Circular OPRAC 1-825 / LISOL 1-673: Production and Financial Inclusion Financing Line, Second Semester 2016 Quota, Borrower Classification, Guarantees, and Amendments — BCRA — AR

"2016 - Year of the Bicentennial of the Declaration of National Independence" COMMUNICATION “A” 5975 17/05/2016 TO FINANCIAL ENTITIES:
Ref.: Circular
OPRAC 1 - 825
LISOL 1 - 673
Production and Financial Inclusion Financing Line. Second Semester 2016 Quota. Borrower Classification. Guarantees. Amendments.

We address you to inform you that this Institution adopted the resolution that, in its pertinent part, provides:

“1. Replace point 4.7. and the first paragraph of point 5.1. of the rules on “Production and Financial Inclusion Financing Line” with the following:

“4.7. Assistance agreed upon for natural and/or legal persons in areas in emergency situations affected by catastrophes caused by natural factors, such as floods, earthquakes, or droughts, through the following modalities:
4.7.1. Financing for working capital, including the discounting of instruments referred to in point 4.2.
4.7.2. Assistance that meets the following conditions:

They must be new financings or refinancings for the capital balances owed to that or another financial entity -in the latter case, with direct payment to the creditor entity-, granted from 1.4.16.
The weighted average term must be equal to or greater than 36 months -with the total term not being less than 48 months- and include a grace period of no less than 12 months.
In both cases, the maximum interest rate to be applied for each interest calculation period shall be the lower of the BADLAR in pesos of private banks and 22% nominal annual.
The intervening financial entity must archive in the credit file of each debtor a copy of the certification issued by the corresponding jurisdiction from which it emerges that the person was affected by the catastrophe.”

…

5.1. Maximum interest rate.
“The maximum interest rate to be applied -except for financings included in points 4.3., 4.5., 4.6. and 4.7.- shall be 22% fixed nominal annual.”

Incorporate as the last paragraph of point 5.2. of the rules on “Production and Financial Inclusion Financing Line” the following:

“Assistance agreed upon for natural and/or legal persons in emergency situations provided for in point 4.7.2. must have a weighted average term equal to or greater than 36 months -with the total term not being less than 48 months- and include a grace period of no less than 12 months.”

Replace, with effect from 1.7.16, Section 2., Section 3., points 4.2. -first paragraph-, 4.8. and Sections 11. and 12. of the rules on “Production and Financial Inclusion Financing Line” with the following:

“Section 2. Quota.
2.1. First semester of 2016.
Covered financial entities must maintain, from 4.1.16 to 30.6.16, a balance of included financings that is, at a minimum, equivalent to 14% of private non-financial peso deposits, calculated based on the monthly average of daily balances from November 2015. In the case of covered entities whose participation in private non-financial peso deposits is less than 0.25% -calculated in accordance with Section 1.- the percentage to be applied will be, from 4.1.16 to 30.6.16, at a minimum, 8%.

2.2. Second semester of 2016.
Covered financial entities must maintain, from 1.7.16 to 31.12.16, a balance of included financings that is, at a minimum, equivalent to 15.5% of private non-financial peso deposits, calculated based on the monthly average of daily balances from May 2016. In the case of covered entities whose participation in private non-financial peso deposits is less than 0.25% -calculated in accordance with Section 1.- the percentage to be applied will be, from 1.7.16 to 31.12.16, at a minimum, 9%.”

“Section 3. Applications.
3.1. General provisions.
At least 75% of the quota defined in Section 2. must be agreed upon with Micro, Small, and Medium Enterprises (MiPyMEs) in accordance with the definition in force in the rules on “Determination of micro, small, or medium enterprise status”.

