Note: The data are provided for informational purposes only and in some cases, the information may be incomplete, not fully accurate or out of date. For more information on how data are compiled, see "A Note About Sources." The date of the last update for each country is marked in the section "Country Indicators." We welcome updates and comments. Click here to write to us.
Colombia
Country Indicators
Information Last Updated
August 2007
Information Compiled by
Nathalie Lozano Blanco, Consultant
Population (Millions)
45.6 [2005]
Population Density (per sq km)
44 [2005]
GNI per capita (US$)
2290 [2005]
GNI per capita (PPP US$)
7420 [2005]
Total Unemployment (% of labor force)
14 [2003]
Employment in Agriculture (% of total employment)
22 [2003]
Gross domestic saving (% of GDP)
19 [2005]
% Population under $2/day (PPP)
8 [2003]
Depth of Financial Sector (M2/GDP)
30 [2005]
Exchange rate
1 USD : 2,017 COP, as of August 12, 2008
Percentage of population with access to banking services
According to recent statistical data (July 2006), only 29% of the total population has access to at least one financial product provided by formal institutions (approx. 12 million people). Out of the 29%, 27% have savings accounts and 7% have credit cards (Bancarization - 2006). Those percentages fall dramatically when only the poor are considered. According to a recent analysis financed by USAID, approx. 10% of the poor are banked (Marulanda,2006).
Ownership structure of banks (and financial institutions if available)
The private banking sector -- which includes commercial and housing banks as well as other deposit-taking institutions -- has been traditionally larger than the non-banking sector. LOCALLY OWNED BANKS AND FINANCIAL INSTITUTIONS (BFIs) (representing approx. 76% of the private BFIs' assets): 12 banks (Bs), 2 Financial Corporations (FCs) and 18 Commercial Finance Companies (CFCs); FOREIGN PARTICIPATION: (representing approx. 24% of the private BFIs´ assets): 7 Bs, 1 FC, 5 CFCs. STATE PARTICIPATION: It has decreased in recent years. There are currently 2 State-owned Bs, 1 CFC, and 10 financial special purpose institutions (SPIs). As of December 2006, total assets of private BFIs are estimated at 143.066.916 million COP (USD 73,745 million), and those of the state-owned BFIs at 16.493.980 million COP (USD 8,502 million). (Bank/FI Ownership)
Formal and Semi-Formal Sources of Microfinance
1) Banks;
2) Some NBFIs [Companías de Financiamiento Comercial and Cajas de Compensación Familiar];
3) Cooperatives.
1) Friends or family
2) Money lenders
3) Commercial stores
4) Informal Savings Funds (Marulanda,2006, p55)
Wholesale Lender(s)
1) Findeter: state-owned financial Special Purpose Institution (SPI), provides wholesale funding, mainly for infrastructure projects, but also, since 2003, for microcredit housing projects (Findeter);
2) Bancoldex: state/private sector-owned special purpose institutions (SPIs), whose main purpose is to provide funding to other financial institutions, and/or to individuals to finance, among others, microcredit projects (Bancoldex);
3) Finagro: state-owned SPI. Financing fund for the agricultural sector (Finagro);
4) FNA [Fondo Nacional del Ahorro]: financial institution which provides housing and educational microcredit to public sector employees.
5) Fomipyme [Fondo Colombiano de Modernización y Desarrollo Tecnológico de las micro, pequeñas y medianas empresas]: State fund whose main purpose is to finance micro, small, and medium enterprise projects;
6) Fondo Emprender: government fund created to finance new microenterprise initiatives (Fondo Emprender).
For a more detailed -- but not always up to date -- list of entities providing financing for microcredit activities, see (Red de Desarrollo Tecnologico).
Definitions of microfinance or microcredit
Financing provided to microenterprises (i.e. with 10 or less employees and total assets of less than 501 minimum monthly wages; currently: US $67,635). If such financing is provided by any financial intermediary or any organization specialized in microcredit, and the maximum credit per customer is equal to or less than 25 minimum wages (US $3,375), then the law authorizes charging fees (deemed technical assistance cost) and commissions (deemed as cost of credit review and loan collection cost) that are not considered as interest. Interest on other loans outside this category is limited by the usury laws (Commercial Code, Art.884). Same ability to charge fees is applicable to Real Estate Microcredit, i.e. mortgage financing less than 25 minimum wages, with less than five year terms and a social housing soft interest rate. (See also Financial System Organic Statute (Decree 663 of 1993) and Financial Reform Law 795 of 2003)
NGO microfinance provider formalization or transformation issues
NGOs need to comply with corporate tax and regulatory burdens, especially the required minimum capital, the cost of compliance with non-prudential regulation, and the limitation on interest rates applicable to supervised institutions. This makes formalization financially unsustainable for most NGOs.
Ongoing microfinance policy development status
1) In 2006, the government launched a microfinance program called Banca de las Oportunidades. Although currently known as a program aimed at extending microcredit to low-income people, the program's core purpose is to raise the percentage of people with bank accounts in Colombia.
2) The new program's target has not changed vis-à-vis prior regulation (Law 590/2000). Therefore, to date, microfinancing's goal in Colombia is the financing of microenterprises, as defined by Law 590/2000.
3) Among the most interesting regulatory modifications: the authorization for all financial institutions to render financial services through non-banking agents (i.e. drugstores), and the inclusion of a specific (higher) interest rate cap for microcredit.
Safety net availability: insurance, pension, etc.
Private pensions have been available since 1991, along with the traditional public pension system. Apart from the pension fund system, there is a public health system, a social security system, and a private insurance system.
Social security benefits include: old age, disability and survivors pensions; sickness and maternity cash and medical benefits; workers and dependents' medical benefits; work injury insurance (covering permanent and temporary disability); unemployment benefit (equal to 1 monthly wage for each year of employment); and family allowances. For more detailed information, see: (Social Security Programs Throughout the World: The Americas, 2005) and (Ministerio de la Proteccion Social: Republica de Colombia)
Recommended Reading
1) Beatriz Marulanda and Mariana Paredes: "Diagnótico: acceso a servicios financieros en Colombia y políticas para promoverlo a través de instituciones formales. USAID-The Services Group." February, 2006.
2) Beatriz Marulanda and María Otero: "The profile of microfinance in Latin America in 10 years: vision and characteristics". ACCION International. April, 2005.
3) FELABAN: "Qué sabemos sobre bancarización en América Latina? Un inventario de fuentes de datos y literatura". March, 2007.
4) Asociación Bancaria de Colombia: "Reporte de bancarización a julio de 2006." July, 2006.
5) Castañeda, A. and R. Cubillos: "La situación de la microempresa en Colombia – Programas de apoyo y acceso al crédito". Working Paper financed by the Corona Foundation and the Ford Foundation.
6) Castañeda, A. and M. Fadul: "Colombia Globalización y crisis económica – Incidencia de la financiación de unidades de pequeña escala". Universidad de los Andes, 1988.
