BOARD OF DIRECTORS

BOARD RESOLUTION NO. 098/2022

SUBJECT:

FINANCIAL ENTITIES MANAGEMENT – APPROVAL OF THE REGULATION ON THE RECEIPT AND ADMINISTRATION OF CREDIT PORTFOLIOS.

VIEWING:

The Political Constitution of the State (CPE) of February 7, 2009.

Law 1670 of October 31, 1995 of the Central Bank of Bolivia (BCB) and its modifications.

Law No. 393 of August 21, 2013, on Financial Services.

The Statute of the Central Bank of Bolivia, approved by Board Resolution No. 095/2022 of October 6, 2022.

Technical Report BCB-GEF-SRRA-DRCA-INF-2021-52 of October 19, 2022 from the Financial Entities Management (GEF).

Legal Report BCB-GAL-SANO-DLBCI-INF-2022-218 of October 21, 2022 from the Legal Affairs Management (GAL).

CONSIDERING:

That Article 327 of the Political Constitution of the State establishes that the Central Bank of Bolivia 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 Central Bank of Bolivia to maintain the stability of the internal purchasing power of the currency, to contribute to economic and social development.

That Article 1 of Law 1670 determines that the BCB is a State institution, of public law, of an autarkic nature, of indefinite duration, with legal personality and its own assets, and with legal domicile in the city of La Paz. It is the sole monetary and exchange authority of the country, with administrative, technical, and financial competence and specialized normative faculties of general application, in the manner and with the scope established in the Law.

That Articles 44 and the subsections a) and o) of Article 54 of Law No. 1670 of the BCB define that the Highest Authority of the Central Bank of Bolivia is its Board of Directors and that its attributions include issuing norms and adopting general decisions necessary for the BCB to fulfill the functions, competencies, and faculties assigned to it by the Law; and that the Board is empowered 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, and those others necessary for the fulfillment of its functions.

That Article 5, paragraph III of Law No. 393, determines that the BCB shall be governed by its own provisions.

That according to numeral 1) of Article 10 of the BCB Statute, the Board is empowered to approve general decisions and issue norms necessary for the BCB to fulfill the functions, competencies, and faculties assigned to it by the Law.

That according to numeral 36) of Article 10 of the BCB Statute, the Board has the attribution to authorize the alienation and administration of portfolios and assets received in dation in payment from banks in liquidation.

That according to paragraph I of Article 26 of the BCB Statute, the Board pronounces on matters within its competence through resolutions and may also do so through decisions that will be expressly recorded in minutes, and also in paragraph II that every draft Board resolution must be motivated and justified by a technical report from the Management or Managements to which the subject matter of the resolution corresponds and by a report from the Legal Affairs Management.

That through Technical Report BCB-GEF-SRRA-DRCA-INF-2021-52 of October 19, 2022, the GEF concludes that the approval of the Draft Regulation on the Receipt and Administration of Credit Portfolios is necessary, which will help fulfill the objectives and policies defined for this effect, the operational and functionality of the areas involved in the receipt, administration, and recovery of credit portfolios received from financial entities subject to liquidation, solution, or forced sale processes, transferred gratuitously to the BCB and under administration.

That through Legal Report BCB-GAL-SANO-DLBCI-INF-2022-218 of October 21, 2022, the GAL establishes that the new Regulation on the Administration and Recovery of Credit Portfolios is legally appropriate and does not contravene the current legal framework, as its object is to regulate the receipt and administration of credit portfolios ceded to the BCB, recommending that the BCB Board consider its approval.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the Regulation on the Receipt and Administration of Credit Portfolios in its six (6) chapters, twenty-two (22) articles, and three Final Provisions, which form an annex to this resolution.

Article 2.- Repeal Board Resolution No. 013/2021 of January 12, 2021.

Article 3.- This Resolution shall enter into force from its publication.

Article 4.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, October 25, 2022

SIGNED. ROGER EDWIN ROJAS ULO. Oscar Ferrufino Morro, Gumercindo Héctor Pino Guzmán, Diego Alejandro Pérez Cueto Eulert.

