Actualidad Costa Rica

The latest in specific regulation for microcredit

Law 9274/2015, 9th March 2015

In the second issue of Progreso we referenced Act 9274, the Integral Reform of the Law on the Banking System for Development. On 9th March 2015, the Republic of Costa Rica enacted the Regulation to implement this law.

The main developments it introduces relating to the microcredit industry are:

  • It defines microcredit as credit requested by small farming producers, micro-firm operators or entrepreneurs, presenting production projects whose total financial requirements are not more than 40 minimum wages (approx. US$ 750).
  • It establishes that both the Fondo de Financiamiento para el Desarrollo and the Fondo de Crédito para el Desarrollo, must earmark at least 11% of their total loan-book to microcredit borrowers. This percentage must be increased by 5% a year until it reaches a minimum of 25% of such funds.
  • It indicates that the microcredit portfolio must be rated in line with the proportion of non-performing credits it contains. It also establishes that microcredit must be arranged, assessed, approved, disbursed and administered using a special credit methodology, different from that applicable to traditional business loans and credit facilities.

This Regulation recognises microcredit as a specific kind of credit which requires the public authorities to apply a specific set of rules more in line with the needs of the microfinance industry.