With the aim of making the classification of debtors more flexible and reducing the risk of non-payment, in a context where delinquent loans keep on rising, Costa Rica authorized the modification of two regulations that apply to entities in the financial system.
The General Superintendence of Financial Entities (Sugef) and the National Council of Supervision of the Financial System (Conassif), informed that changes were made to the "Regulation for the qualification of debtors" and the "Regulation on management and evaluation of credit risk for the development banking system", which ultimately aim to give access to new credits to about 63 thousand people.
From May 2019, foreign customers will have to declare to local system banks that their funds meet their country's tax requirements.
The Superintendence of Banks of Panama (SBP) approved Agreement 02-2019, which implements the recommendations of the Financial Action Task Force, which consists of expanding the required due diligence measures of banks with their customers.
In Costa Rica, the Central Bank and the Commission to Promote Competition are proposed to set a single percentage in the commissions paid by businesses for accepting credit or debit cards.
Law 21.177, which aims to empower the government to regulate the commissions charged by financial institutions to businesses, was presented to the Legislative Assembly by several deputies.
The Costa Rican banking sector opposes such a measure, arguing that imposing an upper cap on interest rates on bank loans would cause informality in the credit market.
The 20.861 reform of the competition promotion and effective consumer defense, which aims to cap credit interest rates, is discussed with the country's Tax Affairs Commission.
Regarding the establishment of a rate cap, Ronulfo Jiménez, legal advisor to the Costa Rican Banking Association, said during the hearing that "... these initiatives are not retroactive, leaving the population with over-indebtedness in that condition, therefore, denies that this will benefit the consumer."
The Central Bank of Costa Rica has increased to $27 million the minimum amount of capital required by banks to operate, and to $5 million the minimum amount for financial companies.
Yesterday the Central Bank agreement which establishes the changes was published in the official newspaper, La Gaceta, The minimum operating capital for private banks increased by 5.8%, rising from $25.6 million to $27.1 million.In the case of financial companies, the increase was from $5.1 million to $5.4 million.
In Costa Rica several banks expressed their disagreement with the new standard which will prevent them from deciding how much of their capital will be denominated in dollars and how much in colones.
In an attempt to gain more control of the risk involved in foreign exchange transactions by banks and their impact on the exchange rate, the Central Bank has changed therules for foreign exchange cash operations, forcing banks to change the composition of their assets so that the proportion denominated in dollars is equal to the proportion of assets in that currency.
Starting December 22nd 2016 a new rule applies that prevents banks in Costa Rica from deciding how much of their capital they want to hold denominated in dollars and how much in colones.
In an attempt to gain more control of the risk involved in foreign exchange transactions by banks and their impact on the exchange rate, the Central Bank has changed the rules for foreign exchange cash operations, forcing banks to change the composition of their assets so that the proportion denominated in dollars is equal to the proportion of assets in that currency.
On October 12 and 13 representatives from the banking and financial sector will be gathering together in Panama City to discuss issues relating to regulation, business and investment.
The International Finance Summit is an event being organized by the Banking Association of Panama and will be held at the Hotel Trump Ocean Club Convention Center.
Increased operating costs because of risk controls imposed by the US have led to correspondent banks avoiding working with small banks.
Maintaining small structures at the same time as paying high costs in order to meet the standards required internationally, primarily in the United States, is no longer viable for banks who want to remain profitable.
Starting from May companies will be able to use intellectual property rights, crops or inventories as collateral for bank loans.
The law which goes into effect on May 20 allows accounts receivable, movable property (except vehicles), stocks, crops, inventories of merchandise and commercial patents to be used as collateral for loans.
Danilo Montero, executive director of the Costa Rican Association of Development Organizations (Acorde), told Nacion.com that "... The law will be very useful for the type of customers they have, most of which are micro-businesses that offer exactly this type of backing. Now this gives us the ability to record, electronically, colatorol with the Registry and in case of default of the debtor, it will be easier to implement the collateral put up. "
All of the formal conditions have now been revealed for the operation of the system for granting flexible loans to farmers and entrepreneurs who currently have no access to commercial bank financing.
Hundreds of millions of dollars were left idle because of lack of standards to allow their use in lending to the productive sector.
From a statement issued by the presidency of Costa Rica:
The Central Bank of Costa Rica has submitted a query regarding the possibility of eliminating the restriction on financial institutions of varying its assets in dollars per day by up to 4% .
The Chamber of Banks looks favorably on the initiative to abolish the current limit of 4% so that more currencies can be bought and sold daily.
The Central Bank "justified in the consultation paper that the move is in line with exchange rate flexibility, to allow intermediaries to increase participation in the determination of the exchange rate, managing risk better and providing liquidity."
Tighter analysis of customers and better control of risk in lending are part of the changes that are being prepared by the financial regulator.
In 2013 the General Superintendence of Financial Entities (Sugef) began a process of regulatory changes for banks to continue during 2014. Tighter analysis of customers and better control of risk when granting loans are some of the changes being contemplated.
New rules forbid issuers from “stalking” cardholders in order to collect pending payments.
The banking industry stated that limiting their ability to call debtors will result in higher delinquency, and that they will object the measure at the constitutional court (Sala IV).
From Nacion.com: “According to article 35 of the new regulation, companies cannot attempt collection techniques with someone different than the client, and they can’t call debtors more than three times, according to article 18”.
A new regulation code overseeing credit cards, by the Economy Ministry (MEIC), will come into effect on November 3.
Automatic teller machines will be obliged to show on-screen any fees charged for cash withdrawals or statement queries.
From Elfinancierocr.com: "Issuers will also be required to issue detailed credit card statements, showing the main balance, current interest, interest applicable to the specific period, interest for delayed payments, and the monthly interest rate".