MexECON Blog

New Limits on Bank Fees Published

Earlier this week, Banco de México published new limits on bank fees and commissions that are designed to make the Mexican financial system more efficient and user-friendly.  The rules went into effect on Tuesday.  According to press reports, the new limits include:

• Branch and ATM Transactions.  Banks are no longer allowed to charge their account holders any fee on deposits or loan payments made at one of the bank's branches or ATMs.

• Insufficient Funds Fees.  When an account holder overdraws his or her account, the bank may only charge the lesser of the amount of the overdraft or a set fee approved by the central bank.

• Late Fees.  Banks are no longer allowed to charge a fee for late loan repayments if they are also charging interest on the past due amounts.

• Non-Use Fees.  If a credit card carries an annual fee, banks are no longer allowed to charge a fee for non-use of the card.

The reports also indicate that bank ATMs will also be required to show a clear listing of the fees to be charged for each transaction and allow a customer to cancel the transaction in order to avoid the fees.

Comment:  Organizations ranging from the U.N. Economic Commission for Latin America to Mexico's Condusef consumer protection agency have complained that the fees charged by Mexican banks are unusually high, making it difficult for the financial system to efficiently accumulate deposits and channel capital to worthy borrowers.  Some banks reportedly even charge a fee to clients who mistakenly enter the wrong PIN number at an ATM.  The central bank's new regulations may help address those problems in a modest way.  However, the new rules do nothing to address the relative concentration in the banking market, where less than half a dozen large, foreign dominated banks account for the bulk of deposits.  They also are unlikely to help with the current credit crunch in Mexico, which is a reflection of the global financial crisis and the recent recession.

Patrick Fearon, CFA
Vice President, Fund Management

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