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provided for informational purposes only and in some cases, the information may be incomplete, not fully accurate or out of date.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.
Nicaragua
Country Indicators
Information Last Updated
August 2004
Population (Millions)
5.5 [2005]
Population Density (per sq km)
45 [2005]
GNI per capita (US$)
910 [2005]
GNI per capita (PPP US$)
3650 [2005]
Total Unemployment (% of labor force)
8 [2003]
Employment in Agriculture (% of total employment)
30 [2003]
Gross domestic saving (% of GDP)
1 [2004]
% Population under $2/day (PPP)
79.9 [2001]
Depth of Financial Sector (M2/GDP)
39 [2005]
Exchange rate
1 USD : 15.940 Nicaraguan Cordobas, as of August 30, 2004
Formal and Semi-Formal Sources of Microfinance
Commercial Banks (domestic and foreign), NBFIs, Cooperatives.
State-owned second tier bank called Financiera Nicaraguense de Inversiones.
NGO microfinance provider formalization or transformation issues
Non-Profit MFIs are in the process of being regulated. As of Jan. 29, 2004 the General Assembly of Nicaragua approved the Special Law for Microfinance Associations, but this law has not yet been ratified. Non-profit MFIs will then have available to them funds and special financing programs designated by the government for the promotion and reactivation of small enterprises.
An autonomous state institution that is responsible for authorizing, supervising, regulating and inspecting all institutions engaged in financial intermediation. (See Superintendency Law, Art. 2)
Accepting deposits from the public (See GL, Art. 2)
Non-banking institutions that provide brokerage and financial intermediation services with resources obtained from public deposit-taking. (See GL, Art. 126)
An autonomous state institution that is responsible for authorizing, supervising, regulating and inspecting all institutions engaged in financial intermediation. (See Superintendency Law, Art. 2)
Agricultural and Agroindustrial Cooperative Law, 1990;
Regulations of the General Cooperative Law, 1975
Engage in financial activities; receive savings deposits, provide loans and discounts to its members through low-interest payments. (See Co-op Law, Art. 9)
The General Directorate of Cooperatives The Department for the Promotion of the Cooperative Movement under the Ministry of Labor supervises cooperatives and the Ministry of Labor issues regulations with the advice from the Permanent Advisory Commission. (See Co-op Law Arts. 19-21)
Receiving deposits from and providing loans to its members. (See Co-op Law, Art. 9)
Law 147/92- General Law for Non-Profit Legal Entities
Not-for profit foundations or associations whose principal function is to extend small loans to both urban and rural natural and legal persons that engage in manufacturing, production, retail and service activities. Non-deposit-taking. (See Special Law, Art. 1)
When law is ratified, Regulatory Commission for Microfinance Entities under the Superintendency of Banks and other Financial Institutions will be responsible for overseeing MFI compliance with norms, statutes and regulations. It will also be responsible for creating and administrating the Registry for Microfinance Associations. (See Special Law, Arts. 23&24).
Providing small loans to the manufacturing, retail and service sectors. (See Special Law Art. 1)
No shareholder can own more than 20% of the bank’s social capital, except the State of Nicaragua and domestic or foreign legal persons that are legally authorized to engage in the business of finance or whose sole objective is to hold bank and NBFI shares. (See GL, Art. 3)
Registration takes up to 240 days and costs 1% of the minimum capital. (See GL, Art. 4, Sec. 3 & Art. 5)
Agricultural and Agroindustrial Cooperative Law, 1990;
Regulations of the General Cooperative Law, 1975
National Cooperative Registry within the Department for the Promotion of the Cooperative Movement. (See Co-op Law, Art. 25)
Limited liability and variable capital cooperative with more than 10 members. (See Co-op Law, Arts. 2(d)(e)&4)
No person can be a member if they have a for-profit motive and no person may belong simultaneously to more than one cooperative engaged in the same activity. No one member can own more than 10% of the coop’s social capital. (See Co-op Law, Arts. 29, 30 & 51)
Registry for Non-Profit Legal Entities under the Governing Ministry. (See Special Law, Arts. 2&3)
Not-for profit foundation or association (See Special Law, Art. 1)
Registration takes up to 45 days and MFIs must pay at least 60% of the minimum social equity capital to initiate activities. (See Special Law, Arts. 3(f)&4))
Licensing Requirements and Standards
Standards for ownership officers
Feasibility study/business plan
Audit of Proposed Founders, Owners, Officers
Banks
Banks