---

ANNEX

REGULATION ON THE RECEIPT AND ADMINISTRATION OF CREDIT PORTFOLIOS

CHAPTER I

GENERAL PROVISIONS

ARTICLE 1. (OBJECT)

The purpose of this Regulation is to regulate the receipt and administration of credit portfolios ceded to the Central Bank of Bolivia (BCB), under the following concepts:

1. In dation in payment from financial entities in forced liquidation or forced sale.
2. Gratuitously, in compliance with Laws and/or Supreme Decrees, from credit portfolios originated in financial entities in liquidation, forced sale, or solution procedures.
3. Under administration on behalf of public entities.

ARTICLE 2. (SCOPE OF APPLICATION)

This Regulation shall be applied by the areas in charge of the receipt and administration of credit portfolios ceded to the BCB and those received under administration.

ARTICLE 3. (DEFINITIONS)

For the purposes of application of this Regulation, the following definitions are established:

1. Credit Portfolio. It is the set of credits or financed operations plus accrued but uncollected interest in execution status or written-off, ceded to the BCB within the framework of Laws or Supreme Decrees.

2. Credit Portfolio in Execution. These are credits for which the liquidated or administered financial entity initiated judicial collection actions and registered them in Asset accounts with a 100% provision.

3. Written-off Credit Portfolio. It is the one registered in off-balance sheet accounts by the liquidated or administered financial entity and ceded to the BCB within the framework of Laws or Supreme Decrees.

4. Off-balance sheet accounts. It is the record used by the BCB to account for operations that do not affect its assets, liabilities, capital, or results, and are registered for tracking and control purposes.

5. Judicial Collection. These are the legal actions for the recovery of credits carried out by the BCB, referring to the initiation, prosecution, and conclusion of processes instituted before competent judicial authorities.

6. Extrajudicial Collection. These are the actions for the recovery of credits without judicial actions carried out by the BCB.

7. Recovery of the Credit Portfolio. These are the actions oriented towards achieving the collection of the credit through judicial and/or extrajudicial means.

CHAPTER II

RECOVERY AND ASSET REALIZATION COMMITTEE

ARTICLE 4. (RECOVERY AND ASSET REALIZATION COMMITTEE)

I. The Recovery and Asset Realization Committee (CRRA) has the purpose of monitoring the processes of receipt and administration of the credit portfolios established in Article 1 of this Regulation.

II. The CRRA shall be composed of the following public servants of the BCB:
a) Two Directors, designated by the BCB Board of Directors, one of whom shall assume the presidency of the CRRA; b) General Manager; c) Financial Entities Manager; d) Legal Affairs Manager; e) Deputy Manager of Legal Affairs; and f) Deputy Manager of Recovery and Asset Realization, who shall act as Secretary.

III. The CRRA shall meet ordinarily at least once a month, in person or virtually, upon convocation by its President and shall sit with a quorum of at least four (4) members, including the President. The summonses for meetings shall be issued by the CRRA Secretary.

IV. In the event of the absence of the CRRA President, he shall be replaced by the other Director, who shall preside over the meeting.

V. In the event of the absence of the Deputy Manager of Recovery and Asset Realization, the Deputy Manager of Legal Affairs shall act as Secretary of the CRRA in the meeting.

VI. The decisions of the CRRA shall be assumed by a simple majority of votes of all members present at the meeting and shall be recorded in minutes. The President shall have a casting vote in case of a tie. CRRA members may not abstain from voting. In case of dissent, they must justify their position, which shall be recorded in the minutes.

ARTICLE 5. (FUNCTIONS AND ATTRIBUTES OF THE RECOVERY AND ASSET REALIZATION COMMITTEE)

The functions and attributes of the CRRA, within the framework of this Regulation, are:

1. Evaluate proposals for strategies and/or policies for the receipt, recovery, and administration of credit portfolios, presented by the Financial Entities Management (GEF) and the Legal Affairs Management (GAL), for consideration by the BCB Board of Directors.
2. Consider and evaluate the report of the commission for the receipt, verification, and review of technical and legal documentation of the credit portfolio to be received, for subsequent submission to the Board.
3. Monitor the application of strategies and/or policies approved by the BCB Board of Directors regarding the receipt and administration of the credit portfolio.
4. Approve, reject, or request expansions or complements to the different reports presented by the GEF and GAL to the CRRA within the framework of this Regulation.

