Global microscope on the microfinance business environment 2012

41
■ Chile
Key characteristics of the microfi nance business
environment:
l Chile’s microfi nance market is relatively small
and fairly saturated. It is dominated by large
private banks and one large state bank, Banco del
Estado. Smaller NGOs service more rural areas,
where large banks have limited reach.
l The microfi nance sector lacks formal regulation,
and there is little expertise within the banking
sector’s regulator, the SBIF, to regulate it.
l Credit bureaus in Chile provide reliable
information but tend to be used largely by the
private banking sector, providing little information
relevant to MFIs and failing to help discourage
multiple borrowing and indebtedness in the
microfi nance sector.
Key changes and impacts since last year:
l A new law was passed in December 2011 that
established a new government consumer
protection agency, SERNAC Financiero. This agency
provides increased consumer protections in the
regulated fi nancial sector.
l Proposed legislation would lower maximum
allowable interest rates, and following an
agreement made between the legislature and
Ministry of the Economy in early July, passage
seems likely. Passage of this bill, which could
happen as soon as October 2012, would be
potentially devastating for the sector, which is
dependent on higher interest rates to maintain
viable profi t margins.
l A proposed new law would bring Credit Cooperatives
under supervision by SBIF, instead of
the Department of Co-operatives.
l The lack of a regulatory environment has not
restricted the use of agent banking. In fact, market
participants note that agent transactions have
evolved from a pilot stage, and a small number of
transactions do occur.
© The Economist Intelligence Unit Limited 2012
<strong>Global</strong> <strong>microscope</strong> on the microfi nance business environment 2012
■ Colombia
Key characteristics of the microfi nance business
environment:
l While Colombia has not developed
comprehensive microfi nance legislation, it is
expected to release a regulatory framework
regarding the microfi nance activity of regulated
entities in the second half of 2012. As the market
matures, most infl uential players have converted
or are in the process of becoming regulated under
the Superintendencia FInanciera. The government,
central bank and multilateral organisations have
been working with Asomicrofi nanzas (the
association of MFIs) and directly with MFIs to
understand the idiosyncrasies of this market. It is
expected that the government will release some
legislative framework in the second half of 2012.
l The interest rate cap is calculated quarterly
using a multiple of microfi nance and commercial
loans; this methodology yields an artifi cially low
rate. However, regulators and policymakers have
been allowing the rate to increase each quarter
such that it does not constitute a constraint for
most institutions offering microfi nance products.
Additional fees, such as insurance, can cause the
effective interest to surpass this cap.
l In 2009, Colombia passed a comprehensive set
of laws around client protection that included rules
about pricing transparency and dispute resolution.
In practice, there is still much work to be done. For
example, a typical microfi nance client is unlikely to
be able to access the Excel database of average
prices that is available online through the
Superintendencia Financiera. Consumer education
is also a top priority.
Key changes and impacts since last year:
l There is a proposed law fl oating in Congress that
would require that 15% of a bank’s portfolio be
allocated to microfi nance. Many stakeholders,
including the associations of microfi nance and
banking, have come out against the law and it is
not expected to pass.
l The market continues to mature as most
unregulated players have transformed into