The amount of financings to MiPyMEs to be imputed will arise from the product of the financing balance and the following valuation coefficients corresponding to the economic size of the borrower and their geographic location, as indicated in the following tables:

Applicable coefficients according to economic size Categories (according to rules on “Determination of micro, small, and medium enterprise status”) Coefficient Micro 1.20 Small 1.10 Medium Tranche 1 1.05 Medium Tranche 2 1.00

Applicable coefficients according to geographic location Categories Coefficient I 1.00 II 1.10 III 1.25 IV to VI 1.50

To determine the corresponding category, the categories provided for in Chapter II, Section 3., point 3.3., of Circular CREFI - 2, to which the locality belongs, will be taken into account:
a) where the investment project of the borrowing MiPyME is developed, in case the financing of a project is applied in more than one category, the one to which the largest proportion of the credit is assigned will be considered; or b) where the domicile declared by that MiPyME before the AFIP and the provincial tax collection body is located, when it concerns financing destined for working capital (including the discounting of deferred payment checks). If the applicant turns out to be domiciled in different jurisdictions according to the AFIP and the provincial tax collection body, or is registered in multiple jurisdictions, they must present a copy of the CM 01 Multilateral Agreement form to the granting financial entity, and it will be considered that 100% of the credit was disbursed in the locality of the domicile declared in that form. For these purposes, the simple average of the daily balances of the financings in force during the corresponding calendar semester will be considered.

3.2. Special application.
The amount to be imputed for the total balance of financings granted in accordance with what is provided in points 4.7. and 4.9. will arise from the sum of:
3.2.1. the product of that balance -up to an amount equivalent to 7.5% of the quota defined in point 2.2.- and a coefficient equal to 2 (two);
3.2.2. the remainder of the total balance in excess of the limit defined in point 3.2.1.”

…

4.2. Discounting of deferred payment checks and other documents to MiPyMEs.
“Discounting of deferred payment checks, public works certificates -or document replacing them-, invoices, and promissory notes to clients meeting the MiPyME condition up to an amount equivalent to:

30% of the Quota defined in point 2.1.
50% of the Quota defined in point 2.2.”

…

“4.8. Financings to non-covered entities.
It includes financings granted to financial entities not covered by these rules and/or to companies that provide financial assistance through financial leasing operations (“leasing”) -point 2.2.8. of the rules on “Complementary services of the financial activity and other permitted activities”-, provided that they allocate the funds, from 27.2.16, to the granting of project financings to MiPyMEs under the terms of point 4.1. Entities must apply the funds to the destinations provided for in this point within a period not exceeding 10 business days between the date they receive assistance from the financial entity and its credit application to MiPyMEs. For imputation purposes, a special external audit report of the non-covered financial entity regarding its compliance must be available, which must contain, in addition to the characteristics specified in Section 9., the dates and amounts of each application to the destinations provided for here.”

…

“Section 11. Excess applications and non-compliance.
Any eventual excess applications that occur with respect to the quota defined in point 2.1. will be transferred to the quota of point 2.2. increased by 10% as greater application.
Any eventual deficiency in applications that occur with respect to the quota defined in point 2.1. may be transferred to the quota of point 2.2. increased by 20% as lesser application, subject to prior authorization from the Superintendence of Financial and Exchange Entities. Without prejudice thereto, any non-compliance will be subject to the provisions of article 41 of the Financial Entities Law.”

…

“12.1. New covered entities.
Those entities that become covered by the application of Section 1. for the second semester of 2016 -having not been covered in the first semester- may, for the purposes of complying with the quota provided for in Section 2., maintain a balance of included financings equivalent to 25% of the Quota defined in Section 2. for the second semester.”

Incorporate, with effect from 1.7.16, as the last paragraph of point 4.7. and as point 4.9. of the rules on “Production and Financial Inclusion Financing Line” the following:

“Financings granted in accordance with this point will only be imputed to the quota required in point 3.2.”

…

“4.9. Financings to financial entities that are destined to grant the assistance agreed upon under the terms of point 4.7. and the incorporations they make of that assistance when it had been granted by other financial entities. The entity that funds the financings or the assignee, as the case may be, may impute said assistance, for which it must have a special external audit report under the terms provided for in point 4.8.”

