Actualidad El Salvador

Steps towards Financial Inclusion

Law to facilitate financial inclusion

On 11th September, the Law to facilitate financial inclusion came into force in El Salvador. Its aim is to make it easier for the people in El Salvador who have traditionally been excluded from the financial system, to gain access to banking services.

The law promotes financial inclusion through the use of new channels with innovative products, such as banking correspondent, mobile money and savings accounts with simplified requirements. The channel must be easy for the general public to access and use. This should bring down costs both for the providers of the financial services and thus for their users.

The law creates E-money Suppliers (Sociedades Proveedores de Dinero Electrónico or SPDE), very much in line with the Colombian law on the creation of such companies, and develops two new products: the electronic money record and the savings account with simplified requirements.

New player in the market

The SPDEs are limited-liability companies supervised by the Superintendencia del Sistema Financiero. Their sole mission is to provide electronic money and administer mobile-payment systems when the Central Bank authorises them to do so. In order to promote good governance in such companies, the law establishes requirements for the appointment and performance of their directors and managers, and lays down their obligations, responsibilities and penalties for non-compliance.

It also expressly enables banks, cooperatives and savings and loan companies to provide electronic money without having to constitute a separate special purpose vehicle.

Inclusive products: electronic money record and simplified savings accounts

The electronic money records are designed to carry out simple transactions, recognising the everyday needs of the population they are intended to serve. The most frequent transactions are local transfers, reception of remittances, payments for basic services and payments in small shops. The requirements for opening a record are very simple: (i) presentation of a unique original identity document and (ii) completion of a form with the individual's basic data (full name, ID document number, home address, business activity, main source of income, name and address of the beneficiaries). Only one electronic money record can be made per customer, and all records are subject to a balance ceiling and limited to the transactions authorised by the Central Bank.

The savings accounts with simplified requirements are governed by the provisions applicable to traditional savings accounts, but with the following specific features:

  • Only available to individuals
  • Only one account per customer and only one holder per account
  • Account to be used exclusively by electronic means
  • Subject to a ceiling on the balance and only transactions authorised by the Central Bank
  • Same requirements for opening as for the electronic money record

The banks, cooperatives and savings and loans companies are the only entities authorised to receive deposits over these accounts.

Finally, in order to facilitate access to the accounts, the law states that they may be opened by new customers through banking correspondents. When they are existing customers, it adds the possibility of opening them over the digital channels offered by the entity.

A similar iniciative was Act on Financial Inclusion and electronical payment systems, anaysed in Progreso 1.