General Participation in the Financial Services Market
142,349,710 million COP (USD73,376 million): 90,586,635 million COP Loan Portfolio (USD 46,694 million), and 69,415 million COP Microcredit Loan (USD 35 million). (as of March 2007) (Establecimientos de Crédito).
49,057,276.90 million COP (USD 25,287 million)
Broad array of financial products, covering individuals and companies. CREDIT SERVICES: traditional target: wealthier clients, loans granted upon the existence of collaterals. Recently, commercial banks have extended their services to cover financial needs of the unbanked by creating specialized microcredit sections, or by rendering basic financial services (such as payment services) through non-banking agents (such as drugstores)
15,787,576 million COP (USD 8,137 million): 13,251,600 million COP Loan Portfolio (USD 6,830 million), 2,235 million COP Microcredit Loan (USD 1.1 million) (as of March, 2007) (Establecimientos de Crédito).
N/A (for public "sight deposits")
The main purpose of CFCs is the mobilization of time-deposits to provide financial intermediation towards consumer financing. They also serve a broad range of consumers. Some of the CFCs have a more focused target market (i.e. Finamerica is a major CFC specialized in rendering microfinance services to poor people)
They cannot receive sight deposits from the public
715,587 million COP (USD 368 million): 618,693 million COP Loan Portfolio, of which 89 million COP (USD 318 million) Microcredit Loan (as of March 2007) (Establecimientos de Crédito).
Traditional credit unions, lending only to members
Cooperatives with Financial Activity
272 (9 full service cooperatives, 102 multipurpose cooperatives and 161 specialized savings and credit cooperatives) (as of December 2006) (SUPERINTENDENCIA DE LA ECONOMIA SOLIDARIA)
Employees of employers affiliated with the SFCF and their families. At least 80% of total loan portfolio must correspond to loans to individuals earning less than 3 monthly minimum wages (USD 600)
They cannot receive deposits from the public. They can only render services to their affiliates' employees and their families.
General Approach to Regulating
Legal basis for regulating
Definition or description of institution
Regulator(s) and role of regulator(s)
Activity that determines required regulatory status
Banks
Commercial Banks
Financial System Organic Statute (Decree 663 of 1993), as amended by the Financial Reform (Law 795/2003) (FSOS); Circular Letter 100 of 1995 (CE 100/95); Basic Legal Circular Letter 007 of 1996 (CE 007/96); Circular Letter 021 of 2003 (CE 021/2003); Circular Letter 022 of 2007 (CE 022/2007)
Financial institution whose main goal is to take deposits, mainly with a view toward providing credit (FSOS, art. 2, sect. 2).
Finance Superintendency (FS), responsible for supervising and controlling the intermediated financial market. The FS has authority over banks, other financial institutions, some finance cooperatives, and trust and insurance corporations and pension funds. Until 2005, there were two separate entities (Banking Superintendency and the Superintendency of Securities). Since 2005, the Government has decided to unify them under the Finance Superintendency (Decree 4327 of 2005).
A financial activity, i.e. deposit-taking for credit granting
Non-bank Financial Institutions
Commercial Finance Companies, Leasing Companies
FSOS, CE 100/95 and CE 007/96, Decree 913/93 and Decree 1799/94.
The main activity of a CFC is to borrow money (mainly by accepting term deposits) in order to extend credit in order to finance the sale of goods and services. All lease companies are included under this category. (FOS, art.2, sect.5)
FCoops take sight or term deposits from members or third parties, in order to invest them again through loans, discounts, or other forms of credit. As cooperatives, they are established to promote the common interests of their members, ruled by generally accepted cooperative principles. (FSOS, art.2, sect. 6, FSOS, art. 27, and Law 454/98, art.40).
As they are considered banking institutions of cooperative nature, they are supervised by the FS (FSOS, art.2, nrl. 6)
Rendering of financial services in a cooperative form for members and non-members (Law 454/98,art.39)
Cooperatives with Financial Activity
Law 79/88; Law 454/98; Decree 2159 of 1999; Basic Legal Circular Letter 007/2003, Basic Financial Circular Letter 0013/2003, and commercial banks' regulation, as applicable.
ACTIVITIES: Cooperatives with financial activity take sight or term deposits from members in order to invest them again through loans, discounts, or other forms of credit. The difference between full-service, multipurpose and specialized cooperatives refers to the array of services they provide.
1) Full-service cooperatives with a savings and credit section render two or more complementary activities.
2) Multipurpose cooperatives have as their corporate purpose the rendering of activities to fulfill a broad range of necessities of its members.
3) Specialized cooperatives have as their main purpose the rendering of a single type of activity (financial, cultural, or any other activity)
(Law 79/88, arts. 61,62,63,64 and 65).
1) Superintendency of Mutualistic and Cooperative Societies [Superintendencia de Economía Solidaria] (SMCS), responsible for supervising and controlling the cooperatives, except for the finance cooperatives, which are subject to the control of the Finance Superintendency (Law 454/1998 Art. 33, Decree 2159/1999, Law 795/03). (Supersolidaria)
2) Mutualistic and Cooperatives Sector National Administrative Bureau [Dansocial], responsible for coordinating the regulatory framework of the mutualistic and cooperative sector (Decree 1789/2003). (DanSocial Republica de Colombia)
Rendering of financial services by a cooperative to members only, with authorization of the Superintendency. If the assets of an integral or multiactivity cooperative with a savings-and-credit component exceed a certain amount, it must convert into a finance cooperative (Law 454/98, art.44).
Non-profit institutions
NGOs
Civil Code, arts. 633 to 652; Law 22/87; Decree 1318/88; Decree 2344/88; Decree 1529/90; Decree 2150/95.
Private non-profit institutions
1) Territorial Divisions of Colombia [Departamentos] are in charge of the authorization and supervision.
2) Chambers of Commerce are in charge of the registration. Law 22/87 and Decree 1318/88).
Non-profit activities
Specialized savings and credit sections of Family Compensation Funds
Law 21/1982 of 1982, CE 100/95, CE 007/96, Law 789 of 2002, Law 920 of 2004, Decree 2801 of 2005, Decree 4709 of 2005, CE 021/2006; Decree 343 of 2007, as well as financial institutions' regulation, as applicable.
Private non-profit entities whose function is to redistribute part of workers' income to low-income workers. According to Law No. 21 of 1982, “the family subsidy is a social benefit payable in cash, kind, and services to medium and low-income workers in proportion to the number of dependents, and its fundamental objective is to alleviate the economic burden of supporting the family, which is the basic nucleus of society.” Since 2004, SFCFs are authorized to render financial services through specialized savings-and-credit sections, which are subject to the Finance Superintendency's supervision (Law 21/82, arts. 39, 40, and 41; and Law 789 of 2002, art.16).