Incorporate as the third paragraph of point 7.1. of the rules on “Borrower Classification” the following:

“For these purposes, refinancings granted to producers when this results from the application of provisions linked to the Agricultural Emergency Law will not be considered within that concept, without prejudice to which, for classification purposes, the delinquency in the delay of their obligations must be taken into account for the moment when the declared emergency expires. The treatment provided in that framework cannot imply an improvement in the classification assigned to the client based on their individual situation, pre-existing to the emergency, nor its application extend beyond the validity fixed for it.”

Provide, with effect until 31.12.17, for those producers to whom the provisions linked to the Agricultural Emergency Law apply, that for the purposes of computing the delinquency period to consider a debtor, in accordance with the provisions in the rules on “Borrower Classification”, classified in:

category 1 (referred to in points 6.5.1. and 7.2.1. -normal situation-): up to 75 days of delay in the payment of their obligations will be admitted;
category 2 (in accordance with points 6.5.2. and 7.2.2. -special follow-up or low risk, respectively-): that period will be 76 and up to 135 days of delay;
category 3 (in accordance with points 6.5.3. and 7.2.3. -problems or medium risk, respectively-): that period will be 136 and up to 225 days of delay.

The treatment provided in this framework cannot imply an improvement in the classification assigned to the client based on their individual situation, pre-existing to the declaration of emergency, nor its application extend beyond the validity fixed for it.

Provide, with effect until 31.12.17, that guarantees considered “Preferred A” are those that the National, provincial, Autonomous City of Buenos Aires, and/or municipal governments agree upon with producers covered by the provisions of the Agricultural Emergency Law for the assistance that financial entities grant them, provided that they consist in the assignment in guarantee of their resources coming from the federal and/or provincial tax coparticipation, royalty funds, and/or others of similar characteristics and/or from the collection of their own taxes.”

Finally, we send you the sheets that, in replacement of those previously provided, will correspond to incorporate into the rules in reference as a consequence of the measure adopted in points 1., 2. and 5. to 7. Likewise, it is recalled that on this Institution's website www.bcra.gob.ar, accessing “Legal and Regulatory Framework - Ordered Texts - Normative Orders”, the modifications made with texts highlighted in special characters (strikethrough and bold) will be found.

Subsequently, we will send you the sheets that will correspond to incorporate into the rules on “Production and Financial Inclusion Financing Line” on 1.7.16.

We greet you attentively.
BANCO CENTRAL DE LA REPÚBLICA ARGENTINA
Darío C. Stefanelli Agustín Torcassi
Principal Manager of Issuance and
Normative Applications General Submanager of Norms

ANNEX

4.7. Assistance agreed upon for natural and/or legal persons in areas in emergency situations affected by catastrophes caused by natural factors, such as floods, earthquakes, or droughts, through the following modalities:
4.7.1. Financing for working capital, including the discounting of instruments referred to in point 4.2.
4.7.2. Assistance that meets the following conditions:

They must be new financings or refinancings for the capital balances owed to that or another financial entity -in the latter case, with direct payment to the creditor entity-, granted from 1.4.16.
The weighted average term must be equal to or greater than 36 months -with the total term not being less than 48 months- and include a grace period of no less than 12 months.
In both cases, the maximum interest rate to be applied for each interest calculation period shall be the lower of the BADLAR in pesos of private banks and 22% nominal annual.
The intervening financial entity must archive in the credit file of each debtor a copy of the certification issued by the corresponding jurisdiction from which it emerges that the person was affected by the catastrophe.

