Circular LISOL 1-127 and OPRAC 1-399: Treatment of SME Financing with Guarantees Extended by Reciprocal Guarantee Societies

BANCO CENTRAL DE LA REPUBLICA ARGENTINA __________________________________________________________________ COMUNICACION " A " 2410 26/01/96 __________________________________________________________________ TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1 - 127.
OPRAC 1 - 399.
Treatment of financing for
SMEs with guarantees extended by Reciprocal Guarantee Societies (Law 24.467)

We address you to inform you that this Institution adopted the following resolution:

"1. Replace Section I. Commercial Portfolio, first paragraph, of Annex I to Communication "A" 2216 (text according to Communication "A" 2358) with the following:

"I. Commercial Portfolio.
For the purposes of these provisions, all financing and guarantees are included in this concept, with the exception of those that do not exceed the equivalent of $ 200,000 with or without preferred guarantees -in the event that the entity has exercised the option- and those considered as consumer loans or for own housing. When the client maintains financing for both concepts, consumer loans or for housing will be added to those of the commercial portfolio to determine their classification in one or the other portfolio based on the amounts indicated, for which purpose credits with preferred guarantee and/or granted by reciprocal guarantee societies, registered in the Registry enabled at this Institution, will be weighted at 50%."

2. Replace the first paragraph and heading of the table
   inserted in Annex II to Communication "A" 2216 with the following text:

"According to the classification that must be assigned to clients, taking into account what is provided in Annex I, the following minimum provisioning guidelines must be applied to the total debts of clients:

With preferred guarantees	Without preferred guarantees
or granted by	or granted by
Category	Reciprocal Guarantee Societies	Reciprocal Guarantee Societies
	registered in the Re-	registered in the Re-
	gistry enabled at	gistry enabled at
	the B.C.R.A.	the B.C.R.A.

3. Add the following points to Annex II to Communication "A"
   2140:

"3.10. the total of the financing that has guarantees extended by the same reciprocal guarantee society registered in the Registry enabled at the Central Bank, cannot exceed 25% of the R.P.C."

"4.7. the financing that has guarantees extended by reciprocal guarantee societies registered in the Registry enabled at the Central Bank, without prejudice to the observance of the global limit provided in point 3.10."

4. Incorporate into Annex I to Communication "A" 2140 the fol-
   lowing point:

"3.6. the financing that has guarantees extended by reciprocal guarantee societies registered in the Registry enabled at the Central Bank, without prejudice to the observance of the global limit provided in point
3.10. of Annex II."

5. Replace points 3.8. and 4.18. of Annex I to Communica-
   tion "A" 2136 with the following:

"3.8. with guarantees granted by societies of reciprocal guarantee (Law 24.467), regis- tered in the Registry enabled at the B.C.R.A. 50%

"3.9. others 100%"

and

"4.18. with guarantees granted by societies of reciprocal guarantee (Law 24.467), regis- tered in the Registry enabled at the B.C.R.A. 50%

"4.19. others 100%"

6. Incorporate into point 4. of the Annex to Communication "A" 467
   (text according to Communications "A" 2054, 2074 and 2098) the following exclusion:

"4.8. Credits that have guarantees granted by reciprocal guarantee societies (Law 24.467), registered in the Registry enabled at the Central Bank."

7. Establish that financial entities that provide credit
   assistance to SMEs -with guarantee extended by societies

of reciprocal guarantee registered in the Registry enabled at the Central Bank-, may use the treatment referred to in points

1. to 6. of this Communication to the extent that the interest
   rates they apply to such operations do not exceed those fixed for the first tier established in the Table of Risk Indicators contained in Annex II to Communication "A" 2136."

We salute you very attentively.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA Alfredo A. Besio Miguel A. Kiguel Manager of Standards for Deputy General Manager Financial Entities Area of Economics and Finance