CHAPTER III

OPERATIONAL AREAS

ARTICLE 6. (OPERATIONAL MANAGEMENTS)

I. The GEF, through the Deputy Manager of Recovery and Asset Realization, is in charge of the receipt and administration of credit portfolios.
II. The GAL, through the Deputy Manager of Legal Affairs, is in charge of legal advice in the receipt and administration of the credit portfolio.
III. The GADM shall assist the GEF and the GAL in the receipt and administration of the credit portfolio.

ARTICLE 7. (REVIEW COMMISSION)

The Review Commission is in charge of the technical and legal review of the credit folders delivered by the liquidated or administered financial entity, and its composition shall be defined by the CRRA according to the characteristics of the portfolio.

The Managers of the GEF and the GAL shall preside over the Review Commission, and the Deputy Managers of Recovery and Asset Realization and of Legal Affairs shall be part of it.

CHAPTER IV

RECEIPT OF THE CREDIT PORTFOLIO

ARTICLE 8. (RECEIPT OF THE CREDIT PORTFOLIO)

It is the process by which the BCB receives the credit portfolio in execution that forms part of the assets of the liquidated or administered financial entity; including the written-off credit portfolio, in compliance with Laws, Supreme Decrees and/or conventions or contracts of cession and receipt of portfolio signed by the BCB and the ceding entity of this portfolio.

ARTICLE 9. (PROCESS FOR THE RECEIPT OF THE CREDIT PORTFOLIO)

I. The process for portfolio receipt is as follows:
a) To initiate the receipt of the credit portfolio, the President of the BCB shall instruct the General Management to have the GEF and the GAL carry out the review and verification of the documentation inherent to the credit portfolio to be received. b) The President of the BCB shall request the transmission of information and documentation in physical and digital form to the liquidated or administered financial entity. c) The CRRA shall form the Review Commission that shall proceed to review the existing technical and legal documentation in the credit folders. d) The GEF shall request the Systems Management to carry out the review of the credit portfolio database and the report to the ASFI Credit Information Central of the liquidated or administered financial entity. e) Upon completion of the review by the Commission, it shall issue a report on the situation and conditions of the portfolio receipt to the General Manager, for the knowledge of the CRRA and, once approved by it, be submitted for consideration by the Board. f) The Board shall authorize the President to sign the Convention or Contract of Portfolio Cession. g) With the signing of the Convention or Contract of Portfolio Cession, the receipt and transfer of the folders shall be coordinated with the GADM, which shall take charge of the respective custody. h) The SCRI, at the request of the GEF, shall carry out the respective publications regarding the received credit portfolio.

ARTICLE 10. (REGISTRATION OF THE RECEIVED PORTFOLIO)

The accounting registration of the portfolio shall be carried out:
a) In the Assets of the BCB financial statements, when the cession of the credit portfolio is granted in dation in payment for the financial support provided by the BCB. b) In off-balance sheet accounts, when the cession of the credit portfolio is made gratuitously or the transfer value results in zero (0) due to being 100% provisioned by the liquidated financial entity, and must be registered at the nominal value of the capital balance on the date of transfer.

CHAPTER V

ADMINISTRATION OF THE CREDIT PORTFOLIO

ARTICLE 11. (ADMINISTRATION OF THE CREDIT PORTFOLIO)

The recovery and tracking process of the credit portfolio shall be the responsibility of the GEF and the GAL within the framework of this Regulation.

ARTICLE 12. (RECOVERY OF THE CREDIT PORTFOLIO)

The GEF and the GAL, within the framework of this Regulation, shall carry out actions for the recovery of the credit portfolio and shall jointly proceed to classify the credit portfolio for collection via judicial or extrajudicial means.

ARTICLE 13. (EXTRAJUDICIAL COLLECTION)

The GEF is the operational area in charge of the extrajudicial collection of the credit portfolios established within the framework of this Regulation.

Collection shall begin when the credit folder contains the loan document signed by the parties, or the disbursement receipt, if applicable, or the payment plan or other document that accredits the existence of the obligation with the liquidated or administered financial entity. In the case of credit cards, with the card issuance signed by the financial entity.

