Circular OPRAC 1 - 362. Advertising of interest rates on active operations

BANCO CENTRAL DE LA REPUBLICA ARGENTINA ______ COMMUNICATION "A" 2147 12/10/93 ______ TO FINANCIAL ENTITIES:
Ref.: Circular
OPRAC 1 - 362.
Advertising of interest rates on active operations

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

"1. Replace, with effect from 1.11.93, the first paragraph of point 2.1. of Chapter II of Circular OPRAC - 1, with the following:
"2.1. Method of declaring rates.
In all operations, regardless of their instrumentation, it corresponds that in contracts, receipts, debit notes or other documents related to clients, where rates or amounts of interest are specified, express mention shall be made of the interest rate or annual contractual discount applied and of the effective monthly or annual interest rate -according to whether the operations are in pesos or in foreign currency, respectively-, equivalent to the calculation of interest in arrears on balances. Likewise, it will be recorded the "Total Financial Cost" for which the effect of the different charges associated with the operation will be considered, regardless of its concept, according to what is provided in the last paragraph of point 2.2."

2. Replace, with effect from 1.11.93, point 2.2.
   of Chapter II of Circular OPRAC - 1 (text according to Communication "A" 1874), with the following:
   "2.2. In all printed advertising, regardless of the medium of dissemination used, relating to operations of credit, regardless of its instrumentation, it must include information on the highest and lowest of the interest rates offered to clients and the average weighted active rate by operations concluded in the month prior to the one that corresponds. Likewise, the display of such information must be observed, on an obligatory basis, in the boards placed in premises attended by the public. When it refers to operations in pesos and in national public securities issued in that currency, the annual nominal rate and the equivalent effective monthly rate will be communicated, the latter, to the calculation of interest in arrears on balances, in percent. In the case of operations in foreign currency and in national public securities denominated in that currency, the nominal and effective rates will be reported annual, equivalent, the latter, to the calculation of interest in arrears on balances, in percent. When by any means -including radio or televi- sive- the offer of credits in specific operations (e.g.: mortgage credits for housing) is advertised, the nominal and annual effective rates must be reported -both in operations in pesos and in foreign currency-. In these cases, the effective rate must reflect the "Total Financial Cost" of the operation considering the effect of the different charges associated with the operation -in addition to the interest rate-, regardless of the concept (e.g.: commissions for the provision of services, reimbursement of admitted expenses, notarization and registration of liens expenses, real estate intermediation commission in the amount that exceeds the normal market rate, integration of shares in the case of entities of a cooperative nature, etc.)."

We salute you very respectfully.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA Juan Carlos Isi Alfredo A. Besio Deputy Manager of Standards Manager of Standards for for Financial Entities Financial Entities