1) For its general, non-financial activities, the Family Subsidy Superintendency [Superintendencia de Subsidio Familiar] (FSS) (Superintendencia Del Subsidio Familiar) (Law 789 of 2002, art.24);
2) The supervision and control over the specialized savings and credit section is carried out by the Finance Superintendency (Law 920/2004, art.1);
3) Concerning unfair competition acts and consumer protection, they are subject to the supervision and control of the Superintendency of Industry and Commerce (SIC) (Law 789 of 2002, art.21, sect.19, par.5)
Providing savings-and-loan financial services to its members. (Law 920/2004, art. 1)
Organizational Registration
Laws and regulations governing registration
Agency administering registration
Required legal form of organization
Restrictions on ownership
Costs of registration [money and time]
Banks
Commercial Banks
1) Code of Commerce, arts. 111 to 121 (incorporation)
2) FSOS, art.53 (licensing).
Stock Corporation (FSOS, art. 53; Code of Commerce, art. 98)
1) Banks cannot own their own shares, except to prevent losses from previously contracted debt, and these must be divested within 6 months. (FSOS, art. 10(b);
2) Banks cannot own more than 10% of the sum of the paid-up capital plus reserves of another bank. (FSOS. art. 10 a);
3) Any person or company that wishes to own, directly or indirectly, 10% or more of the capital of a bank, must have assets equal to at least 1.3 times the capital that it will control in the new institution. In addition, it must prove that at least 1/3 of the capital comes from its own resources, and not from debt or other similar sources (FSOS, art. 53);
4) Any transaction among local or foreign investors for the acquisition of 10% or more of the shares of a bank must be previously approved by the FS. (Law 795/2003, arts.19 and 20, FSOS, art.88. 1, CE 007/96, Title. I, Ch. II, sect. 3.2. 3., and Title I, Ch. VIII, sect. 6.3.1)
The process of incorporation and licensing may take at least 8 months
Non-bank Financial Institutions
Commercial Finance Companies, Leasing Companies
1) Code of Commerce, arts. 111 to 121 (incorporation)
2) FSOS, art.53 (licensing).
Non-profit, limited-liability cooperative associations with unlimited and variable number of members and equity. (FSOS, art. 2, sect. 6, Law 79/1988 arts.4, 5, 9 and 13)
Individuals cannot hold more than 10% of the capital and legal persons cannot hold more than 49% of the capital. (Law 79/88, art.50)
The process of incorporation and licensing may take at least 8 months
Full-service cooperatives with a savings and credit section, Multipurpose cooperatives with a savings and credit section, and Specialized savings and credit cooperatives
1) Civil Code, arts. 633 to 652, Decree 2150 of 1995, and Decree 1529/90 (incorporation);
2) Law 79/88, Law 454/98 and CE 007/2003 (licensing)
1) Chamber of Commerce (incorporation)
2) Superintendency of Mutualistic and Cooperative Societies (SMCS) (licensing)
3) Mutualistic and Cooperatives Sector National Administrative Bureau (DANSOCIAL) (certification of cooperativism studies)
Non-profit, limited liability cooperative associations with unlimited and variable number of members and equity. (Law 79/1988 arts.4, 5, 9 and 13)
Individuals cannot hold more than 10% of the capital and legal persons cannot hold more than 49% of the capital. (Law 79/88, art.50)
The process of incorporation and licensing may take around 5 months.
Non-profit institutions
NGOs
1) Civil Code, arts. 633 to 652, Decree 2150 of 1995, and Decree 1529/90 (incorporation).
Chamber of Commerce (incorporation)
Territorial Divisions [Departamentos] (registration)
Non-profit associations.
The process of incorporation and registration may take around 3 weeks
Specialized savings and credit sections of Family Compensation Funds
1) Civil Code, arts. 633 to652, Decree 2150 of 1995, and Decree 1529/90 (incorporation);
2) Law 21/82, Law 920/2004 and Decree 341/1988 (licensing)
1) Chamber of Commerce (incorporation)
2) Family Subsidy Superintendency (FSS) (authorization to act as a Family Compensation Fund)
3) Finance Superintendency (FS) (authorization to open a specialized savings and credit section)
1) FCFs are non-profit associations. 2) The specialized savings and credit sections have a different legal status. They are regulated as trust funds (Law 920/2004, art.1)
Licensing Requirements and Standards
Standards for ownership officers
Feasibility study/business plan
Audit of Proposed Founders, Owners, Officers
Operating Manuals
Prohibited sources of funds
Banks
Commercial Banks
Accredited good character, responsibility and economic solvency. No criminal conviction for economic crimes such as money laundering or illicit enrichment, or being responsible for mismanagement in other institutions. Concerning economic solvency, any person or company willing to own, directly or indirectly, 10% or more of the capital of a bank, must prove that it has assets equal to at least 1.3 times the capital that it will control in the new institution. In addition, it must prove that at least 1/3 of the capital comes from its own resources, and not from debt or other similar sources (FSOS, art. 53, sect.5, and art. 71, sect.2)
Feasibility study including technical and managerial infrastructure, internal control mechanism, intended risk management. (FSOS, art. 53(3d))
1) To confirm the petitioners’ solvency, the Superintendency will review each of the petitioners’ companies, businesses, assets and debts. (FSOS, art. 53).
2) The Superintendency may conduct any investigation or take any auditing measures it may consider convenient in order to confirm the information and qualities of shareholders and managers (FSOS, art.71, sect.2).
3) Concerning foreign investors, the Superintendency may require a copy of the license granted by the foreign country to such investor to carry on financial activities, and the certificate showing that the new financial company will be subject to a consolidated supervision by the foreign financial authorities, in accordance with international banking law principles (FSOS, art.53, sect. 3 f)).
Non-bank Financial Institutions
Commercial Finance Companies, Leasing Companies
Accredited good character, responsibility and economic solvency. No criminal conviction for economic crimes such as money laundering or illicit enrichment, or being responsible for mismanagement in other institutions. Concerning economic solvency, any person or company willing to own, directly or indirectly, 10% or more of the capital of a bank, must prove that it has assets equal to at least 1.3 times the capital that it will control in the new institution. In addition, it must prove that at least 1/3 of the capital comes from its own resources, and not from debt or other similar sources (FSOS, art. 53, sect.5, and art. 71, sect.2)
Feasibility study including technical and managerial infrastructure, internal control mechanism, intended risk management. (FSOS, art. 53(3d))
1) To confirm the petitioners’ solvency, the Superintendency will review each of the petitioners’ companies, businesses, assets and debts. (FSOS, art. 53).
2) The Superintendency may conduct any investigation or take any auditing measures it may consider convenient in order to confirm the information and qualities of shareholders and managers (FSOS, art.71, sect.2).
3) Concerning foreign investors, the Superintendency may require a copy of the license granted by the foreign country to such investors to carry on financial activities, and the certification showing that the new financial company will be subject to a consolidated supervision by the foreign financial authorities, in accordance with international banking law principles (FSOS, art.53, sect. 3 f))."
