While the coffers of the banks are filled with notes due to growth in deposits and liquidity in the economy, the country's productive sector can not find adequate financing to boost growth.
The increasing liquidity in the financial sector can be explained by excessive regulation required of banks, which sees the need to raise interest rates, among other measures, in order to be able to provide credit while keeping their financial structures healthy.
Both bankers and private sector representatives around the country who are not able to find attractive options for their productive activities, consider that the state should review the regulation that certain entities require.
An article in Elfinancierocr.com notes: "Roque Rivera, president of the Honduran Association of Banking Institutions said that "in Honduras seven taxes apply to the financial sector and a legal reserve of over 20% is required on deposits. If you add up all the money paid in taxes, most banks are giving the state a total of 52% of their profits before tax. Also, a bank’s shareholders are required to pay a 10% tax on dividends which they didn’t have to pay previously. These factors are affecting competition in banking and in many sectors, especially the productive ones, they resent it. "
Source: elfinancierocr.com
More on this topic
June 2009
According to Banks, the change in the calculation of the reserve will increase the costs of the financial intermediaries and will reduce the supply of credit.
The Central Bank of Costa Rica modified the methodology used to calculate reserves, implicating that, beginning next July 1st, Banks must have deposited in the Central Bank, at the end of each day, deposits of no less than 97.5% of the minimum legal reserves for the previous month. At the moment this calculation is done based on deposits from 5 days beforehand and it is at 90%.
May 2012
A new monetary policy prepared by the Central Bank of Honduras affects the competitiveness of the financial sector and credit availability.
Honduran banks reduced by $1,500 million the amount available for loans to the productive sector and may raise interest rates in light of provisions by the Central Bank of Honduras.
November 2008
In an unprecedented move since the dollarization of the country's economy, the BCR will inject ready money into the local financial sector.
The IDB approved an operation for the Central Reserve Bank to buy a credit portfolio totalling $500 million from banks giving them more liquidity to support the production sector.
March 2010
Banks have been very cautious when granting loans; as a result, their liquidity is 24.4% above the legal requirement.
Abansa, the country’s banking association, reported that in January the index measuring liquidity stood at 41.42%, more than in January 2009 (36.51%).
Economists and business leaders criticize banks for not lending these resources to the productive sectors of the country.
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