Financial Crime World

Honduras Regulators Struggle with Credit Card Rate Caps

Tegucigalpa, Honduras - A Major Impasse

The Honduran government has been struggling to implement regulations on credit card interest rates, a move aimed at protecting consumers from exorbitant debt charges. The impasse began when the country’s banking sector rejected an agreement reached between the Association of Banking Institutions and lawmakers working on the bill.

Failed Deal and Veto

According to reports by Elheraldo.hn, the failed deal involved reducing the maximum interest rate by 19%, but using a reference rate of 74% instead of the official 65% set by the Executive. President Hernandez subsequently vetoed the proposed compromise.

Key Points

  • The failed deal aimed to reduce the maximum interest rate by 19%
  • A reference rate of 74% was used instead of the official 65% set by the Executive
  • President Hernandez vetoed the proposed compromise

New Law and Regulation

Francisco Rivera, head of Congress’s special commission on the bill, stated that the new law will cap interest rates at 54% in local currency and 30% in dollars. This follows months of debate after lawmakers finally approved an amendment proposed by the government to regulate debt charges made by banks and financial institutions on credit card loans.

Key Features of the New Law

  • Capping interest rates at 54% in local currency
  • Capping interest rates at 30% in dollars
  • Regulating debt charges made by banks and financial institutions on credit card loans

Opposition from the Business Sector

The private sector has been a major hurdle for lawmakers, with the Honduran Council of Private Enterprise (COHEP) arguing that the usury bill contradicts existing laws governing financial activities. The private sector has presented several comments on the proposed law to the Presidential House and Congress.

Key Concerns

  • Contradiction with existing laws governing financial activities
  • Impact on financial stability in the country

Conclusion

The new regulation aims to bring an end to high debt charges faced by consumers in Honduras, a country where credit card usage is widespread despite limited access to other forms of credit. Lawmakers hope that the stricter regulations will provide greater protection for borrowers and promote financial stability in the country.