On May 8 2013 President Enrique Peña Nieto presented the Financial Reform Bill to Congress. The government stated that the bill would encourage the country's development banking system to lend more actively. At the same time, the government proposes to reduce the cost of borrowing by promoting greater competition among the largely foreign-owned banks.
The bill seeks to boost economic growth by making it easier and cheaper for companies to access credit. The bill establishes guidelines to:
- foster the development banking system as a contributor to financial sector growth;
- promote healthy competition; and
- use credit as an engine for the productive development of Mexico.
The bill comprises four strategic axes:
- The first axis aims to use the developing banking system to complement commercial banking. To achieve this, the bill provides regulatory and financial flexibility for transactions so that credit may be extended to all areas, with special emphasis on priority areas for national development. It also actively promotes financial inclusion by establishing the requirement to adopt a gender-neutral perspective in transactions (ie, parity between men and women through specific products).
- The second axis envisages measures to promote greater competition in the financial system. Such measures will encourage an expansion in the offer of credit and a reduction in interest rates.
- The third axis aims to increase the power and authority of banking regulators to evaluate the performance of commercial banks, while encouraging transparency in their activities.
- The fourth axis proposes measures to strengthen the financial sector. It contemplates the establishment of rules governing the structure and quality of the capital stock of commercial banks published by Basel III.
The bill also aims to streamline bankruptcy laws to make it easier for banks to claim the assets of companies that default on loan repayments, as banks have long touted that doing so is a challenge under the existing rules.
To fulfil these four axes, the bill envisages amendments to 34 laws governing the financial system through the issuance of 13 decrees.
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