New arrivals – November 26, 2018
The operation and operation of Savings and Credit Microfinance Institutions and Investment and Credit Microfinance Institutions is regulated by Decree 25-2016, “Law of Microfinance Entities and Non-Profit Microfinance Entities”.
In this regard, on August 3, 2018, the following resolutions of the Monetary Board were published in the Official Gazette: i) JM-51-2018, “Regulations for Financing Granted by Microfinance Entities”; ii) JM-52-2018, "Regulation of Prudential Aspects for Microfinance Entities"; and iii) JM-53-2018, "Regulations for the Comprehensive Risk Management of Microfinance Entities."
Among other provisions, these regulations aim to:
- Establish i) the minimum information that must be obtained from financing applicants and debtors; ii) the valuation of the microcredit portfolio due to delinquency; and iii) the limits that microfinance entities must observe when granting financing to individuals or legal entities and for microcredits for consumption and housing;
- Regulate the minimum prudential aspects in relation to the liquidity reserve, the minimum amount of equity required and the global proportions in foreign currency that microfinance entities must maintain;
- Determine the minimum aspects that microfinance entities must observe, by establishing the obligation to implement comprehensive risk management (credit, liquidity and operational), whose direction is entrusted to a Risk Management Committee and whose operation and execution is under the responsibility of the Board of Directors of the entity.
Microfinance Entities are focused on promoting small and medium-sized businesses. With these regulations, the capture of savings and money loans will be promoted at a more favorable interest rate for companies seeking formalization, based on the fact that it is a fundamental obligation of the State to protect capital formation, savings and investment. Likewise, they make it easier for all people who are not subject to credit in the national banking system to have access to it, thereby promoting financial inclusion, mainly in rural areas and in small urban centers, but always within a legal framework with adequate supervision and regulation.