Bolivian banks must allocate 6% of their profits to social function

RIO DE JANEIRO, BRAZIL – Through a supreme decree, the Bolivian Government ordered that banks must allocate 6% of their profits to the social function, resources that will mainly go to reinforce housing, production, and seed capital funds.

Economy Minister Marcelo Montenegro pointed out that this 6% will be destined mainly to already existing guarantee funds, according to the decree approved by the Cabinet of Ministers.

These transfers of resources “will have to be made within a maximum period of 30 days” and will be of a “definitive and irrevocable nature”, said Montenegro at a press conference in La Paz.

The minister said that the measure is provided for in the 2013 Financial Services Law, which establishes that when financial entities have profits, “they must contribute a certain percentage fixed in a supreme decree”. He mentioned that the purpose is “to eliminate poverty, eliminate economic exclusion and eliminate social exclusion.

Montenegro said this transfer of resources to the social function was not applied last year with the 2020 income for the banking entities to carry out the “capitalization of 100% of the profits” after a year marked by the worst pandemic stage.

In 2020, due to the quarantine dictated by the first cases of covid-19, governmental deferral and credit rescheduling measures were also established. Last year, Bolivian banks recorded “225 million dollars of net profits”, which represents an increase of 60% compared to 2020, when profits were around US$140 million, said the minister.

Montenegro highlighted that the gross credit portfolio and public deposits have increased by 4.1% and 6.9%, respectively. He also detailed that the guarantee fund for social housing credits reached US$378 million while the one destined to the productive sector has a fund of US$261 million in addition to 30.8 million for the seed capital fund.

The decree also establishes better conditions for access to housing credits, such as the delivery of “risk coverage” of up to 20% of the credit for a property “when the borrower does not have his own contribution”.

With information from EFE