Members of the Board can be shareholders or non-shareholders, legal or natural persons. Natural persons and representatives of legal entities must be at least 25 years old with good reputation and professional competency. Cannot hold delinquent debts or be declared bankrupt; be the spouse or relative of another Board member; be the director, manager, officer or employee of the bank or any other bank; have been sanctioned in the previous 15 years for bankrupting a bank or prejudicing a bank by altering the financial status. (See General Law for Banks, Non-Bank Financial Institutions and Financial Groups (GL) 1999 , Art. 30)
Members of the Board can be shareholders or non-shareholders, legal or natural persons. Natural persons and representatives of legal entities must be at least 25 years old with good reputation and professional competency. Cannot hold delinquent debts or be declared bankrupt; be the spouse or relative of another Board member; be the director, manager, officer or employee of the bank or any other bank; have been sanctioned in the previous 15 years for bankrupting a bank or prejudicing a bank by altering the financial status. See GL, Arts. 128 & 30)
Non-profit institutions
Non-profit MFIs
Directors may be natural or legal persons. Natural persons and representatives of legal entities must be 25 years of age with good reputation and professional competency. Cannot be a director if declared insolvent or bankrupt or have been sanctioned in the past 15 years for prejudicing a financial institution as the director or principal executive; was the director, manager or officer within the last 10 years of an institution forced to liquidate; is the director, officer, manager or employee of the MFI or another MFI or of a commercial bank; and the spouse or relative of another Board member. (See Special Law for Microfinance Associations (Special Law), Art. 13)
Copy of audited financial statements showing the financial capability, solidity and solvency of the previous year. (See Special Law Art. 5(c))
Primary capital: The bank’s social capital plus the non-available reserves, accumulated profits, minus any contingent provisions and any prudential norm stipulated by the Superintendency.
Secondary capital: Subordinated debt with an expiration of more than five years, convertible to capital, plus any other internationally recognized debt instruments. (See GL, Art. 20)
Risk weighted assets include loans or credit securities including corporate bonds; financial investments, other assets and contingent liabilities. Does not include securities issued by the Nicaraguan government or the Central Bank. (See GL, Art. 21)
Losses shall be covered first by the special reserves, if any, then by capital reserves and finally, by the bank’s capital. (See GL, Art. 24)
Must set aside in a Capital Reserve fund at least 15% of net profits. Must also set aside any other reserves stipulated by the Superintendency. (See GL, Art. 22)
Primary capital: The bank’s social capital plus the non-available reserves, accumulated profits, minus any contingent provisions and any prudential norm stipulated by the Superintendency.
Secondary capital: Subordinated debt with an expiration of more than five years, convertible to capital, plus any other internationally recognized debt instruments. (See GL, Arts. 128&20)
Risk weighted assets include loans or credit securities including corporate bonds; financial investments, other assets and contingent liabilities. Does not include securities issued by the Nicaraguan government or the Central Bank. (See GL, Arts. 128 & 21)
Losses shall be covered first by the special reserves, if any, then by capital reserves and finally, by the NBFI’s capital. (See GL, Arts. 128 & 24)
Must set aside in a Capital Reserve fund at least 15% of its net profits. Must also set aside any other reserves stipulated by the Superintendency. (See GL, Arts. 128 & 22)
Cooperatives/Credit Unions
Cooperatives
Losses shall be covered by the reserve fund. (See Co-op Law, Arts. 52&53)
Because cooperatives are not-for-profit, any profits made shall go towards a reserve. At no time can the percentage applicable to the reserve fund be less than 10% of the net profits. (See Co-op Law, Art. 52)
A proposed amendment to the law would raise this to US $ 500,000. (Vega 2005)
Losses shall be covered first by special reserves, if any, then by the equity reserve and then by the MFI’s own social equity. (See Special Law, Art. 9)
Must set aside in an Equity Reserve fund at least 50% of its net profits. Once this fund is established, any other special reserves can be formed. (See Special Law, Art. 8)
Risk Management Guidelines
Guidelines & restrictions on financial services
Guidelines & restrictions on interest rates
Concentration of risk
Connected/insider business
Banks
Banks
Permitted: On-site, savings or term deposits; provide credits in domestic and foreign currency; accept letters of credit; provide leasing; issue credit and debit cards and traveler’s checks; provide guarantees; currency exchange; participate in the secondary mortgage industry; engage in the negotiation of derivatives, negotiable instruments and international business operations. (See target="_blank">General Law for Banks, Non-Bank Financial Institutions and Financial Groups (GL) 1999 , Arts. 40&47)
For a more complete listing of prohibited functions, not necessarily services, see GL, Art. 51.
