Mexico's government is proposing a sweeping reform to the banking sector to make credit cheaper and more available in a country where bank loans represent less than 20 percent of GDP, one-tenth the level in the United States.

The plan would encourage banks to compete and lend more, create new bond markets for mid-sized companies and modify bankruptcy laws to make it easier for lenders to seize debtors' assets.

The huge 1995 financial crisis nearly threw Mexico's banking sector into bankruptcy.

But Finance Secretary Luis Videgaray said Wednesday that Mexico's banks are now solid, and need incentives to lend more.

Videgaray noted that credit levels in Mexico are far below Latin America's average.