Branchless Banking Policy and Regulation in El Salvador
This note present findings and recommendations from a branchless banking policy and regulatory diagnostic that CGAP carried out in 2008 in El Salvador. The study revealed that branchless banking is still in its initial stages in the country. A few banks are currently experimenting with agents and mini-branches in retail establishments, but the current legal and regulatory framework does not clearly permit the use of retail agents. El Salvador does not have specific regulation on the issuance of e-money by nonbanks. In order to create an enabling environment for branchless banking, regulators should:
- Clearly allow the use of agents by licensed and regulated institutions;
- Allow issuance of electronically stored value instruments by banks and nonbanks subject to prudential and other considerations;
- Adapt and or clarify anti-money laundering rules.
The study concludes that the provision of products and services through alternative means and channels such as agents and mobile phones or prepaid cards must be governed by clear and simple conduct-of-business standards. Consumer protection provisions should not be so burdensome as to prohibit development of these channels.