They cannot receive sight deposits
Cooperatives/Credit Unions
Finance Cooperatives
Accredited good character, responsibility and economic solvency. No criminal conviction for economic crimes such as money laundering or illicit enrichment, or being responsible for mismanagement in other institutions. Concerning economic solvency, any person or company willing to own, directly or indirectly, 10% or more of the capital of a bank, must prove that it has assets equal to at least 1.3 times the capital that it will control in the new institution. In addition, it must prove that at least 1/3 of the capital comes from its own resources, and not from debt or other similar sources (FSOS, art. 53, sect.5, and art. 71, sect.2)
Feasibility study including technical and managerial infrastructure, internal control mechanism, intended risk management. (FSOS, art. 53(3d))
1) To confirm the petitioners’ solvency, the Superintendency will review each of the petitioners’ companies, businesses, assets and debts. (FSOS, art. 53).
2) The Superintendency may conduct any investigation or take any auditing measures it may consider convenient in order to confirm the information and qualities of shareholders and managers (FSOS, art.71, sect.2).
3) Concerning foreign investors, the Superintendency may require a copy of the license granted by the foreign country to such investors to carry on financial activities, and the certification showing that the new financial company will be subject to a consolidated supervision by the foreign financial authorities, in accordance with international banking law principles (FSOS, art.53, sect. 3 f))."
Full-service cooperatives with a savings and credit section, Multipurpose cooperatives with a savings and credit section, and Specialized savings and credit cooperatives
Members and managers must demonstrate: a) Good character, responsibility and economic solvency. No criminal conviction for economic crimes such as money laundering or illicit enrichment, or being responsible for mismanagement in other institutions; b) That they have taken at least a 20 hour formal course on cooperativism; and c) That they have good academic knowledge and expertise with respect to accounting and finance matters. (CE 007/2003, Title II, Ch.3, sect.3, and Ch.8)
Feasibility study showing the financial and operational viability of the cooperative for a 5 year term, as well as the reasons that justify its creation (improvement of socioeconomic condition of its members) (CE 007/2003, Title II, Ch.3, sect. 3.2)
Managers must file before the Superintendency documents which prove they do not have any criminal conviction and that no disciplinary fines have been imposed upon them. The Superintendency may conduct any investigation or take any auditing measures it may consider convenient in order to confirm the information and qualities of members and managers (CE 007/2003, Title II, Ch.3, sect.3, and Ch.8).
They cannot receive deposits from non-members
Non-profit institutions
NGOs
Deposits from the public
Specialized savings and credit sections of Family Compensation Funds
The FS shall verify that the CEO and management staff have good character, responsibility, and economic solvency. In evaluating, the FS shall use the same standards and mechanisms as for banking financial institutions. (Law 21/82, art.50, and Decree 4709/2005)
Feasibility study showing the financial and operational viability of the SFCF for a 5 year term, as well as the reasons that justify its creation (FSOS, art. 53, CE 007, Title 1, Ch. 1, sect .5)
1) To review the petitioners’ solvency, the Superintendency will review each of the petitioners’ companies, businesses, assets and debts. (FSOS, art. 53).
2) The Superintendency may conduct any investigation or take any auditing measures it may consider convenient in order to confirm the information and qualities of shareholders and managers (FSOS, art.71, sect.2).
3) Concerning foreign investors, the Superintendency may require a copy of the license granted by the foreign country to such investor to carry on financial activities, and the certificate showing that the new financial company will be subject to consolidated supervision by the foreign financial authorities, in accordance with international banking law principles (FSOS, art.53, sect. 3 f)).
Monetary contributions from non-members and deposits from the public
Capital and Reserves
Minimum capital
Minimum capital adequacy/gearing ratios
Forms of capital recognized
Risk-weighting of assets
Loan loss provisioning, write-off
Reserves, Liquidity requirements
Banks
Commercial Banks
59,369,000,000 COP (USD 30,602,577) (as of May 2007) (FSOS art. 71, art 80,sect.1, Law 795/2003, art.16) (Montos Minimos de Capital)
Solvency ratio cannot be less than 9%. (Decree 1720/2001, art.2)
MINIMUM CAPITAL (TIER I) is the sum of registered and paid capital, guarantee capital, reserves, non-distributed profits, revaluated equity, and convertible bonds. (See Decree 663 of 1993, Art. 80(4) and Decree 1720 of 2001 Arts. 5 and 6). ADDITIONAL CAPITAL (TIER II), which may not exceed the total minimum capital, includes, among others, revaluation reserves, general provisions, and subordinated term debt (FSOS, art.80(4), Decree 1720 of 2001, Art. 7)
0% for maximum security assets such as on-site deposits and investment in government securities; 20% for high security assets such as securities issued by government entities, term deposits in other credit institutions, credit operations related to the sale of interbanking funds; 50% for assets with high security but low liquidity, such as credits to finance the acquisition of housing with the actual housing as guarantee; 100% for the remaining risk assets (includes credit portfolio) (Decree 1720 of 2001, Art. 9, Decree 2540 of 2001; Decree 4648 of 2006 and Decree 343 of 2007, CE 100/95, Ch.13, sect. 1). For a detailed chart see (Superintendencia Financiera de Colombia).
LOAN LOSS PROVISIONING POLICIES adhere to international standards: 5 loan categories, provisioned 0-100%. GENERAL PROVISION: 1% of total gross Loan portfolio. (Circular Letter 035/2006, sect.1.3.4 and 2). It has recently been argued that loan loss provisioning needs to be raised.
LEGAL RESERVE: must increase to at least 50% of subscribed capital; must contribute 10% of net profits from each accounting period. (FSOS, art.85).
Solvency ratio cannot be less than 9%. (Decree 1720/2001, art.2)
MINIMUM CAPITAL (TIER I) is the sum of registered and paid capital, guaranteed capital, reserves, non-distributed profits, revaluated equity, and convertible bonds. (See Decree 663 of 1993, Art. 80(4) and Decree 1720 of 2001 Arts. 5 and 6). ADDITIONAL CAPITAL (TIER II), which may not exceed the total minimum capital, includes, among others, revaluation reserves, general provisions and subordinated term debt (FSOS, art.80(4), Decree 1720 of 2001, Art. 7)
0% for maximum security assets such as on-site deposits and investment in government securities; 20% for high security assets such as securities issued by government entities, term deposits in other credit institutions, credit operations related to the sale of interbanking funds; 50% for assets with high security but low liquidity, such as credits to finance the acquisition of housing with the actual housing as guarantee; 100% for the remaining risk assets (includes credit portfolio) (Decree 1720 of 2001, Art. 9, Decree 2540 of 2001; Decree 4648 of 2006 and Decree 343 of 2007, CE 100/95, Ch.13, sect. 1. (For a detailed chart see (Superintendencia Financiera de Colombia).)
LOAN LOSS PROVISIONING POLICIES adhere to international standards: 5 loan categories, provisioned 0-100%. GENERAL PROVISION: 1% of total gross Loan portfolio. (Circular Letter 035/2006, sect.1.3.4 and 2).It has recently been argued that loan loss provisioning needs to be raised.
LEGAL RESERVE: must increase to at least 50% of subscribed capital, constituted with 10% of net profits from each accounting period. (FSOS, art.85).
