B. For the calculation of the maximum applicable interest rates for the period from 10 May 2021 to 31 October 2021, the average of the month-end observations of the average interest rates of the financial system on consumer credit, as set out in sections I.A.1.a and II.A.1 of this circular, should be used. corresponds to the period from October 2020 to March 2021. Therefore, if we can put in place much more effective mechanisms to recover loans, creditors could lower the interest rates applicable to financing, or even see other actors who today do not provide direct financing (in Peru there are practically no supplier credits) to people who, today, for various reasons, are not credit subjects in the financial system. The Furniture Guarantee Law, with some shortcomings, has had an impact on the interest rate charged for financing, and I would expect that once Legislative Decree No. 1400, the decree-law approving the furniture guarantee system, comes into force, we can see a greater reduction in the interest rate and more loans by suppliers. Similarly, and as an example of the above, we see how the use of private and more efficient enforcement mechanisms, such as trusts, helps to reduce the risk of enforcement, which results in a reduction in interest rates that could be calculated, but always on the basis of the freedom of the contracting parties to set them. depending on the credit risk of creditors. For all types of credit other than those described in the first subparagraph of this paragraph and for passive transactions under any of their modalities, the conventional balancing ratio shall be determined by free competition on the financial market and expressed in actual annual values. The conventional balancing ratio of credit operations for monetary regulation (Article 58 of the Organic Law of the Central Bank) is set by the Board of Directors of the Central Bank and communicated periodically in the monetary program.
In 2001, well before the publication of Law No. 28677 on Personal Property Guarantees, the Ministry of Economy and Finance published a working paper entitled “Facilitating access to credit through an effective system of security guarantees”, which mentioned how judicial enforcement made loans more expensive (i.e. the interest rate applied) because of the delay in the enforcement of security rights in Peru. suggesting that the interest rate applicable to financing could be lowered if a creditor could recover its money in a much shorter period of time. C. The conventional maximum balancing and standstill rates set out in the present bulletin for transactions between persons outside the financial system shall apply to transactions agreed upon upon upon the entry into force of the present circular. For previously agreed transactions, the previously applicable maximum rates apply. The above-mentioned circular was amended by Circular No. 0018-2020-BCRP in response to the provisions of Emergency Decree No. 013-2020 (discussed below), which stipulates that the above-mentioned maximum conventional interest rates and maximum conventional moratorium rates do not apply to interest rates on transactions regulated and supervised by the Securities Market Controller. Article 1243 of the Civil Code (1984) stipulates that the maximum conventional compensatory rate or moratorium is set by the Central Bank of Peru. Law No.
26702, General Law on the Financial and Insurance System and Organic Law on the Supervision of Banks and Insurance (1996), stipulates that enterprises in the financial system are free to declare interest rates, commissions and expenses for their active and passive operations and services. However, the General Law of the Financial System stipulates that when setting interest rates, companies in the financial system must comply with the limits indicated by the Central Bank of Peru for this purpose, exceptionally in accordance with the provisions of the Organic Law of the Central Bank of Peru. The maximum conventional balancing rate shall be calculated in such a way that the actual costs of such transactions, including adjustment, correspond to the rate specified in section I.A.1.a. From the above, we have that there is a “mixed” system in Peru with regard to interest rates. On the one hand, we have that it is free (since the parties are free to agree on the amount of interest to be collected) and with ceilings (according to what is indicated in Circular No. 0018-2019-BCRP) for operations outside the financial system; and on the other hand, we have that it is free and unlimited for the financial system, without prejudice to the fact that the Central Bank of Peru may, exceptionally, set limits in accordance with the provisions of the Organic Law of the Central Bank of Peru. This last point makes perfect sense, given that, according to Peru`s political constitution, this autonomous body is responsible for monetary stability and one of its tasks is to regulate the currency and credit of the financial system. 2.
Some suggestions/alternatives to achieve a reduction in interest rates The next update of the maximum rates will take place on 1. November 2021 using the average of month-end observations of average financial system interest rates for consumer credit over the period April 2021 – September 2021. 1. How are interests regulated in Peru? The TIPMN is the weighted average interest rate of the interest rates paid by banking and financial companies on deposits in local currency, including demand deposits, and is expressed in effective annual values. Thus, in this circular for transactions between persons outside the financial system, the Central Bank of Peru indicated that the maximum conventional compensatory interest rate for transactions not subject to the debt adjustment regime corresponds to the average interest rate of the financial system on loans to microenterprises or the average interest rate of the financial system on consumer credit. the highest amount being high and expressed in actual annual values. With regard to the maximum default interest rate, the Central Bank of Peru noted that the maximum conventional default interest rate corresponds to 15 per cent of the maximum conventional settlement rate for local currency transactions and 20 per cent of the maximum conventional settlement rate for foreign currency transactions. and applies in addition to the usual compensatory interest rate or, where applicable, the legal interest rate. The maximum conventional balancing ratio applicable to transactions between persons outside the financial system shall be the same as that provided for in Section I.A.1.a for credit transactions in national currency in accordance with Article 221(3)(c) of Law No 26702, the General Law on the Financial System and the Insurance System and the Organic Law on Banking Supervision.
Insurance and AFP. At. The maximum conventional balancing and standstill interest rates set out in the present circular shall enter into force progressively in accordance with the following adjustment plan: The maximum conventional balancing rate shall be calculated semi-annually in May and November on the basis of information published by the Banking Authority on the average interest rates of the financial system for consumer credit in national currency. Insurance and AFP on the last working day of each month of the calculation period. In recent months, the question of whether to cap the interest rates charged by companies in the financial system on the loans they grant has been the subject of much debate. The discussion was accompanied by phrases such as “usury” and “abuse,” and even comments from members of Congress who stressed the need to regulate the interest rate on “profits made in the financial system” and “the difference between investment and deposit rates.” .