Page Seven / La Paz
The Government ordered that the Multiple Banks and SME Banks allocate 6% of the net profits of 2021 equivalent to 12.8 million dollars to fulfill their social function and facilitate access to credit to borrowers who cannot cover 20% of own contribution requested by the entities.
“Each one of the Multiple Banks and SME Banks, in compliance with their social function provided for in article 115 of Law 393, of August 21, 2013, on Financial Services, must allocate 6% of their Net Profits from management 2021 for the purpose that will be determined by the Ministry of Economy and Public Finance, through Ministerial Resolution”, specifies article 3 of Supreme Decree 4666.
The text adds that in the resolution that approves this State portfolio, the mechanisms, destination, instruments and all the characteristics that are necessary to fulfill the objective of the norm will be established.
The Minister of Economy, Marcelo Montenegro, reported that the distribution of 6% of the profits of the banks in recent years was directed to the constitution of the Social Housing Credit Guarantee Fund, the Credit Guarantee Fund for the Productive Sector and the Seed Capital Fund.
In the case of social housing, for example, these funds allow borrowers who cannot give their own contribution of 20%, to access financing equally.
Article 115 of the Financial Services Law stipulates that financial intermediation entities will annually allocate a percentage of their net profits to be defined by supreme decree, to fulfill the social function.
Montenegro explained that for this year it will be evaluated if the 6% will go to the funds that are already constituted or to new ones, but clarified that this helps entities to place and facilitate new credits.
Last year Multiple Banks and SMEs obtained 213 million dollars in profit. “The banks generated net profits of 213 million dollars and 6% is close to 12.8 million dollars, that is the amount of resources of the 6% that will be allocated to Guarantee Funds for the credit productive part of the system financial,” said the authority.
Montenegro maintained that the Guarantee Fund for Social Housing, to which 6% of the profits were allocated in the past, has a size of 378 million dollars. Of this amount, there are still 233 million dollars to be used.
The Credit Guarantee Fund for the Productive Sector consolidated 261 million dollars and still has room to guarantee 126 million.
Montenegro clarified that the 6% that banks must allocate from their 2021 profits does not represent a tax.
Economist Gonzalo Chávez said that the Government places a “tax” on the net profits of banks, following the guidelines of former Vice President Álvaro García Linera.
The financial analyst Jaime Dunn maintained that this obligation has been applied since 2014. It is found in Law 393 and the banks know it, the only thing that is striking is that now the application is left to a ministerial resolution that will define the destination. “With this contribution, banks have shown their interest in supporting social sectors and thanks to these funds, credit has been able to reach groups that do not have the capacity to give their own 20% contribution. The risk that this represents was transferred to the funds,” he stressed.
According to Dunn, profits are distributed when financial statements are finalized as of December 31, but balance sheets are generally approved until March 31. “The Government announced this measure generally before January 10 but, as is customary, the contribution of 6% is something that the banks already have planned in their meetings,” he clarified.
Fund Benefit
- Balance As of December 31, 2021, the Guarantee Fund for Social Interest Housing Loans (Fogavis) reached $378 million and benefited 89,933 families, while the Guarantee Fund for Credits for the Productive Sector (Fogacp) reached $ us 261 million.
- Money The financial system earned 60% more in 2021.