For extrajudicial collection, verification of home addresses, search for debtors on social networks, phone calls, publications, preparation of payment intimations, and others that enable the recovery of the portfolio shall be carried out.

ARTICLE 14. (JUDICIAL COLLECTION)

The GAL is the operational area in charge of the judicial collection of the credit portfolios established in this Regulation, through the initiation, prosecution, and conclusion of judicial processes before competent authorities.

ARTICLE 15. (PAYMENT OF PROFESSIONAL FEES TO EXTERNAL LAWYERS)

I. The GAL, prior to internal communication from the GEF, shall communicate to the external lawyer of the liquidated or administered financial entity the existence of consolidated professional fees pending collection in their favor.
II. In the event that the professional fees are not collected within a period of two (2) years from their notification, the GAL shall carry out the corresponding actions to constitute them in judicial deposit or others, or activate another legal procedure as appropriate.

ARTICLE 16. (APPLICATION OF JUDICIAL RECOVERIES)

For the application of amounts recovered via judicial means, both in cash and in movable and immovable assets, in accordance with current regulations, the amount shall first be imputed to overdue interest, then to expenses, and finally to the capital balance.

ARTICLE 17. (RETURN OF OVERPAID AMOUNTS)

The debtor, guarantor, or the person who made the excess credit cancellation may request the GEF to return the overpaid amounts. The GEF shall proceed to return the excess amount prior to issuing the technical and legal reports.

ARTICLE 18. (PORTFOLIO TRACKING)

I. The GEF shall update the portfolio information based on information and data obtained from other Public and/or private Entities.
II. The GEF and the GAL shall analyze the credit portfolio based on its status, age, and recoverability; in order to propose strategies and/or policies to the CRRA for the administration and recovery of the administered credit portfolios.
III. The GEF shall reconcile monthly the capital balances, suspended interest, and provisions registered in the Portfolio Management System (SACC) with the BCB accounting system.

ARTICLE 19. (INSURANCE FOR MORTGAGE GUARANTEES)

In credits received in dation in payment or gratuitously that register mortgage guarantees on immovable properties, whose contracts establish the contracting of insurance at the debtor's expense, the BCB shall contract the respective insurance policy coverage. The cost of the insurance shall be charged to the debtor balance of the credit.

ARTICLE 20. (REPORTS)

I. The GEF and the GAL shall prepare quarterly reports on the recovery of credit portfolios in judicial and extrajudicial collection within the framework of current regulations, for the knowledge of the CRRA.

II. The GEF and the GAL shall jointly prepare semi-annual reports on portfolio administration and recovery, for the knowledge of the CRRA and subsequent presentation to the Board.

ARTICLE 21. (PUBLICATION OF DEBTORS)

The GEF shall request the SCRI, prior to a legal report, to publish the list of delinquent debtors every two (2) years in a national circulation written press medium and its monthly publication on the official BCB website.

CHAPTER VI

EXPENSES IN THE RECEIPT AND ADMINISTRATION OF THE PORTFOLIO

ARTICLE 22. (PORTFOLIO ADMINISTRATION EXPENSES)

The GAL is authorized to incur the following expenses:
a) Notarial or others required for the receipt or transfer of assets by the liquidated or administered financial entity, whether in dation in payment, gratuitous cession, or under administration. b) Judicial expenses arising from any action taken for the recovery of credits; as well as, to determine the location and/or identification of assets given as collateral for credit operations. These expenses shall be recorded as "judicial expenses", charged to its budget.

The GAL shall remit to the GEF the forms of judicial expenses incurred, to be recorded in the debt settlement.

c) Annual property taxes and accessories, and transfer taxes incurred by the BCB, to obtain or exercise the proprietary right of assets adjudicated judicially, which shall be assumed by the BCB.

FINAL PROVISIONS

FIRST.- The credit portfolio currently under administration by the BCB, for recovery, tracking, and control, shall be governed by this Regulation from its publication.

SECOND.- The receipt and administration of the BCB's credit portfolio shall be governed by the Procedures Manual.

THIRD.- In accordance with the provision contained in paragraph III of Article 5 of Law No. 393 of August 21, 2013, on Financial Services, which empowers the Central Bank of Bolivia to be governed by its own norms; the provisions contained in this Regulation shall be of preferential application over the norms issued by the ASFI.