Can liberally apply interest rates in contracts entered into with clients. (See GL, Art. 46)
Credits to related parties cannot exceed 15% of bank’s capital.
Related parties include: shareholders, either persons or entities, that own more than 5% of the bank’s paid in capital, Board of Director members, spouses and relatives. (See GL, Art. 50)
Can liberally apply interest rates in contracts entered into with clients. (See GL, Arts. 128 & 46)
Credits to related parties cannot exceed 15% of the NBFI’s capital.
Related parties include: shareholders, either persons or entities, that own more than 5% of the NBFI’s paid in capital; Board of Director members; spouses and relatives. (See GL, Arts. 128 & 50)
Cooperatives/Credit Unions
Cooperatives
Permitted: Receive savings deposits, provide loans and discounts to its members through low interest payments. (See General Cooperative Law 1971 (Co-op Law), Art. 9)
Prohibited: Cannot engage in the above services with non-members. (See Co-op Law, Art. 9)
Interest rates must be stated in the credit union’s bylaws. The institution must recognize limited interest on its capital.
Non-profit institutions
Non-profit MFIs
Permitted:
In both domestic and foreign currency: provide credits; accept and discount letters of exchange; provide guarantees that constitute payment obligations; engage in investment in conformity with its objectives; and administer funds from other non-profit MFIs or financial development entities whether foreign or national that engage in programs for cooperation. Can also provide loans and accept donations;can access state credit funds. (See Special Law for Microfinance Associations (Special Law), Art. 17)
Prohibited: Cannot accept deposits from the general public; the distribution of surpluses is prohibited (See Special Law, Art. 20)
The maximum interest is the average of the interest rates charged by the banking system, excluding those for credit card transactions and overdrafts. Proposed amendments to the 2004 Law would lift this ceiling. (Vega 2005)
Credits to one person or entity cannot exceed 2% of the MFI’s net equity. If the credit is meant for the purchase of productive fixed assets, the maximum amount shall be 3% of the MFI’s net equity. (See Special Law, Art. 18)
Cannot provide loans or guarantees directly or indirectly to its directors, officers, employees, their relatives and legal persons whose directors, officers or relatives hold direct or indirect ties with the MFI. (See Special Law, Art. 20(d))
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)
Must submit annual financial statements to the Superintendency and must have an annual shareholder meeting to discuss the audited financial statements and must publish these statements in a widely circulated newspaper. (See GL, Art. 25)
Deposit Protection system is funded by the banks and premia are collected regularly (ex ante). The deposit insurance limit per person is about US $18,946 (302,000 NC).
Non-bank Financial Institutions
Non-bank Financial Institution
On and off-site inspections (See Superintendency Law, Art. 3 (8) & (9) and GL, Arts. 128 & 80)
Must submit annual financial statements to the Superintendency and must have an annual shareholder meeting to discuss the audited financial statements and must publish these statements in a widely circulated newspaper. (See GL, Arts. 128 & 25)
Cooperatives/Credit Unions
Cooperatives
Conduct inspections and auditing whenever the Department for the Promotion of the Cooperative Movement, within the Ministry of Labor, deems necessary. (See Co-op Law, Art. 20(c))
Must submit annually the balance sheets and operating statements to the Department. (See Regulations of the Cooperative Law)
Non-profit institutions
Non-profit MFIs
Non-profit MFIs shall cover the costs of supervision. (See Special Law, Art. 26)
Must submit to the Regulatory Commission for MFIs, monthly and annual financial statements. General Assembly must hold a yearly ordinary meeting to discuss the audited statements. (See Special Law, Art. 10)
Other Relevant Business Legislation
Debt Enforcement and Collection
MFI-specific
MFI-specific
Law precludes giving up borrowers’ own homes if they are sued for nonpayment.
