Towards a Stronger Industry: The Implications of Reforms in Microfinance in Nicaragua

Since July 11, 2011, Microfinance Institutions (MFIs) have been subject to the regulation of Law No. 769, known as the “Microfinance Promotion and Regulation Law.” However, the regulatory framework underwent a significant change on November 7, 2023, with the enactment of Law No. 1168, which amended the law previously mentioned. These reforms have brought about a series of changes in the regulations governing MFIs, including updates to the registration process and regulatory obligations. In this article, we will explore the most relevant aspects of these reforms and their implications for MFIs.

    1. Modifications in Definitions

One of the most significant modifications introduced by the reforms is the expansion of the definition of MFIs. Previously, Law No. 769 categorized entities engaged in microfinance operations into two types: MFIs or Microfinance Institutions, and IFIMs, or Intermediary Financial Institutions for Microfinance. However, with the reforms, the term IFIM has been repealed, and the definition of MFIs has been expanded to include any legal entity engaged in any way in granting microcredits or other complementary financial and non-financial services, either with its funds or intermediated funds. This expansion implies that all entities engaged in granting microcredits, considering the definitions established by the law, must register with the National Registry of MFIs, under the supervision of the National Microfinance Commission (CONAMI).

    1. Registration Process with CONAMI

The registration process with CONAMI has been affected by the reforms, with the issuance of updated regulations detailing the requirements and procedures. Resolution No. CD-CONAMI-027-02NOV30-2023, published on January 10, 2024, establishes the requirements for the registration of MFIs in the National Registry.

Once the application, accompanied by the legal, financial, accounting, and commercial documents detailed in art. 5 of the Resolution, is submitted, an evaluation is carried out by the Executive President of CONAMI. After confirming that the MFI has met the established requirements, the President will submit the MFI’s application to the CONAMI Board of Directors.

The CONAMI Board of Directors will authorize or deny registration in the Registry to the applicant MFI. For this, it will have a period not exceeding 30 business days. The registration authorization allows MFIs to operate in the microfinance sector, and the Resolution must be published in the Official Gazette at the expense of the requesting MFI. MFIs that have not commenced operations at the time their registration authorization is issued will have a maximum period of 180 days to start operating.

    1. Obligations for Registered MFIs

Registered MFIs are subject to compliance with the regulatory framework issued by CONAMI. This includes the submission of a diagnostic report analyzing the degree of compliance with the law and the applicable regulatory framework, along with an action plan to achieve full compliance with the requirements. In addition, MFIs must provide resources to cover CONAMI’s annual budget. Such contributions will be in a proportion of up to three per thousand annually based on the value of their total assets, according to the balance sheet of the immediately preceding fiscal year. For new institutions, the initial calculation basis will be based on the assets shown in their respective initial balance sheets.

    1. Implications for Unregistered MFIs

For entities operating without CONAMI authorization, administrative sanctions are established. These sanctions include pecuniary fines, ranging from 10,000 to 100,000 units of fine, and the prohibition to continue operating until their situation is regularized. The value of each “fine unit” will be equivalent in national currency to US$1.00, according to the official exchange rate established by the Central Bank of Nicaragua, in force at the date of imposition of the sanction.

The deadline for the submission of registration applications to CONAMI is established in Resolution CD-CONAMI-026-01NOV30-2023 and corresponds to May 6, 2024.

In summary, the reforms aim to strengthen supervision and regulation in the microfinance sector. While they may pose challenges for MFIs in terms of adapting to new requirements, they can also foster investor and client confidence, thus promoting financial inclusion and economic development.

At Consortim Legal, you will find a committed team to support you on your journey toward microfinance regulation. Please do not hesitate to contact us at in case you have any questions.