Costa Rica: The involvement of special agents in the development banking system (SBD)

The Development Banking System (SBD) was created in 2008 by Law N ° 8634, reformed in 2014 by Law N ° 9274. As its name suggests, it is a system that brings together organizations of different natures, the aim of which is to finance and promote technically and economically feasible productive projects, in accordance with the country’s development model in relation to the social mobility of beneficiaries of the system, which are defined in Article 6 of the Law on the Development Banking System. As stated in Legal Notice 19 of January 26, 2017, of the Procuraduría General de la República, the system includes different organizations that interact to achieve the objectives and principles of the development bank. “It is therefore not a single body responsible for promoting the development of priority sectors through banking or financial services. The System is therefore not an entity. The law does not create it as a legal entity and there is no provision to conceptualize it as a legal entity. It is not a bank either. These organizations are coordinated and directed by a Board of Directors, with the support of the Technical Secretariat, constituted as an instrumental branch.

System integration, described in article 2 of the Law, includes financial, public and private entities, non-financial service entities, state and non-state organizations. While the integration of some entities is mandatory, e.g. public financial intermediaries, the participation of other entities such as private financial intermediaries, private entities accredited by the Board of Governors or private organizations that provide non-financial services , is optional. Because of this conception of development and the purpose of financing and promoting productive projects, the financing and support of the companies of the beneficiaries of the System are just as important. This non-financial support is why the System is also made up of entities that provide non-financial services.

As for the involvement of private financial intermediaries, article 59 of the organic law of the national banking system instructs private banks to allocate a percentage of short-term deposits for the purpose of granting loans to subjects who qualify as beneficiaries. of the DPE. Private banks must comply with one of the following options:

  1. i) Bank toll, in which banks must permanently maintain a loan balance in the Development Credit Fund equal to 17% of their term deposits of 30 days or less. These resources are received by public banks and channeled directly or through a second-tier loan model to associations, cooperatives or other entities.
  2. ii) This alternative requires private banks to have at least four branches or branches outside the central region dedicated to the provision of basic banking services, and to maintain a permanent balance equal to at least 10% of their term deposits of 30 days or less in the form of loans. directed to programs previously approved by the SMD Board of Directors for these purposes. These resources can be placed directly or through a second-tier loan model.

In the event that the private intermediary chooses option ii), he must be authorized by the Board of Governors and register to become a member of the System. Once integrated into the system, it must comply with Board directives and approved programs for these purposes. These resources can be channeled through a first or second level operating model. The use of alternative models to channel these resources to the beneficiaries of the system is necessary in order to be able to allocate them efficiently. Therefore, the involvement of special agents is permitted; these organizations may or may not be regulated by the General Superintendence of Financial Entities (SUGEF). These special agents work with the accredited bank under a pre-approved program, either as a first-level placement agent in a second-level loan model, or as a corresponding agent.

In the first-tier operating model, there are two possibilities: whether the organization itself concentrates all the stages of the loan process, or whether it calls on a third party, or corresponding agent, to develop one or more of the loan process. these steps (except credit approval, which must be completed by the accredited bank). In accordance with the Operating Regulations on First and Second Level Lending Activities of Banks Participating in the Development Banking System, the Correspondent Agent is a link or contact between the accredited bank and the beneficiaries of the system. In this case, the bank’s credit exposure is with the final beneficiary.

In contrast, in the second-tier operating model, the financial operator uses an placement agent to place the loans. The operating regulations define the placement agent as an organization, which must be accredited in the system which, in a second-level loan model, performs first-level operations with functional autonomy from the responsible accredited bank of the program, with the exception of the identification and selection of beneficiaries, who must meet the conditions set out in article 6 of the law. In this case, the bank’s credit exposure is with that organization, which in turn, has the exposure with the final beneficiary.

The involvement of these special agents is very important because it facilitates the achievement of investment and resource allocation objectives for accredited banks. Their specialization, knowledge and experience are fundamental factors that make it easier for these agents to allocate resources or to act as a link or contact between beneficiaries and authorized banks. In addition, their intervention implies greater efficiency in channeling resources to the final beneficiaries, which ultimately implies greater efficiency of the system as such.

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