The Peruvian Experience in Financial Inclusion

The Financial Supervisor’s Perspective

Superintendencia de Banca, Seguros y AFP

The AFI Global Policy Forum

Riviera Maya, Septiembre 2011

Peru

Territory: 1.285 million Sq.Km

Population: 29 461 933

Population density: 22.9 Inhab/Sq.Km

Total Poverty: 31.3%

GNP per cap. (USD 2000): 3181

2006 2010

44.5 31.3

Poverty rate (%)

LORETO

UCAYALI

PUNO

CUSCOMADRE DE DIOS

JUNIN

LIMA

AREQUIPA

PIURA

ICA

ANCASH

SAN MARTIN

AYACUCHO

HUANUCO

PASCO

AMAZONAS

CAJAMARCA

TACNA

APURIMAC

LA LIBERTAD

MOQUEGUA

LAMBAYEQUE

TUMBES

Densidad

1 - 14

15 - 33

34 - 78

79 - 242

243 - 5 966

Densidad Poblacional

(hab./Km2)

SBS´s vision of financial inclusion and

strategy to improve it

Financial inclusion

Usage Access

Adequate FS: savings, loans,

payments, insurance,

pension funds,…

The Strategy to improve financial inclusion

SBS´s strategy to promote financial inclusion

Re

gulatio

n

Transp

aren

cy &

use

r o

rien

tation

Finan

cial Lite

racy

Co

nsu

me

r P

rote

ction

Financial Inclusion

The regulatory framework should promote the stability and competition of the financial system, while generating incentives to promote financial inclusion

Regulatory framework conducive

to financial inclusion

I

Stability F.Inclusion

Proportional to risk regulation

Regulatory framework conducive to financial inclusion, while maintaining the stability of the financial system

Regulation of microcredit

1997

Retail agents

2005

Micro-insurance

2007

Level playing

field for MF

2008

AML/CFT: Proportional to risk regimes

Basic Accounts

2011

E-money Proposal of Law

2011

Sustained growth of loans and debtors of microcredit, on average 28% and 19%, respectively, in the last 8 years

Micro and Small Enterprise Loans and Micro and Small Enterprise Borrowers

0

2,000

4,000

6,000

8,000

10,000

Jun-

03

Dic

-03

Jun-

04

Dic

-04

Jun-

05

Dic

-05

Jun-

06

Dic

-06

Jun-

07

Dic

-07

Jun-

08

Dic

-08

Jun-

09

Dic

-09

Jun-

10

Dic

-10

Jun-

11

Loan

s (U

S$ m

illio

n)

0

500

1,000

1,500

2,000

N°

Bo

rro

wer

s (0

00)

MSE Loans

MSE Borrowers

Proportional to risk regulation

Regulatory framework conducive to financial inclusion, while maintaining the stability of the financial system

Regulation of microcredit

1997

Retail agents

2005

Micro-insurance

2007

Level playing

field for MF

2008

AML/CFT: Proportional to risk regimes

Basic Accounts

2011

E-money Proposal of Law

2011

Customer service network has increased steadily

N° Branches, ATMs and Banking Agents and N° Service

Points per 100,000 adults

1,278 1,818 2,833 3,077 3,2801,2092,823

4,113 4,713 5,625

5,054

7,219

10,117

1,900

67

38

16

83

103

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Jun 2001 Jun 2007 Jun 2009 Jun 2010 Jun 2011

0

20

40

60

80

100

Banking agents

ATMs

Branches

Service points per 100,000 adults

Proportional to risk regulation

Regulatory framework conducive to financial inclusion, while maintaining the stability of the financial system

Regulation of microcredit

1997

Retail agents

2005

Micro-insurance

2007

Level playing

field for MF

2008

AML/CFT: Proportional to risk regimes

Basic Accounts

2011

E-money Proposal of Law

2011

0

20

40

60

80

100

120

0

100

200

300

400

500

De

c-0

8

Mar

-09

Jun

-09

Sep

-09

De

c-0

9

Mar

-10

Jun

-10

Sep

-10

De

c-1

0

Mar

-11

Jun

-11

N°P

rod

uct

s

N°P

oli

cy H

old

ers

(000

)

Microinsurance Policy Holders and Microinsurance Products

Products N° Policy Holders

Increasing number of micro-insurance policy holders and products

450

Proportional to risk regulation

Regulatory framework conducive to financial inclusion, while maintaining the stability of the financial system

Regulation of microcredit

1997

Retail agents

2005

Micro-insurance

2007

Level playing

field for MF

2008

AML/CFT: Proportional to risk regimes

Basic Accounts

2011

E-money Proposal of Law

2011

Information about the benefits, costs and risks of the financial services help agents to undertake good decision making and effective risk management

Transparency and orientation to users of the financial system

II

…Transparency and orientation to users of the financial system

Interest rates:

Average per market segments, products and firms.

Loan interest rates, including all costs

RETASAS – comparative on line information

Insurance: Annual premium and coverage - REPRIMAS - comparative information

II

Campaigns:

TCEA: Annual interest rates, all costs included for loans and credit cards

TREA: Annual rate of return for savings and time deposits

Minimum balance to obtain positive return

Mortgage credit interest rates: regular and targeted to low income segments (MiVivienda)

Comparative information for auto and school insurance.

…Transparency and orientation to users of the financial system

II

RETASAS: Web Publication of loan interest rates, all costs included, per product, per firm - comparative information

… Customers and potential customers Orientation

Use of mass media to provide orientation: budget planning, use of credit cards, dangers of ponzi schemes, among others.

Des-centralized information points

User Portal: updated information on the user’s rights and responsibilities, mechanisms to complain, etc.

