Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 012/2021

SUBJECT: DEPARTMENT OF FINANCIAL ENTITIES - APPROVES REGULATIONS FOR INCENTIVES FOR THE RECOVERY OF CLAIMS OF THE CENTRAL BANK OF BOLIVIA UNDER ARTICLE 13 OF LAW NO. 1356 OF DECEMBER 28, 2020.

VISTOS:

• The Political Constitution of the State (CPE), promulgated on February 7, 2009.
• Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia (BCB).
• Law No. 1977 of May 14, 1999, Law Modifying Legal Provisions of the Financial System.
• Law No. 1356 of December 28, 2020, General State Budget Law for Management 2021.
• Supreme Decree No. 2068 of July 30, 2014.
• The BCB Statute approved by Board Resolution No. 128/2005 of October 21, 2005.
• Board Resolutions No. 069/2009 of June 16, 2009, No. 090/2011 of July 12, 2011, No. 050/2013 of May 7, 2013, No. 065/2015 of April 28, 2015, which approved the Regulations for Incentives for the Collection of Credit Portfolios Owned by the Central Bank of Bolivia.
• Act No. 01/2021 of the meeting on January 7, 2021, of the Recovery and Asset Realization Committee.
• Technical Report from the Department of Financial Entities BCB-GEF-SRRA-DRCA-INF-2021-2 of January 7, 2021.
• Legal Report from the Department of Legal Affairs BCB-GAL-SAJU-DLCCI-INF-2021-8 of January 7, 2021.

CONSIDERING:

That Article 327 of the CPE establishes that the BCB is a public law institution, with legal personality and its own assets. Within the framework of the State's economic policy, it is the function of the BCB to maintain the stability of the internal purchasing power of the currency, to contribute to economic and social development.

That Law No. 1670 in its Article 1 provides that the BCB is the sole monetary and exchange authority of the country, with administrative, technical, and financial competence and specialized normative powers of general application, in the manner and with the scope established in the Law.

That Article 44 provides that the highest authority of the BCB is its Board of Directors, which is responsible for defining its policies, specialized normative provisions of general application, and internal rules; as well as establishing administrative, operational, and financial strategies of the BCB, approving their respective short and medium-term programs. For the monitoring and supervision of their execution, it will have access to independent information, analysis, and audit services.

That subsections a) and o) of Article 54 provide that the BCB Board of Directors has the authority to issue norms and adopt general decisions that may be necessary for the BCB to fulfill its functions, competencies, and powers assigned by Law; and to approve, modify, and interpret the Statute and Regulations of the BCB, by two-thirds of the votes of all its members, without the need for any additional administrative act.

CONSIDERING:

That the Department of Financial Entities, in its capacity as administrator of the credit portfolios owned by the BCB originating from entities subject to liquidation processes and others detailed above, in its Technical Report BCB-GEF-SRRA-DRCA-INF-2021-2 of January 7, 2021, states: "In previous management periods (2009 and 2015), the BCB Board of Directors approved incentives for the extrajudicial collection of credit portfolios on four occasions, under Article 54 of Law 1670, which grants it the authority to issue norms and adopt general decisions necessary for the BCB to fulfill the functions, competencies, and powers assigned. In the 2019 management period, Law No. 1206 on Modifications to the General State Budget – Management 2019 was approved, which in its Article 6 approved incentives for debtors of liquidated banking entities, whose credit portfolios were transferred to the BCB with principal balances equal to or less than $us15,000 or its equivalent in bolivianos. The incentives established in the aforementioned Law consisted of the forgiveness of current and penal interest, fines, commissions, and other ancillary expenses, according to the scale approved and regulated by the BCB through Board Resolution (BR) No. 100/2019, with a validity of one (1) year computable from the publication of Law No. 1206."

That consequently, the currently proposed scale is consistent with what is established in Law No. 1356, Article 13, which in its text provides: "The incentives for the recovery of claims, through the forgiveness of current and penal interest, fines, commissions, and other ancillary expenses that the Central Bank of Bolivia applies" (italics and underline are our own).