Cooperatives/Credit Unions
Finance Cooperatives
1,500 million COP (US $587,291.02 ) (Law 454/98, art.42).
Solvency ratio cannot be less than 9%. (Decree 1720/2001, art.2)
MINIMUM CAPITAL (TIER I) is the sum of registered and paid capital, guaranteed capital, reserves, non-distributed profits, revaluated equity, and convertible bonds. (See Decree 663 of 1993, Art. 80(4) and Decree 1720 of 2001 Arts. 5 and 6). ADDITIONAL CAPITAL (TIER II), which may not exceed the total minimum capital, includes, among others, revaluation reserves, general provisions, and subordinated term debt (FSOS, art.80(4), Decree 1720 of 2001, Art. 7)
0% for maximum security assets such as on-site deposits and investment in government securities; 20% for high security assets such as securities issued by government entities, term deposits in other credit institutions, credit operations related to the sale of interbanking funds; 50% for assets with high security but low liquidity, such as credits to finance the acquisition of housing with the actual housing as guarantee; 100% for the remaining risk assets (includes credit portfolio) (Decree 1720 of 2001, Art. 9, Decree 2540 of 2001; Decree 4648 of 2006 and Decree 343 of 2007, CE 100/95, Ch.13, sect. 1.) For a detailed chart see Decree Chart.
LOAN LOSS PROVISIONING POLICIES adhere to international standards: 5 loan categories, provisioned 0-100%. GENERAL PROVISION: 1% of total gross Loan portfolio. (Circular Letter 035/2006, sect.1.3.4 and 2). It has recently been argued that loan loss provisioning needs to be raised.
LEGAL RESERVE: must increase to at least 50% of subscribed capital, constituted with 10% of net profits from each accounting period. (FSOS, art.85).
Full-service cooperatives with a savings and credit section, Multipurpose cooperatives with a savings and credit section, and Specialized savings and credit cooperatives
MINIMUM CAPITAL: 500 million COP (approx. US $250,000) (Law 454/98, art. 42), but the Superintendency may authorize a lower capital (Law 510/99)
1)Solvency ratio for cooperatives with a capital of less than 934 million COP (USD 490,000): 30%.
2) Solvency ratio for cooperatives having a capital between 934 million COP (USD 490,000) and 3,700 million COP (USD 1,970,000): 20%.
3) Solvency ratio for cooperatives having a capital between 3,700 million COP (USD 1,970,000) and 9,000 million COP (USD 5,000,000): 12%.
4) Solvency ratio for cooperatives having a capital of 9,000 million COP or more (USD 5,000,000): 9%. (CE 013/2003, Chapter 2.2)
MINIMUM CAPITAL (TIER I) is the sum of registered and paid capital, guaranteed capital, reserves, non-distributed profits, revaluated equity, and convertible bonds. ADDITIONAL CAPITAL (TIER II), which may not exceed the total minimum capital, includes, among others, revaluation reserves, general provisions and subordinated term debt (CE 013/2003)
0% for maximum security assets such as on-site deposits and investment in government securities; 20% for high security assets such as securities issued by government entities, term deposits in other credit institutions, credit operations related to the sale of interbanking funds; 50% for assets with high security but low liquidity, such as credits to finance the acquisition of housing with the actual housing as guarantee; 100% for the remaining risk assets (includes credit portfolio) (CE 0013/2003, Ch.2, sect. 9 and 10, Ch. 3, sect.3)
GENERAL PROVISION: 1%. MICROCREDIT LOANS: 0-30 days (0%); 31-60 (1%); 61-90 (20%); 91-120 (50%); >120 (100%) (Resolution 1507/2001)
LEGAL RESERVE: At the end of the accounting period, must set aside at least 20% of net profit for a capital reserve, 20% for an education fund, and 10% for a solidarity fund. (Law 79/88, art. 54) LIQUIDITY FUND: equal to 10% (Law 795/2003, art.101)
Non-profit institutions
NGOs
N/A
Paid capital
Specialized savings and credit sections of Family Compensation Funds
Same as Finance Cooperatives: 1,500 million COP (US $587,290). However, if their financial situation does not permit them to comply with such minimum capital, they can constitute a specialized section with 50% of the minimum capital required to constitute a finance cooperative. (Decree 2801 of 2005, art. 2, and CE 021/2006)
Solvency ratio cannot be less than 9%. (Decree 2801/2005, arts. 5, 6, 7 and 8)
Tier I and Tier II capital, under the same rules applicable to financial institutions (Decree 2801/2005)
0% for maximum security assets such as on-site deposits and investment in government securities; 20% for high security assets such as securities issued by government entities, term deposits in other credit institutions, credit operations related to the sale of interbanking funds; 50% for assets with high security but low liquidity, such as credits to finance the acquisition of housing with the actual housing as guarantee; 100% for the remaining risk assets (includes credit portfolio) Decree 343/2007)
LOAN LOSS PROVISIONING POLICIES adhere to international standards: 5 loan categories, provisioned 0-100%. GENERAL PROVISION: 1% of total gross Loan portfolio. (External Circular Letter 035 of 2006, sect.1.3.4 and 2).
LIQUIDITY FUND: Reserve equal to 10% of total deposits. (Law 920/2004, art.58)
Risk Management Guidelines
Guidelines & restrictions on financial services
Guidelines & restrictions on operational rules
Guidelines & restrictions on interest rates
Concentration of risk
Connected/insider business
Banks
Commercial Banks
PERMITTED: public deposit-taking (fixed, term, and time deposits); loans; money transfers; discount and negotiable promissory notes, letters of exchange and any other debt instrument, buying and selling letters of exchange and currency, issuing and receiving letters of credit, granting of guarantees; housing mortgage loans; housing lease operations; issuance of debt; investment in special purpose institutions and in treasury bills (FSOS, arts. 7 and 9). PROHIBITED: Own its own shares; grant loans to individuals or companies in order to purchase the bank's (or any other financial institution's) shares; receive letters of exchange for 90-day term as a guarantee for loans; limit the amounts of receivable deposits; grant collateral over its own assets; purchase or own products, goods or shares; operate as a fiduciary (FSOS, art. 10 and 118)
1) Banks must obtain prior authorization from the FS to: open and close branches and agencies; launch advertising campaigns; merge with other institutions; designate CEOs and managers. (FSOS, art,326, CE 007/96, Title I, Ch. IV, sect. 1.1);
2) Must comply with regulation concerning anti money-laundering measures (information requirements for operations exceeding 10 million COP (5,000 USD)), code of conduct for managers and employees, specific internal auditing procedures) (CE 007/96, Ch.10; FSOS, arts.102 to 107, CE 022/2006).
