1. Una política para promover el acceso a servicios financieros buscando equidad social

2. A Policy to Promote Access to Financial Services in Colombia, looking for Social Equity. To promote access to financial services for the population, with special emphasis in low income families, aiming to stimulate economic development of the country, looking for social equity. Mision To increase the level of bancarization and financial institutions outreach to all municipalities of Colombia, with adequate products and services for all segments of population. To be recognized nationally and internationally, as an effective Government program that have an impact in the promotion of access to financial services, contributing to the alleviation of poverty and the increase of social equity. Vision

3. Una política para promover el acceso a servicios financieros buscando equidad social Created by Decree 3078 of September, 2006 Administered by Bancoldex, operates by mandate of the Ministry of Finance and Public Credit. Resources: Initially COP $120,000 millions, January 2007. Coordination and Monitoring: Intersectional Commission Adviser Minister Minister of Finance and Public Credit Minister of Commerce, Industry and Tourism Director of National Planning Department (DNP) Director of Dansocial President Representative President of Bancoldex Banca de las Oportunidades

4. Una política para promover el acceso a servicios financieros buscando equidad social Policy that coordinates and potenciates the efforts of existent financial intermediaries (credit establishments, cooperatives, MFI, NGO, Commercial Financial Companies, insurance companies, etc) Gives incentives to expand outreach and supply of adequate financial services. La Banca de las Oportunidades: Estrategy X Bank X Second Tier Bank X Gives Credit NO YES

5. Una política para promover el acceso a servicios financieros buscando equidad social Policy to promote access to financial services Objective: Incorporate segments of the population that had been unattended by the financial sector: Bancarize. Deepen access and diversity of instruments to attend different segments of the population. Reasons: Increasing financial inclusion has a direct impact on the economic growth of countries, by expanding consumption capacity and increasing the investment potential. It has been proven that access to financial services has beneficial effects as a strategy to fight against poverty.

6. Una política para promover el acceso a servicios financieros buscando equidad social Investment Program Banca de las Oportunidades Ensure the accomplishment of the objectives of the policy of Banca de Las Oportunidades. Design incentives to expand financial outreach to all municipalities of Colombia Propose reforms to the regulatory frameworks in aspects that limit access. Design incentives to promote access to financial services (Supply and Demand). Establish the methodology to assign incentives. Develop and promote financial education programs for the supply and demand Offer Technical Assistance programs and institutional strengthening to Cooperatives, NGOs and others. Functions:

7. Una política para promover el acceso a servicios financieros buscando equidad social Factors that limit access to savings From Supply Side High fixed costs to expand outreach. High management costs and cash transportation High operative costs for small amounts captured Regulatory requirements increase the cost of products.. Lack of knowledge about microsavings technologies From Demand Side High commissions for account management and transactions. GMF (4 por mil) – Tax on Financial Movements that make expensive cash use. Difficult and long processes to open accounts. Absence of products that suit their needs Self-exclusion.

8. Una política para promover el acceso a servicios financieros buscando equidad social Factors that limit access to credit From the Supply Side Costs High costs of personalized attention and monitoring Information for risk evaluation Lack of knowledge about Microcredit technologies Risks High risk perception for credit to micro and small businesses. Difficulty to obtain adequate information to estimate repayment capacity. Difficulty to validate guarantees. From the Demand Side Difficulties to meet documentation and guarantees requirements. Micro, Small and Medium sized enterprises are sensitive to interest rates. Micro entrepreneurs and households value more easiness to access than cost. Self-exclusion.

9. Una política para promover el acceso a servicios financieros buscando equidad social Goals There are specific compromises with each group in order to achieve the goals on savings, credit, and access to financial services in general : Financial institutions´presence in ALL municipalities of Colombia by 2010. Increase by 3,000,000 the number of savings accounts, including 1,500,000 for beneficiaries of the Familias en Accion program (Program of Conditional Cash Transfer to families in extreme poverty). Increase in 5% the Bancarization level in the next 4 years, to reach 34.2%. 5,000,000 credits to microenterprises. 2,000,000 Banks y CFC 2,750,000 NGO 250,000 Cooperatives 850,000 new associates to Cooperatives. Goal of Credit for the first time : - Total Microcredit for the first time 2006-2010: 780.000 credits - Total credits for the first time (including Credit for Consumption : 1.500.000 credits.

