Financial Inclusion and Exclusion Risks in Dominican Republic Pose Challenges to State Policies
Financial inclusion policies are increasingly crucial for achieving sustainable development goals worldwide. However, barriers prevent hundreds of thousands of citizens from benefiting from economic growth, posing a significant challenge to the state.
The Role of Superintendencia de Bancos (SB) in Promoting Financial Inclusion
In the Dominican Republic, the SB has taken steps to promote financial inclusion by forming an innovation and financial inclusion team. This team assists in promoting products that support financial inclusion while respecting financial integrity. They work closely with other teams at SB on innovation, regulation, and anti-money laundering and combating financing of terrorism (AML-CFT) to enable financial inclusion.
Recent Developments: Circular 029-20
The recent Circular 029-20 ratifies the promotion of financial inclusion by outlining guidelines on basic deposit products. These products aim to bring unbanked citizens into the formal financial system. The circular lists special requirements for opening an account, simplified due diligence, and limitations that allow for risk mitigation.
Key Features of Basic Accounts
Basic accounts are optional for financial intermediation entities, such as commercial banks, which facilitate the flow of funds from savers to borrowers. These accounts offer the same level of security and quality as traditional deposit instruments. Service charges will be minimal, and accounts may be opened in person or through non-face-to-face channels.
Types of Basic Accounts
The Dominican financial system offers two types of basic accounts:
- Basic Savings Accounts: Aimed at people accessing banking services for the first time
- Basic Payroll Accounts: Target workers excluded from the banking system due to legal or credit issues
Features and Limitations
Basic accounts use a risk-based approach with limits on transactions, balance, and aggregate amounts, in line with AML-CFT recommendations. These accounts are only offered to nationals and foreign individuals without savings or credit products in the financial system.
- Basic payroll accounts are exclusively used for salary payments and do not limit the number of transactions per month.
- A worker’s criminal record may not be an obstacle to opening this type of account.
Transactions Allowed
Transactions allowed through basic savings accounts and basic payroll accounts include:
- Deposits and withdrawals at financial entity offices or ATMs
- Payment of credit cards and loans
- Access to digital channels to view past transactions, make domestic transfers, and conduct payments for services
Progress and Future Plans
In the first 11 months since the circular was launched, 345 basic accounts were opened in 28 provinces. Six financial intermediation entities have made these basic accounts available.
The SB appeals to users to approach entities offering basic accounts with full certainty that they will find a product that opens doors to improve their household economies and create a better country.