That with respect to credits in judicial execution, it is expected that the incentives will allow for a reduction in judicial processes as well as in expenses for judicial procedures incurred by the BCB.

That from the foregoing background and based on the cited regulatory framework, it is established that the BCB's Recovery and Asset Realization Committee has among its functions and responsibilities the definition of strategies and guidelines for the fulfillment of the administration and collection of credit portfolios.

That in this context, the BCB's Recovery and Asset Realization Committee through Act No. 1 of January 7, 2021, considered the proposed Incentives Regulation project and ordered its submission to the BCB Board of Directors for its treatment and subsequent approval.

CONSIDERING:

That Law No. 1356, of December 28, 2020, General State Budget Law for Management 2021, in its Article 13 provides for incentives for the recovery of claims, through the forgiveness of current and penal interest, fines, commissions, and other ancillary expenses that the Central Bank of Bolivia applies to non-linked credit portfolios owned by it and received in administration from financial intermediation entities, by virtue of specific Laws, Supreme Decrees, and liquidation processes, only those credit obligations whose outstanding principal balance is equal to or less than USD 80,000.00 (Eighty Thousand 00/100 United States Dollars) or its equivalent in national currency may be subject to such incentives.

That the BCB Statute approved by Board Resolution No. 128/2005 in items 1, 2, and 29 of its Article 11 establishes that the Board of Directors of the Issuing Entity has the authority to approve general decisions and issue norms that may be necessary for the BCB to fulfill the functions, competencies, and powers assigned to it by Law; define the BCB's policies, specialized normative provisions of general application, and internal rules; as well as approve and modify BCB Regulations, by two-thirds of all its members, without the need for any additional administrative act.

That item 44 of the aforementioned Article 11 entrusts the General Manager with elaborating, in coordination with Area Managers, the necessary regulations for the implementation of laws and general norms, as well as for the timely execution of Board decisions, in the areas of their respective competencies.

That likewise, item 36 authorizes the Board of Directors to alienate and administer portfolios and assets received in dation in payment from banks in liquidation.

That the Recovery and Asset Realization Committee, in its meeting on January 7, 2021 and through Act No. 01/2021, approved the Project for the Regulation of Incentives for the Recovery of Claims of the Central Bank of Bolivia within the framework of Article 13 of Law No. 1356 of December 28, 2020 and authorized its presentation to the Board of Directors for its consideration and approval.

That the Report from the Department of Financial Entities BCB-GEF-SRRA-DRCA-INF-2021-2 states that in order to operationalize the compliance with Article 13 of Law No. 1356 of December 28, 2020, of the General State Budget Law for Management 2021, it is necessary to have a Regulation that allows for the implementation of incentives for the recovery of claims by the BCB.

That the Department of Legal Affairs in Report BCB-GAL-SAJU-DLCCI-INF-2021-8 establishes that the Regulation proposal raised by the Department of Financial Entities does not contravene any legal norm, so there is no legal impediment for its consideration and approval by the Board of Directors, which, within the framework of its powers established in Law No. 1670 and its Statute, has the authority to consider and approve incentives for the payment of portfolios, with the favorable vote of two-thirds of all its members.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA.

RESOLVES:

Article 1.- Within the framework of what is established in Article 13 of Law No. 1356, of December 28, 2020, General State Budget Law for Management 2021, approve the Regulation for Incentives for the Recovery of Claims of the Central Bank of Bolivia, which forms an integral part of this Resolution as an Annex, with validity until December 31, 2021.

Article 2.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, January 12, 2021

Roger Edwin Rojas Ulo

Rafael Boyán Téllez Bismarck Arevilca Vásquez Darwin Ugarte Ontiveros

ANNEX

REGULATION FOR INCENTIVES FOR THE RECOVERY OF CLAIMS OF THE CENTRAL BANK OF BOLIVIA WITHIN THE FRAMEWORK OF ARTICLE 13 OF LAW NO. 1356 OF DECEMBER 28, 2020

Article 1. (Object). This Regulation aims to establish the collection procedure for non-linked credit portfolios from financial intermediation entities in liquidation that were transferred to the Central Bank of Bolivia (BCB) in application of Laws, specific Supreme Decrees, and other regulations, and for the portfolio received in administration; as provided in Article 13 of Law No. 1356 of December 28, 2020, of the General State Budget – Management 2021.

