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The microfinance market in Nicaragua is led mainly by non-profit microfinance institutions, private NGOs and finance cooperatives. The Superintendency of Banks and Other Financial Institutions is responsible for supervising and regulating all institutions engaged in financial intermediation, including microfinance financial intermediaries (IFIMs), non-profit microfinance institutions (IMFs), private NGOs and finance cooperatives, while the General Directorate of Cooperatives under the Ministry of Labor supervises cooperatives. In 2009, the “No Pago” or “no voy a pagar” movement, in reaction to perceived high interest rates and unmanageable debt in the microfinance sector, put pressure on the legislature, leading to the passage of a Moratorium Law in February 2010 which set an interest rate cap on restructured loans for a lifespan of 120 days. A more permanent response came in June 2011 with the passage of the Law on the Promotion and Regulation of Microfinance, which among other things, includes consumer protection requirements and establishes a new regulator, the National Commission for Microfinance (Conami).



Microfinance & Banking

Consumer Protection

In June 2011, the Nicaraguan National Parliament enacted the first law that contains consumer protection provisions specific to microfinance institutions. Most of these provisions will apply to any microfinance financial intermediary institution (IFIMs) or other institutions registered with the new microfinance regulator, Conami. This law covers issues of truth in advertising, disclosure to consumers, pricing transparency (including use of an effective interest rate), and financial consumer rights. The law is expected to come into effect in the beginning of 2012.