Banking association opposes cap on interest rates in the financial system
Costa Rica
30 noviembre 2018

The Costa Rican Banking Association (ABC) attended November 29 the National Assembly Finance Committee to participate in the debate on the initiative that regulates the cap on interest rates. Mario Gómez and Ronulfo Giménez spoke on behalf the banking sector before the members of the Committee and made it clear that limiting the interest rates excludes low-income population from the financial system, thus limiting access to credit.

Giménez said that they seek to protect customers from certain financial services that are not yet regulated and avoid over-indebtedness to protect customers’ savings. They consider that setting caps on interest rates is not the solution because it would restrict credit availability and would not benefit those customers already in debt. ABC believes that the measure would increase operating costs, which would exclude the most vulnerable sectors and would increase credit informality. The Association also made a comparison with the Chilean model, which had to revert regulations already in effect to avoid greater exclusion in small loans and benefitting only the population that previously had banking products.

The banking institution thinks there are other possible consequences. For example, lower economic growth and greater difficulty in joining the OECD – which recommends eliminating restrictions of this type. However, this does not mean they oppose to promoting legislation on the sector. Actually, they encourage responsible access to credit while ensuring consumer protection. ABC cares about avoiding abusive clauses in contracts, deepening financial education, and collaborating with National Assembly members on the issue. Gómez and Giménez pointed out that credit cards are the gateway to the financial system as a multi-product (means of payment, credit line and benefits) that helps to combat tax evasion. They also supported the creation of a Credit Information Center through legislation. In addition, the banking sector representatives requested that a Protocol of Good Practices be legally supported, which ABC is set to publish in the upcoming weeks.

The legislative process will continue in the next weeks with more hearings on File No. 20,861. The following agencies are set to attend: General Superintendence of Financial Entities (SUGEF), Ministry of Economy, Industry and Commerce (MEIC), and National Council for the Supervision of the Financial System (CONASSIF).

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