DEPOSIT INTEREST RATES: interest rates on savings, term and ordinary deposits shall be liberally fixed (FSOS, art. 128). CREDIT INTEREST RATES: Interest rate caps exist. Usury interest rates are defined by the Criminal Code as those which exceed by 50% the ordinary interest rate, as certified by the FS. Until December 2006, the FS only certified one type of ordinary interest rate. Since then, it is certifying on a trimestrial basis two distinct ordinary interest rates: microcredit and consumer credit (microcredit defined as established in Law 590/2000). CURRENT ORDINARY CONSUMER INTEREST RATE: 19.01%. CURRENT USURY RATE: 28.51%. CURRENT ORDINARY MICROCREDIT INTEREST RATE: 22.62%. CURRENT MICROCREDIT USURY RATE: 33.93% (Resolution 1086/2007). CHARGES AND COMMISSIONS FOR MICROCREDIT LOANS: Law 590/2000 has authorized financial institutions to charge commisions of up to 7.5% for microcredit loans. Such commission is not considered to be part of the interest rate. (Code of Commerce, art.884, Law 590/2000, Decree 018/2007, Decree 519/2007, Resolution 428/2007 issued by the FS). (see (Superintendencia Financiera de Colombia))
1) Credit to an individual person cannot exceed 10% of the entity’s capital if the only guarantee of the transaction is the debtor’s equity. (FSOS, art. 122, and Decree 2360 of 1993, art. 2);
2) Investment in World Bank bonds cannot exceed 10% of the entity's capital and reserves (FSOS, art. 8, section 5);
3) Investment in bonds issued by any government or company -- except for Colombian government bonds -- cannot exceed 10% of the bank's capital and reserves (FSOS, art.9, sect. 1a).
1) Board of Directors must vote unanimously to approve transactions with: shareholders owning more than 5% of the capital; managers; and their spouses and relatives. Terms and conditions cannot be different from those offered to the public, except for transactions entered into by the managers relating to their health, education, housing, and transportation (FSOS, art.122, Law 795/2003, art.36). 2) Bank cannot own its own shares (FSOS, art.10b)).
Non-bank Financial Institutions
Commercial Finance Companies, Leasing Companies
PERMITTED: Accept term deposits (minimum one month term); negotiate securities issued by third parties; provide loans; provide financing through letters of exchange; engage in leasing operations; provide guarantees; purchase and sell exchange currencies; obtain loans from other financial institutions in order to render microfinance services (FSOS, art.24, Law 510/99, Decree 710/2003, CE 007/96, Tit. II, Ch.1, sect. 4.2, 5.1). PROHIBITED: Accept sight deposits.
CFCs must obtain prior authorization from the FS to: open and close branches and agencies; launch advertising campaigns; designate CEOs and managers (FSOS, art,326, CE 007/96, Title I, Ch. IV, sect. 1.1, CE 022/2006)
DEPOSIT INTEREST RATES: interest rates on savings, term and ordinary deposits shall be liberally fixed (FSOS, art. 128). CREDIT INTEREST RATES: Interest rate caps exist. Usury interest rates are defined by the Criminal Code as those which exceed by 50% the ordinary interest rate, as certified by the FS. Until December 2006, the FS only certified one type of ordinary interest rate. Since then, it is certifying on a trimestrial basis two distinct ordinary interest rates: microcredit and consumer credit (microcredit defined as established in Law 590/2000). CURRENT ORDINARY CONSUMER INTEREST RATE: 19.01%. CURRENT USURY RATE: 28.51%. CURRENT ORDINARY MICROCREDIT INTEREST RATE: 22.62%. CURRENT MICROCREDIT USURY RATE: 33.93% (Resolution 1086/2007). CHARGES AND COMMISSIONS FOR MICROCREDIT LOANS: Law 590/2000 has authorized financial institutions to charge commisions of up to 7.5% for microcredit loans. Such commission is not considered to be part of the interest rate. (Code of Commerce, art.884, Law 590/2000, Decree 018/2007, Decree 519/2007, Resolution 428/2007 issued by the FS). (see (Superintendencia Financiera de Colombia))
1) Credit to an individual person cannot exceed 10% of the entity’s capital if the only guarantee of the transaction is the debtor’s equity. (FSOS, art. 122, and Decree 2360 of 1993, art. 2);
2) Investment in World Bank bonds cannot exceed 10% of the entity's capital and reserves (FSOS, art. 8, section 5);
3) Investment in bonds issued by any government or company -- except for Colombian government bonds -- cannot exceed 10% of the bank's capital and reserves (FSOS, art.9, sect. 1a).
1) Board of Directors must vote unanimously to approve transactions with: shareholders owning more than 5% of the capital; managers; and their spouses and relatives. Terms and conditions cannot be different from those offered to the public, except for transactions entered into by the managers relating to their health, education, housing, and transportation (FSOS, art.122, Law 795/2003, art.36). 2) Bank cannot own its own shares (FSOS, art.10b)).
Cooperatives/Credit Unions
Finance Cooperatives
PERMITTED: Accept term and sight deposits from members and non-members; collect resources through contractual savings; negotiate securities issued by third parties; provide loans and credit; provide financing through letters of exchange; provide guarantees; provide technical assistance and training services; provide housing microcredit loans (FSOS, art. 27 and Law 454/1998, art. 47, Law 795/2003, art.95). PROHIBITED: Cannot be a fiduciary (FSOS, art. 118).
1) Must obtain prior authorization from the FS to: open and close branches and agencies; launch advertising campaigns; establish business hours; merge with other institutions; designate CEOs and managers. (FSOS, art,326, CE 007/96, Title I, Ch. IV, sect. 1.1);
2) Must comply with regulation concerning anti money-laundering measures (information requirements for operations exceeding 10 million COP (5,000 USD)), code of conduct for managers and employees, specific internal auditing procedures) (Basic Legal Circular Letter, Ch.10, FSOS, arts.102 to 107).
DEPOSIT INTEREST RATES: interest rates on savings, term and ordinary deposits shall be liberally fixed (FSOS, art. 128). CREDIT INTEREST RATES: Interest rate caps exist. Usury interest rates are defined by the Criminal Code as those which exceed by 50% the ordinary interest rate, as certified by the FS. Until December 2006, the FS only certified one type of ordinary interest rate. Since then, it is certifying on a trimestrial basis two distinct ordinary interest rates: microcredit and consumer credit (microcredit defined as established in Law 590/2000). CURRENT ORDINARY CONSUMER INTEREST RATE: 19.01%. CURRENT USURY RATE: 28.51%. CURRENT ORDINARY MICROCREDIT INTEREST RATE: 22.62%. CURRENT MICROCREDIT USURY RATE: 33.93% (Resolution 1086/2007). CHARGES AND COMMISSIONS FOR MICROCREDIT LOANS: Law 590/2000 has authorized financial institutions to charge commisions of up to 7.5% for microcredit loans. Such commission is not considered to be part of the interest rate. (Code of Commerce, art.884, Law 590/2000, Decree 018/2007, Decree 519/2007, Resolution 428/2007 issued by the FS)
Credit limit to an individual person cannot exceed 10% of the entity’s capital if the only guarantee of the transaction is the debtor’s equity. (FSOS, art. 122)
1) Board of Directors must vote unanimously to approve transactions with: shareholders owning more than 5% of the capital; managers; and their spouses and relatives. Terms and conditions cannot be different from those offered to the public, except transactions entered into by the managers relating to their health, education, housing, and transportation (FSOS, art.122, Law 795/2003, art.36). 2) Credit operations with CEOs, managers, Board of Directors or their relatives must be previously approved by 4/5 of the Management Council (Law 454/98, art.61)
Full-service cooperatives with a savings and credit section, Multipurpose cooperatives with a savings and credit section, and Specialized savings and credit cooperatives
PERMITTED: Accepting term and sight deposits from members to grant loans and other financial services to members, as well as for discounts and other credit operations; provide technical assistance and training. (Law 454/98, arts. 39 and 48). PROHIBITED: Rendering of financial services to non-members (Law 454/98, arts. 39 and 41); full-service cooperatives cannot provide housing microcredit loans (Law 795/2003, art.95).
