The Honduran banking system has been involved in a drive towards modernization and increased competition. There are currently 23 commercial banks, up from 14 just three years ago.
All Honduran banks have correspondent relations with U.S. banks.
Most of these banks are associated with powerful economic groups, and lend primarily to businesses owned by the group of which they are a part. The system has been criticized for permitting excessive amounts of unsecured lending to major stockholders or bank principals. This law replaces archaic financial legislation dating back to the early 1950's. The new banking law is a modern piece of legislation modeled on the Chilean banking law and recent financial sector reforms adopted in Ecuador and Colombia. The new banking law establishes a modern regulatory framework for the functioning of the banking system.