Transparent Pricing In Colombia

The Colombian microfinance sector is the largest in Latin America both in terms of total active borrowers served and outstanding gross loans disbursed. The landscape of the sector has been transformed over the years through strong partnerships between key governmental, non-governmental and private sector actors. Since its inception in the early 1980s the sector has been growing steadily towards achieving scale and deepening access to finance. Downscaling commercial banks, commercial finance companies, financial cooperatives, loans and savings cooperatives and NGOs are the major players in providing microfinance services in the market.

The regulatory and supervisory framework of the Colombia microfinance industry is shaped around deposit taking and non-deposit taking microfinance service providers. The Financial Superintendence of Colombia (SFC) is the main regulatory body of deposit taking microfinance service providers. Cooperatives and saving and loans associations are overseen by the Economia Solidaria Superintendency. The majority of NGO MFIs do not fall under any regulatory body.

Usury laws and interest rate caps have existed in the Colombian financial sector since 1963. Article 39 of the Myims law, issued in 2000 and later amended in 2004 by the SFC,specifically deals with the fees and commissions charged by financial institutions. The SFC Resolution 1311, issued in 2010, instituted separate interest rate caps for ordinary, consumer and microcredit loan products. A legal framework on consumer protection for the financial sector was put in place in 2009. This law (1328) aims to promote the transparent supply of information by requiring adequate disclosures on all documentation and by creating an appropriate institutional mechanism for the protection of consumers. This legal framework does not cover the vast majority of unregulated NGO MFIS operating in Colombia.