1) Must obtain prior authorization from the SMCS to: open and close branches and agencies; launch advertising campaigns; establish business hours; merge with other institutions; designate CEOs and managers; and modify by-laws. (CE 007/96, Ch.9). 2) Must comply with regulation concerning anti money-laundering measures (information requirements for operations exceeding 10,000,000 million COP (5,000 USD)), code of conduct for managers and employees, specific internal auditing procedures) (CE 007/96, CE 021/2006, Ch.10, FSOS, arts.102 to 107).
DEPOSIT INTEREST RATES: interest rates on savings, term and ordinary deposits shall be liberally fixed (FSOS, art. 128). CREDIT INTEREST RATES: Interest rate caps exist. Usury interest rates are defined by the Criminal Code as those which exceed by 50% the ordinary interest rate, as certified by the FS. Until December 2006, the FS only certified one type of ordinary interest rate. Since then, it is certifying on a trimestrial basis two distinct ordinary interest rates: microcredit and consumer credit (microcredit defined as established in Law 590/2000). CURRENT ORDINARY CONSUMER INTEREST RATE: 19.01%. CURRENT USURY RATE: 28.51%. CURRENT ORDINARY MICROCREDIT INTEREST RATE: 22.62%. CURRENT MICROCREDIT USURY RATE: 33.93% (Resolution 1086/2007). CHARGES AND COMMISSIONS FOR MICROCREDIT LOANS: Law 590/2000 has authorized financial institutions to charge commisions of up to 7.5% for microcredit loans. Such commission is not considered to be part of the interest rate. (Code of Commerce, art.884, Law 590/2000, Decree 018/2007, Decree 519/2007, Resolution 428/2007 issued by the FS). (see (Superintendencia Financiera de Colombia))
Investments are restricted to other similar entities, with an upper limit equivalent to its reserves and contributions. Investment in non-cooperative institutions permitted only if convenient for its corporate purpose, and only up to 10% of capital and reserves. Total investment must be less than 100% of capital and reserves combined. Credit limit on unsecured loans per member is 10% of shares and institutional capital. Credit limit on secured loans per member is 20% of shares and institutional capital. (Law 454/98, art.50).
Credit operations with CEOs, managers, Board of Directors or their relatives must be previously approved by 4/5 of the Management Council (Law 454/98, art.61)
Non-profit institutions
NGOs
PERMITTED: Any non-profit purpose activity. Concerning financial services, NGOs can grant loans, provide technical assistance, and engage in social assistance activities. PROHIBITED: collecting savings.
CREDIT INTEREST RATES: Interest rate caps exist. Usury interest rates are defined by the Criminal Code as those which exceed by 50% the ordinary interest rate, as certified by the FS. Until December 2006, the FS only certified one type of ordinary interest rate. Since then, it is certifying on a trimestrial basis two distinct ordinary interest rates: microcredit and consumer credit (microcredit defined as established in Law 590/2000). CURRENT ORDINARY CONSUMER INTEREST RATE: 19.01%. CURRENT USURY RATE: 28.51%. CURRENT ORDINARY MICROCREDIT INTEREST RATE: 22.62%. CURRENT MICROCREDIT USURY RATE: 33.93% (Resolution 1086/2007). CHARGES AND COMMISSIONS FOR MICROCREDIT LOANS: Law 590/2000 has authorized financial institutions to charge commisions of up to 7.5% for microcredit loans. Such commission is not considered to be part of the interest rate. (Code of Commerce, art.884, Law 590/2000, Decree 018/2007, Decree 519/2007, Resolution 428/2007 issued by the FS). (see (Superintendencia Financiera de Colombia))
Specialized savings and credit sections of Family Compensation Funds
PERMITTED: Deposit-taking from members (fixed, term, and time deposits); loans and subsidized microcredit loans (SFCF can grant credits up to 70% of their total loan portfolio for microcredit housing loans and 30% for consumer credits); discounting and negotiating promissory notes, letters of exchange, and any other debt instrument. PROHIBITED: Capital investments; requiring members to make savings deposits. (Law 789 of 2002, Law 920/2004, Decree 2340/2003).
1) Must obtain prior authorization from the FS to: open and close branches and agencies; launch advertising campaigns; merge with other institutions; designate CEOs and managers. (FSOS, art. 326, CE 007/96, Title I, Ch. IV, sect. 1.1);
2) Must comply with regulation concerning anti money-laundering measures (information requirements for operations exceeding 10 million COP (5,000 USD)), code of conduct for managers and employees, specific internal auditing procedures) (CE 007/96, Ch.10, FSOS, arts.102 to 107).
DEPOSIT INTEREST RATES: interest rates on savings, term and ordinary deposits shall be liberally fixed (FSOS, art. 128). CREDIT INTEREST RATES: Interest rate caps exist. Usury interest rates are defined by the Criminal Code as those which exceed by 50% the ordinary interest rate, as certified by the FS. Until December 2006, the FS only certified one type of ordinary interest rate. Since then, it is certifying on a trimestrial basis two distinct ordinary interest rates: microcredit and consumer credit (microcredit defined as established in Law 590/2000). CURRENT ORDINARY CONSUMER INTEREST RATE: 19.01%. CURRENT USURY RATE: 28.51%. CURRENT ORDINARY MICROCREDIT INTEREST RATE: 22.62%. CURRENT MICROCREDIT USURY RATE: 33.93% (Resolution 1086/2007). CHARGES AND COMMISSIONS FOR MICROCREDIT LOANS: Law 590/2000 has authorized financial institutions to charge commisions of up to 7.5% for microcredit loans. Such commission is not considered to be part of the interest rate. (Code of Commerce, art.884, Law 590/2000, Decree 018/2007, Decree 519/2007, Resolution 428/2007 issued by the FS). (see (Superintendencia Financiera de Colombia))
Credit limit to an individual person cannot exceed 10% of the entity’s capital if the only guarantee of the transaction is the debtor’s equity. (FSOS, art. 122)
Cannot carry out transactions within the same SFCF, its CEOs or managers, or with SFCF employees earning more than 3 monthly wages (USD600) (Law 920/2004)
Reporting and Supervision
Supervision Method
Supervision costs and fees
Disclosure and reporting requirements
Depositor protection mechanisms (e.g., deposit insurance or lender of last resort)
Banks
Commercial Banks
The Superintendency can carry out on- or off-site inspections at any time to supervise the activities of the financial institutions, and to collect all relevant information concerning their financial and operational situation. (FSOS, arts. 325, 326, nrls. 1 to 6, 8 and 9, Law 795/03, Law 964/05, Decree 3552/05)
Banks must file daily, weekly, monthly, quarterly, semi-annual, and annual reports. Annual audited financial statements must be published. For a complete list of all reports, see (Catalogo de Formatos Vigentes).
