic impact in several countries. For this reason, some governments are developing exceptional measures to mitigate its effects. For example, the suspension of tax and mortgage payments to lessen the economic pressure on small businesses and households.
In the United States, interest rates were reduced to almost zero and a US$700 billion stimulus program was launched in a bid to protect its economy, says Mario Miranda, director of finance at MonederoSMART.
The Executive and the banking sector agreed to extend until December 31st of this year the moratorium on credit payments, a measure that applies to mortgages, personal loans, the agricultural sector, commercial, transportation, auto and credit cards.
The government also reported that in the context of the covid-19 outbreak, President Cortizo sanctioned Bill 295 which adopts special social measures for the temporary suspension of payment of public services such as electricity, fixed and mobile telephony and Internet.
In response to the country's health crisis, 15 banks have granted a 90-day extension for their customers to make their personal credit card, home mortgage, vehicle and personal loans.
Until March 31st, the financial institutions that confirmed that had granted the extension to their clients are BAC Credomatic, Banco General, Banistmo, Banco Nacional, Global Bank, Multibank, St.
It was agreed that debtors and financial institutions may define a new maximum payment date, in all those cases where the customer had to pay their fee during the curfew, which will be in force until April 12.
A grace period will also be granted that could be until June 30, 2020, depending on the needs of each client and the ability of the bank to maintain the necessary liquidity without receiving those payments, reported the National Commission of Banks and Insurance (CNBS).
In El Salvador, banks will not be able to charge any kind of penalty to clients who, due to the crisis of the covid-19, fail to pay their credit quotas.
They were approved "Temporary Technical Norms to Face Noncompliance’s and Contractual Obligations" derived from the emergency were approved, which will avoid that, during the validity of the emergency, the credit risk category of Salvadorans is affected, therefore, no penalty will be charged for non payment. With these rules will also allow the granting of credits, consolidation, restructuring and refinancing of debts in favorable conditions for those affected by the COVID-19 pandemic, reported the Central Reserve Bank (BCR).
As of November 2019 the credit portfolio of banks in the national system totaled $55.723 million, 2% more than reported in the same month of 2018, increase that is explained by loans to the livestock sector, mortgage and personal.
Domestic credit to the private sector reflects an increase of 2.5% over similar period last year. The sectors that drive domestic credit are associated with personal banking products, reported the Superintendency of Banks of Panama.