Why borrow from banks in Cuba?

For decades, Cubans lost the habit of borrowing from the bank. But the reopening of the non-state sector, the growing emigration, and its impact on daily life, came to change that trend. Today, having a good credit culture is already a necessity in Cuba.

Cuban financial institutions offer to the natural persons of the country the service of credits or bank loans.

For this concept the bank delivers a certain amount of money, for a predetermined purpose. And in return, it demands that the customer repay the borrowed amount, or “principal amount” of the debt. Together with the payment of interest, commissions and expenses agreed between both parties. All this, as is logical, within the term established in the contract.

To provide this service, the Central Bank of Cuba authorizes:

• Banco de Crédito y Comercio (BANDEC): present throughout the island.
• Popular Savings Bank (BPA): present in all municipalities, with the exception of Havana.
• Banco Metropolitano SA (BM, or BANMET): present in Havana only.

Bank credits available in Cuba

First, a clarification. On the island, natural persons only have access to bank loans in Cuban peso (CUP).

And now to the point. Four types of loans are enabled:

1. For consumption: in order to enable the purchase of goods and / or services for personal use.
2. For the purchase of construction materials: specially designed to allow, or facilitate, the acquisition of materials and the payment of labor to undertake the construction of houses by own effort. It also includes the execution of construction actions for the improvement, expansion and / or remodeling of the home.
3. For the purchase of replacement refrigeration equipment.
4. For agricultural producers: available to independent producers and cooperatives. Its purpose is to finance the production of various crops, and pigs and sheep-goats (cattle are excluded).

Question of interests

In Cuba, the interests of bank loans fluctuate between 3% and 9% of the principal amount of the loan. It depends on the objective of the requested loan, its amount, and the time established for its repayment (that is, to pay off the debt).

Bank interest should be understood as the price paid by the customer for using, for X time, the money loaned by the bank.

Who can access a bank loan in Cuba?

In general, individuals over 18 years of age, with permanent residence in the country, can access a bank loan.

In addition, specifically, applicants must meet the following requirements:

• Demonstrate the possession of legal, fixed and / or regular income.
• Have the payment capacity, the guarantees, and the rest of the conditions required by the bank.
• Accumulate a good history of bank debt payments, past and / or present.

And also specifically, applicants must be included in the default profile of the type of credit they are requesting. (These profiles were explained in the previous section).

And so far the summary on the general characteristics of bank loans in Cuba. In future articles Cuban Directory will publish details of each type in particular. We all need the information!