The entity is working on establishing the requirements for this loan that would be in effect from January 1 next.
The credits at 1% interest and a 30-year term offered by the President of the Republic, Guillermo Lasso, will be given as of January 1, through BanEcuador; They would plan to start with a ceiling of up to $ 5,000 per beneficiary.
This was revealed on Tuesday by the general manager of the public financial institution, Mauricio Salem, during a discussion with the media, in Guayaquil, where the current financial situation of the National Finance Corporation (CFN), entity with which BanEcuador must merge and for which there is still no specific date.
Salem explained that they are working on completing the internal and external approval phases, which will be ready in the coming weeks, to start with the credits on January 1 next.
“We have to put limitations to democratize much more and reach as many Ecuadorians as possible … Yes, we could be talking about a ceiling of up to $ 5,000 at the beginning, in an initial phase to serve all citizens of the base of the pyramid, ”said the manager, who added that as the process progresses and resources come from external sources, this base will increase.
Microcredits at 1% per year and a 30-year term are declared a national priority by decree
The general manager of BanEcuador, which will be renamed the Economic Development Bank (BFE), clarified that this first phase in the delivery of loans will be carried out with resources from the bank that it currently has $ 565 million of liquidity, of which $ 360 million are immediate liquidity.
Regarding the 1% rate that will be charged to the beneficiaries, Salem clarified that it is not the rate that covers operating costs, since for this segment the rate that the entity normally charges is 16%. However, he pointed out that the remaining 15% will be subsidized by the State, thus ensuring that the bank’s assets will not be at risk.
He added that the grant process does not come directly to the bank but rather through the investment project that is carried out through the ministries involved, such as the Ministry of Production, the Ministry of Agriculture and Livestock and finally the Ministry of Finance, from where the resources will come.
“We provide 16% credits to that microcredit segment (…) the bank is covered because we are placing the same rate that is currently charged, only that it is not paid by the beneficiary, but by the State,” explained Salem, who pointed out that the credits will be focused on those producers, entrepreneurs, artisans and exporters that are affected by the pandemic, on the one hand, for rural women and other priority segments.
“This is not what they are already thinking that they are going to buy shrimp farms for, no, this is for the base of the pyramid,” Salem warned, who assured that on January 1 they will begin to collect all credit applications according to the manual credit to be approved, which is in process. He added that the bank will also absorb the value of the credit life insurance.
In addition, he clarified that the 30-year term to pay the loan will depend more than on the amounts, due to the age of the beneficiary and their life expectancy. In this way, Salem explained that the beneficiaries may not exceed 75 years during the life of their loan.
“If someone over 60 wants to take out a loan for up to 30 years, they could have the option of taking it out for up to 15. because life expectancy, according to the INEC, is that women have an average life expectancy in Ecuador of up to 76 or 77 years and men between 72 and 73, so we have established a mix there ”, expressed the manager of BanEcuador.
Meanwhile, on the bank’s financial situation, the general balance sheet was presented, which reflects that as of December the entity has assets of $ 1,946 million, $ 5,437 million in liabilities; and a net worth of $ 391 million.
Meanwhile, on the situation of the CFN, Iván Andrade, president of the entity’s Board of Directors, indicated that the value of the equity that in December 2020 reflected $ 1,500 million at the end of 2021 will be at $ 1,133 million.
This has to do specifically with the provisions of the loan portfolio and the values of the written-off or non-performing portfolio that were generated in 2014, 2016, 2017 and 2019; and that to October of this year they are located in $ 419 million.
Eduardo Salgado: ‘I have been working in banking for some years and I have never seen what happens here (at CFN) with clients’
Andrade stated that a concentration in the non-performing portfolio of 85% is maintained, which represents $ 354 million. Despite this, in those years delinquencies between 5.09% and 9.26% were recorded.
It was highlighted that in 2014 $ 657 million in loans were granted, of which currently represents 24% of the total non-performing portfolio as of October 2021.
“Every dollar that we lend and we cannot recover affects the 17 million Ecuadorians … when credit is given it is not only to give credit but to recover and if one gives it, one can make mistakes. What you have to do is correct the errors in the road, but neither will the problems increase as time goes by, “said Andrade, who also has observations with the appraisals made in those years for the guarantees to give the loans and a worrying number of ongoing lawsuits.
He added: “When there is the will to reach a solution, a solution is sought, however when cases are already faced, it is not that they have no solution as such, it is that they have never had a reason for being the credits, because they do not they did the analyzes that should have been done, because the guarantees were not properly valued, because a control audit was not carried out through the credits ”.
Andrade was consulted by EL UNIVERSO newspaper about an alleged loan that a Chinese financial entity would have approved for the CFN.
The official clarified that the CFN did not receive this credit, however, he confirmed that there was a proposal “at a certain time.” “The Bank of Asia proposed to deliver that loan under certain conditions, this was the proposal as such, the intention; and finally, at the time, the CFN, as such, decided that the conditions were not appropriate nor that we were the arm to execute this type of resources and their destination as such, ”said the CFN’s Chairman of the Board.
He added: “We are also very careful, not only with the resources, but also how they are going to be used …”.
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