Article 2. (Scope of Application). I. The scope of application of this Regulation extends to credit obligations whose outstanding principal balance is equal to or less than USD 80,000 (Eighty Thousand 00/100 United States Dollars) or its equivalent in national currency from the credit portfolios corresponding to the following financial intermediation entities: Banco de Crédito Oruro S.A., Banco Potosí S.A., Banco del Progreso Nacional S.A.M., Cooperativa San José Obrero Ltda., Banco Boliviano Americano S.A. including the portfolio ceded by FONDESIF, BIDES A (in administration by the BCB), Banco Sur S.A., Mutual La Frontera, Mutual Manutata, Mutual Tarija, Mutual Del Pueblo, Cooperativa Trapetrol, and the credit portfolio of the former National Pre-Investment Institute (ex INALPRE) administered by the BCB.

II. It also extends to debtors of credit portfolios that the BCB receives within the framework of Supreme Decree No. 2068, during the validity of this regulation.

Article 3. (Incentives for Recovery of Claims). The incentives for the recovery of claims, through the forgiveness of current and penal interest, fines, commissions, and other ancillary expenses that the BCB applies to the credit portfolios mentioned in Article 2 of this Regulation, apply according to the following scale:

Principal Balance expressed in USD	Forgiveness of Current Interest	Forgiveness of Penal, Late, Publications, Forms, and Insurance Interest
Less than or equal to 500	95%	100%
Greater than 500 up to 1,000	90%	100%
Greater than 1,000 up to 5,000	85%	100%
Greater than 5,000 up to 80,000	80%	100%

Article 4. (Payment Conditions). I. Debtors of the credit portfolios indicated in Article 2 of this Regulation, to qualify for the forgiveness, must cancel their debt in a single payment and in cash.

II. Obligations in foreign currency may be canceled in national currency at the official selling exchange rate in effect on the date of payment.

III. Payment may also be made by a third party without this implying automatic subrogation of the debt.

Article 5. (Payment of the Obligation). I. Those interested in qualifying for the forgiveness must request the BCB to calculate the amount of the debt as of the date of payment.

II. Subsequently, they must make their payment at BCB cashiers or at the financial entity where the BCB has an account enabled for this purpose, which will be communicated to them, and submit a copy of the payment slip to the Department of Financial Entities of the BCB. Once the cancellation of the debt is credited, the BCB will proceed with the procedures to release the debtor and guarantors of the obligation.

III. In the event that debtors or guarantors have more than one obligation with the BCB, the forgiveness will be applied per credit individually.

IV. The forgiveness extends to credits with judicial collection actions at any procedural stage up until before the judicial approval of the auction of the guarantee in cases that are at this procedural stage.

V. Credits that have goods auction approved by judicial authority may only qualify for the forgiveness for the balance of the credit that results once the amount resulting from the auction of goods has been applied.

Article 6. (Exclusions from Forgiveness). I. The forgiveness established in Article 3 of this Regulation does not exempt from the payment of professional fees for external lawyers, nor does it exempt judicial expenses during the processing of the credit collection process, which must be paid in full.

II. The forgiveness does not apply to current interest from the credit portfolio of the former BBA received in dation in payment for the BCB's financial support.

III. Judicial deposits arising from pending judicial withholdings for collection and application will not be considered in the calculation to be made for the forgiveness provided for in Article 3 of this Regulation. These uncollected withholdings will be released by the court if the debtor pays the obligation.

IV. In the case of auctions with adjudication by third parties, where the judicial approval of the auction and payment at the court exist, they are not covered by this Regulation. For payment with incentives, the calculation will include said auction amount once paid and registered at the BCB.

V. The forgiveness does not apply to credits classified as linked that were delivered to the BCB in dation in payment.