Colombia Fintech Proposes Several Usury Rates, One for Each Sector

At an event held on Thursday, Gabriel Santos, president of Colombia Fintech, proposed that the country have several usury rates, one for each sector of the economy.

The idea was proposed by Colombia Fintech leader, after stating that this indicator, which is set monthly by the Financial Superintendence, failed in the country.

It should not be forgotten that the usury rate is the maximum level of interest that financial institutions can charge for making loans to citizens.

Currently, this rate is at 26% and impacts, above all, people who take out credit cards from banks and other financial companies .

Change in usury rates in Colombia

According to Santos, the adjustments should lead to Colombia having different usury rates weighted by specific markets and niches, as countries such as Chile have achieved .

For example, having maximum interest levels for vehicles, credit cards, consumption, free investment, etc.

In addition to the above, Santos noted: “We must be able to start generating specific relief, through the separation of the current bank interest rate between consumer and ordinary loans, which would generate immediate relief.”

He added: “But we must also begin to eliminate the distortions of having many representations of commercial credits in the credits that people receive.”

For the president of Colombia Fintech, the proposed changes respond to the failure of the usury rate in the country, since it has generated self-exclusion and no creation of a credit history. Not to mention that Colombians have had to resort to the so-called ‘gota a gota’, which charge interest rates that can exceed 300% annually.

This is confirmed by a study by the union and ANIF, which indicates that access to credit in Colombia is “deeply unequal and inequitable.”

Colombia Fintech president says the usury rate must be revised

Although banks are the most common lenders among individuals (35.8%), as their income level decreases, their reliance on informal sources of financing such as gota a gota and family and friends increases.

For this reason, David Vélez, founder and CEO of Nubank, stated that “the figures from the ANIF study clearly show the exclusion that the usury rate has caused in the most vulnerable populations: almost 4 out of 10 low-income Colombians turn to informal lenders, paying rates of up to 360% .”

The president of Colombia Fintech concluded by saying: “The usury rate must be revised, because it is the type of public policy that is created with good intentions, but ends up significantly harming those it is trying to help.”

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(Featured image by Random Institute via Unsplash)

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First published in VALORA ANALITIK. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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