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Fonacot attributes daily client growth to competitive payroll credit rates

ByEditor

Feb 13, 2024

Salvador Gazca Herrera, general commercial coordinator of Fonacot, listed the institute’s objectives on the occasion of the commemoration of the 50 years of the creation of that entity. From the beginning of the current administration to date, the interest rates on payroll loans offered by the Institute of the National Fund for Workers’ Consumption (Fonacot) have decreased almost 20 percentage points, a fact that has allowed it to attract more clients and place a greater amount of financing, said Salvador Gazca Herrera, general commercial coordinator of the organization.

At the beginning of the administration, he mentioned, the rate of the total annual cost of payroll financing for workers with Fonacot exceeded 40 percent, and today it is at a level of 25.5 percent, which places it as the lower when compared to the same product offered by traditional banks. In an interview, carried out on the occasion of the commemoration of the 50 years of the creation of the institute, Gazca Herrera pointed out that another of the current objectives is to remove the population the idea that we are an institution for buying furnituresince it is a loan that can be used for any purpose.
The main effort is to reduce the cost of credit to the worker, when this administration began the interest rate was 24.5 percent and the total annual cost was 43.7 percent, today we have a rate of 15.6 percent and a total cost of 25.5 percent, which has been achieved by reducing our operating costs and also being well valued by rating agencies, which allows us to obtain cheap funding.

The manager highlighted that the decrease in the total cost of credit by 18.2 percentage points also occurs at a time when the economic cycle is marked by the high reference rate maintained by the Bank of Mexico (BdeM), which is the instrument which marks the cost at which companies and families are financed. Not raising rates, but lowering them, he stated, is also the result of the fact that the growth of credit by Fonacot advances evenly throughout the country.
That is to say, the same thing that we progress in the north, we do in the southbecause labor subcontracting has been eliminated and people have stable employment, and this is reflected in the fact that the activity continues with a positive dynamic, which allows households to have stable income.

According to Gazca Herrera, Fonacot closed 2023 with 1,686 million credits dispersed among workers, which meant that, throughout last year, 42,998 million pesos were granted in new financing. In turn, he highlighted the fact that 59 percent of the loans are granted to people whose income does not exceed two minimum wages and that means that We provide financing to the base of the population, a segment excluded by the banks.. Unlike traditional institutions such as banks or Sofipos and Sofomes, we are not for-profit like them, we obtain economic funding to keep rates low and support workers, and our portfolio recovery rates remain low.

The credit is not to buy furniture. The manager maintained that another of the objectives is that people do not see us as an institution that only serves to buy furniture, that lasted perhaps 35 years, but today that is no longer the case, we grant loans that are up to four times the salary of the workers and they can use it for their needs. In this sense, he stated, the use of financing by the workers who request it is mixed, since between the months of June to September it is mostly used for returning to school, from January to March it is also used to consolidate the debts, and later it can even be used to organize vacations. However, he pointed out, there are months in which the flow of new loans or refinancing decreases, since in May there are profits and in December people have their bonus. Gazca Herrera added that today Fonacot is working at a fast pace so that in a maximum of one month the institute’s new application will be available, which will work for the moment for clients who already have a loan, and will be able to pay their monthly payments or request refinancing. Currently, 70 percent of our clients are people who already had a loan and the remaining 30 percent are new, so with the app we will be able to download the large number of people who are in the institute’s offices. But we are investing in technology, and that has allowed each of our operators to increase their daily placement from 13 to 17 loans.he added.

By Editor

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