Up until August three banking entities with microfinance licenses granted loans worth $154.17 million to micro and small businesses.
Capital.com.pa reports that "statistics from the Superintendency of Banks in Panama up to August 2013 indicate that Banco Delta leads the credit portfolios, with 72.24% of the total. Its followers are MiBanco, with 17.12% and Banco G & T Continental, with 10.64% ... ".
On January 11, 2012 the Law on Promotion and Regulation of Microfinancers comes into force.
From 2009 up to 2011 the global financial crisis and the local crisis has negatively affected the microfinance sector, which has generated successive losses.
The president of the Nicaraguan Association of Microfinance Institutions (ASOMIF) and general manager of the Foundation for Rural Social and Economic Development (Fundeser), Rene Romero expects that the new legislation will bring "stability and institutionalisation" to the microfinance sector.
The Nicaraguan Assembly has passed a law on the promotion and regulation of microcredit.
According to Gutierrez Wálmaro of the association of microfinance institutions (ASOMIF) the effect of the new regulations will result in a reduction of interest rates charged by microfinancers over the next three years.
"He adds that the only additional fees that could be charged are interest arrears, which also have a limit, as it can not be greater than 25 percent of the base interest rate agreed upon when the loan is approved”, noted an article in Laprensa.com.ni.
The Alba Caruna cooperative may continue to operate as second-tier bank with microfinancers beyond regulation of the new law.
The exclusion was requested after taking into account that the cooperative not only provides loans to its members but also to third parties.
".... Sandinista representatives got the backing of the majority of the seats in the National Assembly to keep cooperatives outside the regulations of the microfinance law", reported an article published on La Prensa’s website.
In the coming weeks, the bill which has been approved by the public and private sector will be sent to the Assembly.
The committee has already been formed (five members, two from the private sector and three from the public) which will be responsible for overseeing the microfinance sector, as stated in the bill.
According to an article in Laprensa.com.ni, “the bill for Microcredit Development states that the minimum capital of an MFI must be 200 thousand dollars, it does not determine credit limits, or fix interest rates. ‘This must be determined by the market '." said the President of the Superior Council of Private Enterprise (COSEP), José Adán Aguerri.
The Law for the Promotion of microcredit proposed by the government is starting to make sense for the private sector.
For the Nicaraguan Association of Microfinance Institutions (ASOMIF), discussion of the governmental law is starting to find more points in common than differences with regards to the current needs of the sector, and is progressing well.
A law regulating the microfinance market would open the opportunity to capture savings that currently can only be done through cooperatives and banks.
The article by Byron Dardón in Capital.com.pa, reports that the bill on microfinance is expected this year and has the support of the Financial Inclusion Program of the Treasury of the United States, which promotes the adoption in Latin American countries of market governing rules.
By October it is anticipated that the law will be approved after seven years in the National Assembly.
Freddy Torres, member of the National Assembly's economy committee, indicated that progress had been made, adding that they are awaiting a final review by a Peruvian microfinance expert before sending it for approval by the Assembly.
"We have reached several conclusions, one of which is that micro-finance companies are going to be regulated by the banking regulator," he told Laprensa.com.ni.
The "No Payment" movement is scaring US and European investors, threatening the arrival of $70 million worth of funds for micro finance companies.
"In the last Central American Microfinance Conference the challenges and opportunities faced by the sector were discussed and the Guatemalan moderator, Reynold Walter, concluded by highlighting that governments should discourage 'no payment' movements, which received a round of applause from the attendees.
Asomif will submit a plea for unconstitutionality at the Supreme Court of Justice.
René Romero, president of Asomif, the Nicaraguan Association of Microfinance Institutions, assured that despite presenting this plea, they will observe the new law known as “Moratory Law”, which sets conditions for negotiating debt covenants between debtors and microfinance institutions.
The so-called "Moratorium Law", passed yesterday in Nicaragua, could have a strong negative effect on the availability of credit for the productive sector.
One of the criticisms of the new regulation is that it sets interest rates by law. Opponents argue that the cost of money changes with the variations of the international financial markets.
José Adán Aguerri, President of the Private Enterprise Council, stated that the passing of the law carries dire consequences for the country's production, as it risks the capacity of micro-financing institutions to offer loans.