(FSOS, ART. 97, sect. 2 and 3, CE 007/96, Title II, Ch.1, Ch. 4, sect. 4.3 and 4.4., CE 022/2007)
Deposits are insured up to 20 million COP (USD 10,300) per depositor by the National Guarantees Fund [Fondo Nacional de Garantías] (FNG). Banks must pay a one-time affiliation sum equal to 0.0115% of the minimum required capital, as certified by the FS, and an annual insurance premium of 0.3% of deposits. (FSOS, art. 323, Law 510/99, art. 34, and Resolution 5/2000) (FOGAFIN)
Non-bank Financial Institutions
Commercial Finance Companies, Leasing Companies
The Superintendency can carry out on- or off-site inspections at any time to supervise the activities of the financial institutions, and to collect all relevant information concerning their financial and operational situation. (FSOS, arts. 325, 326, nrls. 1 to 6, 8 and 9, Law 795/03, Law 964/05, Decree 3552/05)
CFC must file daily, weekly, monthly, quarterly, semi-annual, and annual reports. Annual audited financial statements must be published. For a complete list of all reports, see (Catalogo de Formatos Vigentes).
(FSOS, ART. 97, sect. 2 and 3, CE 007/96, Title II, Ch.1, Ch. 4, sect. 4.3 and 4.4., External Circular Letter 022/2007)
Term deposits are insured up to 20 million COP (USD 10,300) per depositor by the National Guarantees Fund (FNG). CFC must pay a one-time affiliation sum equal to 0.0115% of the minimum required capital, as certified by the FS, and an annual insurance premium of 0.3% of deposits. (FSOS, art. 323, Law 510/99, art. 34, and Resolution 5/2000) (FOGAFIN)
Cooperatives/Credit Unions
Finance Cooperatives
The FS can carry out on- or off-site inspections at any time to supervise the activities of the financial institutions, and to collect all relevant information concerning their financial and operational situation. (FSOS, arts. 325, 326, nrls. 1 to 6, 8 and 9, Law 795/03, Law 964/05, Decree 3552/05)
FCoop must file daily, weekly, monthly, quarterly, semi-annual, and annual reports. Annual audited financial statements must be published. For a complete list of all reports, see (Catalogo de Formatos Vigentes).
(FSOS, ART. 97, sect. 2 and 3, CE 007/96, Title II, Ch.1, Ch. 4, sect. 4.3 and 4.4., External Circular Letter 022/2007)
Deposits are insured up to 75% for deposits up to 5 million COP (USD 2,500) or for a fixed sum of almost 4 million COP (USD 2,000) for deposits of more than 5 million COP per depositor, by the Guarantees Fund for Cooperatives (GFC). Cooperatives must pay an affiliation sum equal to 0.2% of their total assets and an insurance premium of 0.5% of the deposits. (Law 454/98, Decree 2206/98, arts. 11,12 and 16, Resolution 03 of 2004 issued by the GFC (FOGACOOP)(Preguntas Mas Frecuentes)
Full-service cooperatives with a savings and credit section, Multipurpose cooperatives with a savings and credit section, and Specialized savings and credit cooperatives
The SMCS can carry out on- or off-site inspections at any time. (Law 454/98, arts. 34)
Cooperatives with assets of 100 million COP (USD 52,000) or more must pay an annual fee which will be set forth by the SMCS, up to 2% of their total assets (Law 454/98, art.38)
Must file before the SMCS monthly, quarterly, semi-annual, and annual reports. (Supersolidaria)
Deposits are insured up to 75% for deposits up to 5 million COP (USD 2,500) or for a fixed sum of almost 4 million COP (USD 2,000) for deposits of more than 5 million COP per depositor, by the Guarantees Fund for Cooperatives (GFC). Cooperatives must pay an affiliation sum equal to 0.2% of their total assets and an insurance premium of 0.5% of the deposits. (Law 454/98, Decree 2206/98, arts. 11,12 and 16, Resolution 03 of 2004 issued by the GFC (FOGACOOP)(Preguntas Mas Frecuentes)
Non-profit institutions
NGOs
The FS can carry out on-site inspections at any time to determine whether the NGO is rendering financial services without proper authorization. (Law 795/2003, art.82)
Must file annual accounting reports.
Specialized savings and credit sections of Family Compensation Funds
GENERAL SOCIAL SECURITY ACTIVITIES: The FSS is responsible for ensuring that social security services are rendered by the FCF in accordance with applicable laws, as well as to supervise all financial and management practices of FCF. The FSS can carry out on- and off-site inspections, and may take all preventive and remedial actions to protect workers affiliated with the FCF. (Law 789 of 2002, art. 24, External Circular Letter No.007 of 2004, issued by the FSS). FINANCIAL ACTIVITIES PERFORMED BY SFCF: Subject to FS supervision, under the same rules applicable to financial institutions (see above). (Law 920/04, art.1)
In connection with their SFCFs, Family Compensation Funds must file daily, weekly, monthly, quarterly, semi-annual, and annual reports. For a complete list of all reports, see (Catalogo de Formatos Vigentes).
(FSOS, ART. 97, sect. 2 and 3, CE 007/96, Title II, Ch.1, Ch. 4, sect. 4.3 and 4.4., External Circular Letter 022/2003)
DEPOSITOR INSURANCE: The Government may authorize the Guarantees Fund for Cooperatives (GFC) to grant depositor insurance to SFCFs. However, to date this mechanism is not operating. (Law 920/2004, art. 1). GUARANTEE OVER LOANS GRANTED TO MICROENTERPRISES: SFCFs may enter into agreements with the National Guarantees Fund (FNG) to act as guarantor of the loans disbursed by SFCF to microenterprises. (Decree 2340/2003, art.6).
Tax Treatment
Taxes on Income
Taxes on Transactions
Taxes on Payroll
General Applicability
General Applicability
38.5% taxable income (Tax Statute, Decree 624/1989 as amended)
Financial transactions tax: 0.4% on each withdrawal from bank account
9% on gross salaries
Other Relevant Business Legislation
Credit Rating and Reporting Requirements, Services
Competition/Consumer protection rules: standard disclosure formats
General Applicability
General Applicability
Both individuals and firms are listed in credit registry. Positive and negative data is distributed, and the registry collects credit information from financial institutions as well as retailers and utility providers.
Institutions rendering financial services have several restrictions as to the publicity content. Advertising campaigns must be previously approved.
