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Report on Other Non-Financial Credit Providers

According to the quarterly survey carried out by the BCRA, about 6.1 million borrowers have debts to creditors known as “other non-financial credit providers” (otros proveedores no financieros de crédito, OPNFC) outside the financial system for an overall amount of ARS195,000 million.

OPNFCs stand for a heterogeneous group of companies made up of cooperatives and mutual associations, home appliances stores, and fintechs, among others. Since October 2020, the BCRA has made significant changes to the regulations on OPNFCs. Consequently, most non-financial credit companies must register as OPNFCs (even if they do not receive financing from financial institutions) and comply with the provisions that grant greater protection for financial service users.

The report further shows that the number of OPNFCs registered in the BCRA grew significantly over the last two years, from 235 at the end of 2018 to 323 in January 2021. Between June 2020 and January 2021, 50 new providers registered as OPNFCs, the highest figure since the second half of 2018, more than doubling the average of the three previous six-month periods.

Other conclusions:

-Total debtors: OPNFCs granted credits to 6.1 million borrowers—mostly natural persons—in October 2020.

- Exclusive debtors: About 2.8 million borrowers were exclusive debtors to OPNFCs (i.e., have no debts with the financial system).

- Comparison with the financial system: Financial institutions granted credit assistance to 13.4 million natural persons in October 2020. This means that exclusive debtors of OPNFCs represented about 20% of debtors of financial institutions.

- Debtors shared with the financial system: The number of OPNFCs´ clients that also had debts with the financial system dropped from 4.3 million in January 2018 to 3.4 million in October 2020.

- Amount: In October 2020, 215 OPNFCs reported to the BCRA on their portfolio of financing for ARS195,000 million. Excluding credit card assistance, the amount owed to OPNFCs was ARS88,000 million.

- The average annual percentage rate stood at 84%, recording a 28 p.p. drop between the first quarter of 2020 and October 2020.

-Non-performance: The non-performance ratio of OPNFCs (excluding credit card financing) stood at high levels, reaching 39% in October 2020. However, this was not due to a deterioration of the non-performing portfolio, but to a decrease of new loans, which in turn reduced the total amount of outstanding debts and the comparison basis for calculating the ratio as well.

- Financial system’s financing to OPNFCs´ clients: The stock of financial system’s loans to OPNFCs´ clients reached ARS612,000 million in October 2020. In real terms, the total stock of loans accumulated a 27% decrease from January 2018 to October 2020. The average stock disaggregated by debtor in real terms showed slight fluctuations between January 2018 and October 2020, with a drop of 7%.

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April 21, 2021.

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