Peruvian Congress debates on caps on interest rates to promote access to financing.

The Congress of the Republic of Peru seeks to modify the Law that protects financial consumers from usury, approved in 2020 and in effect since 2021, which establishes limits on interest rates for consumer loans and for micro and small businesses granted in the formal system. Currently, three legislative proposals are being considered to eliminate or temporarily suspend these limits, with the aim of providing greater access to financing to individuals and businesses under favorable conditions and thus preventing them from turning to the informal market. These proposals have been assigned to the Committees on Economy, Banking, Finance and Financial Intelligence, and Consumer Defense and Regulators of Public Services (Codeco) for their respective analysis. According to statements by César Revilla, president of the Economy Committee, it is expected that all projects will be debated in this legislative session. In contrast, the Superintendence of Banking, Insurance and Pension Fund Administrators (SBS) has reaffirmed its position against interest rate caps, arguing that these limit access to financing and promote the growth of the informal market. The SBS maintains that maximum rates should be permanently eliminated for all types of credit from financial institutions. On the other hand, the Association of Banks (Asbanc) has pointed out that interest rate caps have excluded half a million families from accessing credit, leading to an increase in the number of clients resorting to informal mechanisms to obtain financing. Álvaro Castro, partner at Damma Legal Advisors, also emphasizes that controlling the prices of financial services through interest rate limits distorts the credit market and affects clients considered high risk by financial institutions. Amidst this debate, it is important to find a balance that protects consumers from possible financial abuses without disproportionately limiting access to credit. The proposed bills aim to address this issue and find solutions that promote financial inclusion and economic development in the country.