II

Campaigns on financial information and responsibility

Advises for a responsible use of your credit card and for debt taking

The preventive approach reduces the probability of consumers being negatively affected by products, services or policies of financial institutions

Consumer Protection

III

III. Regulatory framework for consumer protection

. Customer Service System

•

• Customer service Officer

• Implementa-tion of Policies

• Proper functioning of the system

Transparency in the

contractual process

• Disclosure of i-rates and costs.

• Contractual terms: simple, clear, no fine prints.

• Loans: Summary of conditions, payment schedule

• Deposits: yield / Information booklet

• 30 days notice ahead of any change

Review of contractual

clauses

• SBS establishes general contractual clauses.

• Forbiddance of abusive clauses

SBS

sup

ervi

ses

po

licie

s a

nd

pro

ced

ure

s

…Consumer Protection in Contracts

Examples of charges that were forbidden since no service was delivered or for excessive charge:

Fees to evaluate payment capacity

Fees for paying after the due date, in addition to overdue interests

Fees for inactive savings accounts, in addition to maintenance fees and regardless the inactivity time period.

It allows people to develop the capacity to search for and understand the available information on financial services and to undertake informed and responsible decisions

Financial Education

IV

IV. Advances in Financial Education

LORETO

UCAYALI

PUNO

CUSCOMADRE DE DIOS

JUNIN

LIMA

AREQUIPA

PIURA

ICA

ANCASH

SAN MARTIN

AYACUCHO

HUANUCO

PASCO

AMAZONAS

CAJAMARCA

TACNA

APURIMAC

LA LIBERTAD

MOQUEGUA

LAMBAYEQUE

TUMBES

Financial Literacy Program targeted at school teachers

• Offered in 15 regions • Estimated outreach:

10% teachers of state schools. 29% of state school students

Callao

IV. Advances in Financial Education

Measuring progress in financial inclusion:

Some access and usage indicators

Reporte de Indicadores de Inclusion Financiera

http/www.sbs.gob.pe

LORETO

UCAYALI

PUNO

CUSCOMADRE DE DIOS

JUNIN

LIMA

AREQUIPA

PIURA

ICA

ANCASH

SAN MARTIN

AYACUCHO

HUANUCO

PASCO

AMAZONAS

CAJAMARCA

TACNA

APURIMAC

LA LIBERTAD

MOQUEGUA

LAMBAYEQUE

TUMBES

LORETO

UCAYALI

PUNO

CUSCOMADRE DE DIOS

JUNIN

LIMA

AREQUIPA

PIURA

ICA

ANCASH

SAN MARTIN

AYACUCHO

HUANUCO

PASCO

AMAZONAS

CAJAMARCA

TACNA

APURIMAC

LA LIBERTAD

MOQUEGUA

LAMBAYEQUE

TUMBES

N° Service points per 100,000 adults

Jun-03 Jun-11

17 103

Better geographical outreach through branches, ATMs, and Banking Agents

Service points: 19 022

Service Points: 2 806

June 2003 June 2011

Total

10 - 117

117 - 211

211 - 563

563 - 1 709

1 709 - 9 568

The network of the financial system reaches 82% of the national population, living in 34% of the districts

Distribution of population by access to financial

services*

* Population in districts with service points as percentage of total population.

Without access

18% With access

82%

Distribution of districts by type of service point

(branch, ATM and banking agent)

Branch, ATM

and banking

agent

14%Without service

point

66%

Two types of

service point

7%

Branch, ATM or

banking agent

13%

Sustained growth of individuals with a bank account

Source: SBS.

* Individuals with a bank account

N° depositors* and n° depositors per adult

population (%)

15,475

13,44011,651

10,5559,233

83.9

74.0

65.260.0

53.3

0

5,000

10,000

15,000

20,000

Jun 2007 Jun 2008 Jun 2009 Jun 2010 Jun 2011

N° d

epos

itor

s ('0

00)

0

25

50

75

100

N° d

epos

itor

s /

Adu

lts

(%)

N° depositors ('000) N° depositors /adults (%)

The number of borrowers per adult population notably increases

Source: SBS.

N ° borrowers and n° borrowers per adult

population (%)

3,094 3,323 3,7494,127

4,3854,80418.2

19.221.3

23.124.2

26.1

0

1,000

2,000

3,000

4,000

5,000

6,000

Jun 2006 Jun 2007 Jun 2008 Jun 2009 Jun 2010 Jun 2011

N° b

orro

wer

s ('0

00)

0

5

10

15

20

25

30

N° b

orro

wer

s /

adul

ts (%

)

N° borrowers ('000) N° borrowers / adults (%)

0 500 119 28 477 117 358 25.4

500 1000 54 39 273 195 219 15.5

1000 3000 66 113 414 735 349 24.7

3000 7000 20 89 224 1 026 204 14.5

7000 10000 4 32 72 602 68 4.9

10000 30000 3 52 159 2 711 156 11.1

More than US$ 30 000 1 129 58 3 437 57 4.0

266 482 1 677 8 823 1 411 100.0Total

%

Number of MSE borrowers and MSE loans

Debt range

(US$)

Jun-01 Jun-11 Var. Jun11/ Jun01

N°borrowers

(000)US$ million

N°borrowers

(000)US$ million N° borrowers

(000)

The number of MSE borrowers has notably increased in the last decade, particularly of the small ones

Source: SBS.

x6+

Distribution of loans by poverty level improves in the last decade

Source: Reports, SBS. Poverty Map Foncodes 2006.

0

10

20

30

40

50

60

70

80

90

100

Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5

0.080.50 2.47 6.49

90.46

0.292.68 8.57

11.73

76.72

(%)

Distribution of loans by poverty level(In percentage)

Jun-01

Jun-11

*Quintiles weighted by population, where quintile 1= poorest and quintile 5= lesat poor.

Gracias!

www.sbs.gob.pe