Banking Law

This Law regulates financial operations carried out by banking institutions. All banks in El Salvador should operate as anonymous societies of fixed capital, with no less than ten associates. The capital amount required for an institution's establishment will be determined by the Banking Regulator.

During the first three years of their constitution, all banking entities should maintain an equity-to-weighted assets ratio of 14.5. After this period, the Regulator will determine whether this ratio may be modified. Directors' responsibility is to make sure the fund of all clients are properly managed, following the criteria of honesty, prudence and efficiency.

Chapter IV discusses the liquidity reserves which banks must maintain. This reserve fund must be composed of different tranches. The first 25% of the fund should be allocated to the first tranche, which will be deposited at the Central Bank. All banking entities can have direct access to this portion of their reserves. The second tranche must be at least 25% of the entire fund, and must also be deposited at the Central Bank. Though the bank has automatic access to this tranche, there will be a surcharge to any amount withdrawn from this portion of the fund. A 50% will be allocated to the third tranche, and its withdrawal must be authorized by the Central Bank. 

Document Details

Title (Non-English): 
Ley de Bancos
Document Type: 
Document Topic: 
Authoring Country: 
Originating Country or Trade Block: 
Issue Status: 
Year of Document: 
1999
Date of Document: 
Monday, September 27, 1999
Language (This Document): 
Spanish
Files: 

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