Lending Slows in Mexico as Tax Cheats Choose Cash Over Credit Ben Bain - Bloomberg News
go to original September 9, 2014

A new law giving Mexican tax officials explicit authority to search for scofflaws by screening credit-card data is causing some shoppers to avoid plastic, executives at two of the nation’s biggest banks said.

Credit-card loans outstanding rose just 4.4 percent in July, the least in four years and a third the pace of a year ago, according to Mexican regulators. The slowdown was spurred partly by a law that took effect this year stating that tax authorities can review credit-card transactions for signs of outsize spending relative to reported income, according to Jorge Benitez, a bank analyst at Corporacion GBM SAB.

Instead, more Mexicans are just using cash, said Manuel Romo, the head of consumer banking at Grupo Financiero Banorte SAB, Mexico’s third-biggest bank by outstanding loans. The shift is curbing banks’ total loan growth while impeding President Enrique Pena Nieto’s efforts to stimulate Latin America’s second-biggest economy with more lending.

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