Nicaragua did not have a special law regulating the
microfinance industry until the approval of the Ley de
Fomento y Regulación de las Microfinanzas (Law for
the Promotion and Regulation of Microfinance), published in
La Gaceta, Official Diary Number 128 on July 11 2011.
The law entered into force 180 days after its publication.
The purpose of this law is to promote and regulate the
registration, authorisation to operate, operation and
supervision of microfinance institutions (known as IMFs). IMFs
are defined as commercial or not-for-profit entities dedicated
in any manner to the intermediation of funds for microcredit,
and the rendering of financial or ancillary services, other
than those offered by banks and financial companies, and which
have a minimum social capital of C$4.5 million ($176,000).
The law establishes the obligation of IMFs to request their
registration and authorisation to operate to the
Comisión Nacional de Microfinanzas (Conami
– National Commission of Microfinance). It also
establishes that other entities not defined as IMFs but which
render microcredit services, may also voluntarily request their
registration before Conami.
The Microfinance Law regulates certain matters of the
internal organisation of IMFs, such as the type of shares that
IMFs created as corporations should issue, the composition,
duration and operation of the board of directors and the
appointment of an internal auditor. It also establishes the
activities prohibited for IMF entities, which include deducting
interest in advance of the loans they provide, calculating
interest rates over the total amount of the loan (only over the
outstanding balance), capitalising interest to the principal
(except in restructuring operations and agreed by both
parties), charging penalties for early payment and collecting
funds from the public.
The law also grants certain benefits to IMFs registered
before Conami, such as: a) all loan contracts will be
enforceable in executive proceedings (a faster judicial
proceeding than an ordinary proceeding); b) no obligation to
provide a surety in judicial proceedings; c) access to
Conami's's Risk Central; d) access to the benefits of the
microfinance promotion fund; and, e) access to studies and
information created for other Conami projects.
In general terms, the law regulates the matters that should
be taken into consideration by all IMFs obligated to register
and also by those entities that decide to voluntarily register
before Conami, to take advantage of the benefits provided in