10. Una política para promover el acceso a servicios financieros buscando equidad social (June 2006) Bank Outreach 307 Municipalities without presence of the Financial System at the creation of Banca de las Oportunidades

11. Una política para promover el acceso a servicios financieros buscando equidad social Types of Incentives – Support to Banca de las Oportunidades Network Subsidy to Cost Give a fixed amount of resources to an intermediary, for an activity or product when these are not profitable. Requires homogeneity and standardization Solid and regulated institutions, with institutional, financial and opperative capacity Transitory and decreasing Project Coofinance Partial finance of pilot projects that are nor profitable or whose profitability has not been demonstrated. Custom-made projects by the entity, within the priorities defined by Banca de las Oportunidades in a determined period of time. Technical Assistance In species input by hiring an adviser or institution with broad international or local experience in microfinance technologies, institutional strengthening of cooperatives and NGOs

12. Una política para promover el acceso a servicios financieros buscando equidad social Strategic Blocks Environment and Regulation to promote access to financial services Support to Banca de las Oportunidades Network Support to Supply and Demand of Financial Services

13. Una política para promover el acceso a servicios financieros buscando equidad social Propitiate Reforms to the Regulatory Framework Activities that allow massification of microinsurances.. Review the regulatory framework for interest rates. Support reforms to the guarantee regime Promote necessary reforms for the implementation of mobile banking as a mechanism to facilitate bancarization. Promote reforms to facilitate the creation and consolidation of Risk Capital Fund and Seed Capital Funds Environment and Regulation to promote access to financial services

14. Una política para promover el acceso a servicios financieros buscando equidad social Expand geographic outreach of the Network Convocation for Non-Bank Agents (NBA) in municipalites without bank presence Expand outreach of NBA in marginal areas of big cities Expand outreach of NGO Expand outreach of Cooperatives Expand outreach of CFC. Increase access of low income families Technical Assitance on Village BAnking Technical Assistance for Self- Help Groups Pilot project for incentives for savings to Familias en Accion Pilot project of Microinsurances for Familias en Acción Support to Banca de las Oportunidades Network

15. Una política para promover el acceso a servicios financieros buscando equidad social Financial Education a. Promote new schemes of use of the financial education methodology of Microfinance Opportunities (MO) b.Promote the utilization of the MO methodology among the institutions that received the first training c.Learn about new schemes of financial education schemes for the objective population. New Product Design Promote studies that help to design new products and services in the country Technical Support and Services Identify the needs in the supply of financial services and design technical assistance schemes to attend them. Support to Supply and Demand of Financial Services

16. Una política para promover el acceso a servicios financieros buscando equidad social Consolidation of Projects, technical assistance and coofinanciation developed during 2007 and 2008, with a special emphasis on the following programs: MAIN ACTIVITIES IN 2009 Technical Assistance of Village Banking Technical Assistance of Self- Help Groups Microinsurance design for Familias en Acción Outreach exoansion of NBA in Marginal areas of main cities Technical Assistance fo the implementation of Microsavings Support to Banca de las Oportunidades Network Support to Supply and Demand of Financial Services Mobile Banking – Support to Financial Services Financial Education Training for microcredit advisers Design Toolkit with financial institutions information Support to MF NGO with entreprise development programs Support with guarantees through the FNG to massify financial services

17. Una política para promover el acceso a servicios financieros buscando equidad social SIGOB GOALS

18. Una política para promover el acceso a servicios financieros buscando equidad social SIGOB GOALS

19. Una política para promover el acceso a servicios financieros buscando equidad social Main Achievements 2008 I.ENVIRONMENT AND REGULATION TO PROMOTE ACCESS TO FINANCIAL SERVICES II.SUPPORT TO SUPPLY AND DEMAND OF FINANCIAL SERVICES Decree 086 MHCP: Avoid double charge of GMF (4x1000) for CNB. En-08 Expedition of norms to regulate savings account of small amount management, now electronic accounts. Dic-08. Approval of Habeas Data Law: Information and database management. Dic-08. Technical work table with Red Juntos. 500 microentrepreneurs trained through Bogotá´s Chamber of Commerce agreement Contracts: NGO trainers, microinsurance marketing research, Mobil banking proyect. RESULTS III.SUPPORT TO THE NETWORK OF BANCA DE LAS OPORTUNIDADES Incentives for extending outreach Among 307 municipalities without financial sistem outreach, at the begining of the BdO Program, only 68 municipalities would be pending. Technical assistance for strengthening 10 cooperatives Technical assistance to implement self-help groups programs SIGOB goals achievements

