Colombia’s financial regulator could take steps to limit credit limits

BOGOTA, Aug 17 (Reuters) – Colombia’s financial regulator said on Wednesday it could take steps to counter rising consumer credit limits and tackle rising household debt as rates rise. interest rates and inflation are rising.

The amount of credit available on credit cards has soared to 96 trillion pesos, or some $22.7 billion, from just 62 trillion pesos before the coronavirus pandemic, according to figures from the Superintendency of Finance.

The measure would require banks to be responsible for high credit limits that are not used by consumers, which affects their results.

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“Financial entities could do good management in terms of controlling the growth rate of consumer debt,” regulator superintendent Jorge Castano said on the sidelines of a banking conference in Cartagena.

“The share of money that families or debtors use to pay their debts starts to increase and if we clearly add the effect of inflation, there will be greater pressure on the ability to pay,” Castano added. .

The measure will come into effect depending on the banks’ quarterly results in the fourth quarter, he said.

Castano also indicated that these are longer loan terms, which exceed eight years even as payments deteriorate.

Consumer credit rose as the economy rebounded and is close to 22%, well above the usual average of 8% or 9%, he said.

“History tells us that when there’s growth in consumer credit, it’s natural that some of that debt will start to deteriorate,” he said.

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Reporting by Nelson Bocanegra Writing by Julia Symmes Cobb

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