The Government of President Pedro Castillo ordered the extension, until March 31, 2022, of the term of acceptance of the subprograms of patrimonial strengthening of the Program of Patrimonial Strengthening of the institutions specialized in microfinance and term of validity of the Emergency Decree No. 037-2021. Before, the foster care period expired on October 31.
In this way, the Emergency Decree No. 101-2021, which comes to expand the scope of the previous one, seeks to mitigate the deterioration of the loan portfolios of the aforementioned companies as a result of the context of the pandemic.
“Allow the strengthening of assets of specialized microfinance institutions, as well as facilitate their corporate reorganization, in order to protect the public’s savings, preserve macroeconomic stability and maintain the continuity of the chain of payments in the economy,” says the document.
This will facilitate that the heritage of the Municipal Savings Banks is repowering through the temporary participation of the State in the capital stock, in the form of preferred shares.
The standard reaches private institutions specialized in microfinance recognized by the Superintendency of Banking and Insurance (SBS), through the temporary purchase by the State of instruments representing subordinated debt.
Finally, it is established that the Urgency Decree No. 037-2021 will be in force until May 31, 2022. The document bears the signature of President Pedro Castillo; the head of the Presidency of the Council of Ministers (PCM), Mirtha Vásquez; and the Minister of Economy and Finance, Pedro Francke.
Strengthening Microfinance Companies
It should be noted that the Patrimonial Strengthening Program of Institutions Specialized in Microfinance It is made up of three subprograms:
- Strengthening of municipal savings and credit funds, through the temporary participation of the State in their capital. Municipal banks are microfinance institutions owned by municipal governments.
- Strengthening of private microfinance institutions (rural and microfinance banks), through the temporary purchase of instruments representing subordinated debt, in exchange for an established return, as an investment in these financial assets traditionally operates.
- Corporate reorganization of microfinance institutions, aimed at facilitating the consolidation of the companies that participate in the program, if necessary.
Support for strengthening the assets of microfinance institutions ensures that these entities continue to support micro and small companies (mypes), continue to grant them credit and, furthermore, advance their work of financial inclusion in the most remote areas of our country.
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