Published and draft legislation - Peru

Solidarity Group

Regulation of Solidarity Group Loans - SBS Resolution 4174/2015

The objective of this regulation is to promote access to formal finance for disadvantaged populations traditionally under-served by the financial sector and allow a better analysis of their credit risk, thereby facilitating greater access to basic financial services.

In this context, the regulation defines and regulates one of the main forms of "group lending", known as "Solidarity Group Credit". Such loans are granted by an entity in the financial system to a group of people who are then jointly liable for the debt obligations acquired. Thus, the group as a whole is the borrower.

The regulation stipulates that the Solidarity Group must have not less than five (5) or more than thirty (30) members, who must know each other and voluntarily form the group. Their domicile must be in a single geographical area, where they conduct their activities, so that the group can be monitored. However, it allows for two types of solidarity groups according to their ability to manage the loan themselves. Thus, there can be solidarity groups that manage their own credit obligation and others that require external management.

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The prudential rules for the proper management of the Solidarity Group loans for entities that grant such funding include:

  • Establishment of early warning signals to flag Solidarity Groups that are having problems repaying their loans;
  • Periodic reports on the Solidarity Groups with high credit risk, to monitor their repayment performance and their balances and disclose how they are managing the risks to which they are exposed;
  • Periodic retrospective analysis of all Solidarity Group loans, determining the causes of non-payment using sampling techniques.