Nicaragua: Protection for small borrowers clients
Thursday, March 7, 2013
Nicaraguans who borrow modest amounts of money, either for small businesses or for personal consumption, now have a greater degree of protection, following the entry into force last year of new rules governing microfinance.
Under the Law for Promotion and Regulation of Microfinances (Ley de Fomento y Regulación de las Microfinanzas), institutions engaged in the intermediation of resources for microcredit, which have a minimum capital of 4.5 million cordobas ($180 million), and whose microfinance portfolio represents least 50% of the total value of the assets portfolio - known as microfinance institutions (MFIs) - must be registered with the National Microfinance Commission.
A registered FMI can can offer customers whatever conditions it chooses, including interest rates.
However, the MFI must publish its contract models, and its annual interest rate.
Another benefit to borrowers is that they can apply to the Commission, in the case of a complaint that has not been answered promptly, or which has received a negative response from the MFI.
As far as benefits to lenders are concerned, funds are available for for registered MFIs, from aid organizations and agencies, in order to promote microcredit.
An FMI can be either a nonprofit entity or a for-profit corporation.
Before 2012, Nicaragua did not have a system for the regulation of microfinance.
For more information, please contact Olga Barreto at [email protected], or (505) 22545454