Published and draft legislation - Colombia

Guidelines for microcredits and MIPYME commission

Proposed Decree to regulate the provision of microcredits

The Colombian government’s Trade, Industry & Tourism Ministry seeks to introduce new requirements that microcredit operators must meet if they wish to charge their clients a Mipyme fee. The regulation includes:

  • A definition of fees and commissions applicable to the microloan
  • Characteristics of Microfinance Institutions (MFIs)
  • Creation of a central MFI registry
  • Procedure for applying for MFI filing
  • Cancelling registered MFI status
  • Rights and obligations of registered MFIs

Pursuant to the law, the MIPYME fee remunerates the monitoring, training and financial education activities carried out by MFIs. These activities are the primary input for any risk and feasibility study of microcredit, given that,  they are focused on the ones excluded from traditional financial information systems (risk assessment centres).

To be eligible for the payment, the amount of borrowing that customers may have on the market should not be more than 120 times the monthly minimum wage, MMW (SMMLV: Salarios Mínimos Mensuales Legales Vigentes) in Colombia (approximately COP 82,734,480 = USD 27,579). No single transaction can be for more than 25 times the monthly minimum wage (approximately COP 17,236,350 = USD 5,746); and their tariff may not be more than 7.5% p.a. of the credit balance due for loans under 4 minimum wages, or 4.5% a year for those which reach or exceed the 4 MMW.

The regulation seeks to neutralise the practice of some MFIs which charge the special fee and the MIPYME commission on the microloan without going through the procedures of guidance and advice required by law of the lender for this type of credit transaction. This measure will prevent an irresponsible provision of microcredits on the market.