Mexican Senate Considers Legislation to Place a Limit on Bank Fees, Reduce Interest Rates

SourceMex Economic News & Analysis on Mexico, March 21, 2007 | Go to article overview
Save to active project

Mexican Senate Considers Legislation to Place a Limit on Bank Fees, Reduce Interest Rates

The Mexican Senate is considering three pieces of legislation that would impose new restrictions on Mexican banks, including a limit on interest rates for credit cards and a cap on fees charged for cash withdrawals and other services. The initiatives are likely to pass because of strong approval from the three major parties in Congress and at least a partial endorsement from President Felipe Calderon's administration. The Banco de Mexico (central bank), which would play a central role in any regulation, was more cautious about the initiative. The banking sector, in the meantime, is pulling out all the stops in an attempt to prevent the measure from becoming law.

Under the law proposed in the Senate, the Banco de Mexico would set monthly limits for interest rates for credit cards and other kinds of loans. Some members of the opposition Partido Revolucionario Institucional (PRI) have proposed having the banking regulating agency (Comision Nacional Bancaria y de Valores, CNBV) set the limits rather than the central bank.

Proponents say their legislative initiatives would reduce costs for beleaguered banking customers and help expand access to financial services in Mexico, Latin America's second-largest economy. Domestic bank lending equals 11% of Mexico's US$877 billion economy, a third of the percentage in Brazil, the region's largest economy.

The initiatives have thus far only been considered in the Senate finance committee (Comision de Hacienda y Credito Publico), which, if it approves the measures, would then forward them to the full Senate. The upper house would then send the initiative to the Chamber of Deputies.

Proposal has wide support among three major parties

The chances of passage in the Senate appear good because the initiative has strong support from the governing Partido Accion Nacional (PAN) and the opposition Partido de la Revolucion Democratica (PRD) and PRI. "The banks have artificially distorted interest-rate charges," said PAN Sen. Ruben Camarillo, one of three chief sponsors of the bill.

Sen. Camarillo said the committee is investigating charges that the banks are involved in collusion, echoing a concern noted in a study by the Economic Commission for Latin America and the Caribbean (ECLAC). "We have well-founded suspicions that there is an agreement among the banks to fix prices, commissions, and interest rates," said the PAN senator.

The ECLAC study, published in February, charged that banks have purposely channeled the majority of their lending activities to credit cards, to the detriment of other types of loans.

The Calderon administration has stopped short of directly endorsing the limits but has acknowledged that something must be done about the high banking fees. During testimony before the Senate finance committee, deputy finance secretary Guillermo Zamarripa noted that banking fees have come down in recent years, but "there is still room" for banks to reduce excessive charges to consumers.

Similar comments came from Miguel Angel Garza Castaneda, in charge of oversight of financial institutions at the CNBV. Garza said all financial institutions, but particularly banks, need to make an additional effort to reduce or eliminate some fees for services charged to the public.

The government's financial-services consumer-protection agency (Comision Nacional para la Proteccion y Defensa de los Usuarios de los Servicios Financieros, CONDUSEF) offered the strongest criticisms against the banking system. Luis Fabre Brunela, a CONDUSEF vice president, said consumers are facing overall higher fees to conduct financial activities, even though some banking costs have declined. The higher costs, said Fabre, include many increases in fees for credit cards.

Fabre did not, however, endorse placing a limit on fees. Instead, he recommended that banks be forced to provide complete and transparent information to users regarding their costs.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Mexican Senate Considers Legislation to Place a Limit on Bank Fees, Reduce Interest Rates


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?