Peru encourages the entry of new participants in the local financial system
Peru Banking & Finance Alert
The recent amendment to the law governing the financial system in Peru includes key measures that promote the participation of new entities in the sector. In this way, it promotes the diversification of the supply of local financial services, particularly those that provide alternatives to the traditional model, such as digital banking.
On March 20, 2022, to promote greater competition within the financial system and in use of the powers delegated in December 2021, the Peruvian Ministry of Economy and Finance (MEF) amended, through Legislative Decree No. 1531, the General Law of the Financial System and the Insurance System and the Organic Law of the Superintendence of Banking and Insurance, approving measures that will enable the entry of new entities and allow the expansion of an alternative offer to traditional financial services in Peru.
The main amendments include: (i) the reduction of the capital requirements for companies that transport money; (ii) the simplification of the licensing and supervision process for companies that do not collect deposits from the public; (iii) the facilitation of the existence of 100% digital entities or offices; and, (iv) the adaptation of capital requirements, in line with international best practices in banking regulation and supervision (Basel III).
Among the above-mentioned provisions, one of the main changes is the existence of 100% digital financial entities. Thus, the MEF has indicated that this measure is in line with its permanent policies and plans for greater financial inclusion. For these entities, it will no longer be necessary to have a main office or premises to display the authorization resolution, which must be published in such a way that it is permanently accessible to the public.
In this way, supervised financial entities are expected to be able to continue competing in a market of increasing development of digital finance, which allows cost reduction and greater alternatives for the benefit of consumers.
This Legislative Decree No. 1531 is in line with the legal framework designed for the regulatory sandbox established in the Regulation for the Temporary Conduct of Activities in Novel Models, which came into force last February 2022.