Financial Reform In Mexico

Mexican President Enrique Peña Nieto presented a reform bill before the Permanent Commission of Mexico's Federal Congress on May 15, which amends, adds, and repeals 34 statutes, primarily financial in nature (hereinafter, the "Financial Reform").

The Financial Reform presented by the President underwent diverse amendments in the Chamber of Deputies on September 10. The resulting bill, which amended, added, and repealed diverse provisions of the Financial Law and issues of the Law of Financial Groups, passed the Chamber of Deputies the same day. Additionally, on November 26, the Senate Chamber passed the bill without any amendments; therefore, to become enforceable, the modified statutes (hereinafter, "The Decree") need only to be promulgated and published in the Official Federation Gazette.

Details about the Financial Reform's diverse statutes and amendments, each of which has a different date of enforcement, are provided in this Commentary.

According to statements made by the executive branch, and on the grounds of legal pronouncements issued by the legislative branch, the Financial Reform is based on the following fundamental grounds:

The creation of new incentives so that banks can provide more loans. Contributions toward fair competition with regard to the banking and financial system, so that rates and expenses are reduced. The fortification of the financial and banking system so that it may experience long-term, continuous growth. The establishment of a new chain of command for the development-banking sector that will contribute to the evolution of the financial sector. The strengthening of the financial authorities' legal power to impose penalties. The goal of ensuring that the relationship between debtors and creditors is properly rooted in equity. The following sections describe the Decree's main proposals.

Production of New Incentives for Banks to Provide Loans

In the area of loan provision, the Decree seeks to:

Improve the loans provided by the banking sector to small and medium enterprises. Enable the Department of Treasury and Public Credit to evaluate bank performance, specifically regarding the banks' compliance with their obligation to support and promote the most productive sectors in the country. Enable the National Banking and Securities Commission to establish procedures and policies to be complied with by the banks, in order to funnel more resources to the funding of the most productive sectors in the country...