20. Una política para promover el acceso a servicios financieros buscando equidad social NON BANKING AGENTS NATIONWIDE TOTAL:4.881 Citibank: 3.983 Other Banks: 898 (as of December 31th,2008) Includes 1 NBA that has not yet been reported to the Finance Superintendence Main Results NBA

21. Una política para promover el acceso a servicios financieros buscando equidad social NON BANKING AGENTS BY ENTITY (as of December 31th,2008) Includes 1 NBA that has not yet been reported to the Finance Superintendence Main Results NBA Entity# NBA CITIBANK3.983 BANCOLOMBIA S.A.326 BANCO AGRARIO DE COLOMBIA S.A.229 AV VILLAS100 BANCO POPULAR S.A.99 BANISTMO COLOMBIA S.A.65 BBVA COLOMBIA38 BANCO CAJA SOCIAL BCSC20 BANCO DE BOGOTA17 OCCIDENTE4 Total4.881

22. Una política para promover el acceso a servicios financieros buscando equidad social Source: Finance Superintendence of Colombia – Format 398 Data as of December, 2008 Main Results NBA TOTAL NUMBER OF TRANSACTIONS THROUGH NBA BY MUNICIPALITIES´SIZE (JUNE 2007- DEC 2008) Source: Finance Superintence of Colombia 569.461; 6% 2.332.493; 23% 873.993; 9% 6.504.915; 62% 0 - 10.000 inhabitants10.001 - 50.000 inhabitants 50.001 - 100.000 inhabitantsMás de 100.000 inhabitantes TOTAL: 10.280.862

23. Una política para promover el acceso a servicios financieros buscando equidad social Source: Finance Superintendence of Colombia – Format 398 Data as of December, 2008 TOTAL AMOUNT OF TRANSACTIONS THROUGH NBA BY SIZE OF MUNICIPALITIES (JUN 2007 - DEC 2008) (COP MILLION) 155.125; 8% 699.114; 37% 165.925; 9% 878.393; 46% 0 - 10.000 inhabitants10.001 - 50.000 inhabitants 50.001 - 100.000 inhabitantsMás de 100.000 inhabitants TOTAL: $ 1.898.558 Main Results NBA

24. Una política para promover el acceso a servicios financieros buscando equidad social DISBURSEMENTS TO MICROENTERPRISES 3.446.990 CREDITS 10.6 COP TRILLION (as of December 31th,2008) Results

25. Una política para promover el acceso a servicios financieros buscando equidad social (as of December, 31th 2008) Results CREDIT TO MICROENTERPRISES THERMOMETER Number of transactions vs. SIGOB goal (29 months) NETWORK MONTHLY GOAL (ACUMULATED)RESULT

26. Una política para promover el acceso a servicios financieros buscando equidad social (August 2006 – December 2008) Banks and CFC:332.040 Cooperatives: 34.093 NGOs: 742.103 TOTAL: 1.108.236 Source: Asobancaria, Confecoop, Emprender * Preliminar information as of December, 2008 Results BANCARIZATION RATE OF MICROENTREPRENEURS THAT HAD ACCESS TO CREDIT FOR THE FIRST TIME

27. Una política para promover el acceso a servicios financieros buscando equidad social July, 2006:47.06 % December, 2006 51.10% March, 2007 51.98% June, 2007 54.04% December, 2007 55.21% March, 2008 55.52% June, 2008: 55.49% *Source: Asobancaria Results BANCARIZATION RATE OF COLOMBIAN POPULATION OLDER THAN 18

28. Una política para promover el acceso a servicios financieros buscando equidad social BANCARIZATION RATE OF COLOMBIAN POPULATION July, 2006: 30.17 % October, 2007 30.96% March, 2007 33.56% June, 2007 35.06% September, 2007 36.57% December, 2007: 37.81% March, 2008*: 38.02% June, 2008*: 38,37% * Recalculated with data from 2005 census population – Source: Banca de las Oportunidades, before March, 2008. Source: Asobancaria Results