Peruvian Parliament revoked the law that fixed an 85% maximum yearly interest rate on personal credit loans

The Peruvian Parliament, after suffering extreme pressure from the Peruvian banks, needed to revoke the law from 2021 that fixed a maximum interest rate on the money citizens borrowed from the financial institutions.

If this 85% limit already sounds absurd, imagine that the Peruvian Central Bank (BCR), fixed a (not mandatory) maximum yearly interest rate of 115% for local currency and a 96% for money borrowed in USD.

Incredible!

But the realty is worse, banks apply to the common citizens a yearly interest rate between 150-200% for personal credits. It’s true that most of the Peruvian economic structure is informal, without tax declarations and without the use of bank transfers for payments, but still, for a person that wants to borrow money to buy a street food car to work and earn enough to give the essentials to their family, this is a scandal. Still the people risk for a credit even at the 200% interest rate and the bank refuses the operation, so they borrow money from the mafia where the yearly interest is between 1500- 2000%; if the “client” is unable to fulfil a payment the mafia takes their life as compensation.

Peru somehow looks like a real life “Far West” studio, always there to surprise and to let you understand how unlucky some of the people that were born there are.