Leveling the playing field between public and private banks would be another benefit
Measure is analyzed by the Central Bank and Conassif and will be raised in the coming days
Offering more credit options to clients and small and medium-sized private banking companies is what the Central Bank is looking for by eliminating the “bank toll.”
This requirement forces private entities to transfer 17% of the money they manage, better known as deposits, to public banks within 30 days.
These resources are mostly managed by the National Bank and the Bank of Costa Rica to give resources to the Development Credit Fund (FCD) that finances the Development Banking System (SBD).
Read more: Myths and realities: Banking for development
In 2014, the Development Banking Law was reformed and a series of obstacles were eliminated that allowed private banks to use the resources, prior approval of the SBD Governing Council.
Read more: Strong controls and bank-style regulation
The changes are analyzed by the Central Bank, the National Council for Supervision of the Financial System and the superintendencies, however, the decision must also have the endorsement of the Ministry of Finance and the Ministry of the Presidency.
“The elimination of this rule would level the playing field; since private banks capture deposits and cannot lend them efficiently. They have to segment the projects a lot to find the most profitable ones. Without the toll, they will have more access to financing, thus opening the doors to
more and new investment and mortgage projects”, assured Ariel Rosenblatt, Vice President of Finance for Scotiabank Central America.
Last year, an attempt was made to change this obligation that began in 1995 when private banks began to manage current accounts, and the initiative was presented by Ivonne Acuña, deputy of the New Republic, but it did not prosper.
“At Banco Nacional we support all monetary and regulatory policy measures in favor of greater efficiency in the financial system and that eliminate distortions, as, for example, we have indicated it with respect to the parafiscal contributions of State commercial banks; However, for
To refer specifically to each of these proposals, it is first necessary to have a first version, which we do not yet have,” said Reinaldo Herrera, Corporate Director of Finance.
Private banks consider that the money they allocate to the Credit Fund for the Development of the Development Banking System could be used to directly finance micro, small and medium-sized enterprises, as they are already doing, as long as they have viable projects. .
On the other hand, the resources that are in the bank toll do not have assets because they are liabilities of private banks with the public and if loans are given with these resources and the debtor does not pay, there is no one who is responsible for those losses.
It is for this reason that the fund has hardly been used since the state banks cannot expose their own assets to cover the risks.
“All financial intermediaries must comply with the same regulatory requirements without exception; regulatory arbitrage in no way favors healthy competition. On the other hand, the safety of the public’s savings is vital, regardless of the type of financial institution that manages it; take care of the Liquidity is essential so that depositors can withdraw their deposits without fear,” concluded María Isabel Cortés, executive director of the Costa Rican Banking Association.
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