Actualidad Colombia

Period extention to claim collateral

Draft External Regulation Circular, 27th January 2016

The Colombian government promotes collateral facilitation programmes through the National Guarantee Fund, the Fondo Nacional de Garantías S.A. (FNG), as part of its policy to facilitate the access to credit.

The FNG is in charge of facilitating access to credit to micro, small and medium entreprises , for which purpose it originates, handles, pays and recovers collateral. The FNG may guarantee a number of transaction types, for instance, microloans for operating expenses and/or capital expenses.

Current legislation stipulates that the financial entity may recover its collateral from the FNG after four (4) months of payment default. This draft circular proposes extending the minimum default period required for the collateral claims, from four to six (6) months.

This extension of the time limit has the aim of facilitating payment agreements and restructuring a arrangements as part of the push to bring microcredits into the mainstream.   

The modification will become law on 1st July 2016.


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