4.8. Financings of motor vehicles and/or machinery through financial entities not covered by these rules and financial leasing companies.
Financings granted to financial entities not covered by these rules and/or to companies that provide financial assistance through financial leasing operations (“leasing”) -point 2.2.8. of the rules on “Complementary services of the financial activity and other permitted activities”-, provided that they allocate the funds, from 27.2.16, to the granting of credit assistance to MiPyMEs for the acquisition of motor vehicles and/or machinery at a sales price that is not higher than that of cash operations -list price, net of any general promotions that might exist- and under the conditions of this line (rate up to 22% nominal annual and term not less than 36 months). Entities must apply the funds to the destinations provided for in this point within a period not exceeding 10 business days between the date they receive assistance from the financial entity and its credit application to MiPyMEs. For imputation purposes, a special external audit report of the non-covered financial entity regarding its compliance must be available, which must contain, in addition to the characteristics specified in Section 9., the dates and amounts of each application to the destinations provided for here. Version: 4th COMMUNICATION “A” 5975 Validity:
18/05/2016
PRODUCTION AND FINANCIAL INCLUSION FINANCING LINE B.C.R.A.
Section 4. Eligible Financings.

5.1. Maximum interest rate.
The maximum interest rate to be applied -except for financings included in points 4.3., 4.5., 4.6. and 4.7.- shall be 22% fixed nominal annual.
For operations contemplated in point 4.1. with clients who do not meet the MiPyME condition: free.

5.2. Currency and terms.
Financings must be denominated in pesos and have -at the time of disbursement- a weighted average term equal to or greater than 24 months, weighting for this purpose the capital maturities, with the total term not being less than 36 months. Financings destined for working capital provided for in the second paragraph of point 4.1. must have an effective weighted average term equal to or greater than 24 months. Discounting operations of deferred payment checks and other documents to MiPyMEs as well as consumer credit portfolios incorporated in accordance with point 4.3. will have no minimum term. Mortgage loans to individuals for housing must have a minimum term of 10 years. Assistance agreed upon for natural and/or legal persons in emergency situations provided for in point 4.7.2. must have a weighted average term equal to or greater than 36 months -with the total term not being less than 48 months- and include a grace period of no less than 12 months. PRODUCTION AND FINANCIAL INCLUSION FINANCING LINE B.C.R.A.
Section 5. Terms and conditions of financings.
Version: 3rd COMMUNICATION “A” 5975
Validity:
18/05/2016

ORDERED TEXT ORIGIN NORM
Sec. Point Para. Com. Annex Sec. Point Para.
OBSERVATIONS
1. “A” 5874 unique 1.
2. “A” 5874 unique 2.
3. “A” 5874 unique 3.
4.1. “A” 5874 unique 4.1.
4.2. “A” 5874 unique 4.2. According to Com. “A” 5923.
4.3. “A” 5874 unique 4.3.
4.4. “A” 5874 unique 4.4.
4.5. “A” 5874 unique 4.5. According to Com. “A” 5950.
4.6. “A” 5874 unique 4.6. According to Com. “A” 5950.
4.7. “A” 5874 unique 4.7. According to Com. “A” 5975.
4.
4.8. “A” 5913 1. According to Com. “A” 5929.
5. 5.1. “A” 5874 unique 5.1. According to Com. “A” 5898 and 5975.
5.2. “A” 5874 unique 5.2. According to Com. “A” 5975.
6. “A” 5874 unique 6.
7. 7.1. “A” 5874 unique 7.1.
7.2. “A” 5874 unique 7.2.
8. “A” 5874 unique 8.
9. “A” 5874 unique 9.
10. “A” 5874 unique 10.
11. “A” 5874 unique 11.
12. 12.1. “A” 5874 unique 12.1.
12.2. “A” 5874 unique 12.2.
B.C.R.A.
ORIGIN OF THE PROVISIONS CONTAINED IN THE RULES ON “PRODUCTION AND FINANCIAL INCLUSION FINANCING LINE”

7.1. Classification criterion.
Without prejudice to the fact that previous analyses before granting financings and refinancings must also relate to the debtors' payment capacity, evaluating the impact of their periodic income by the total of credit commitments assumed, the classification of these clients will be carried out considering -at the end of each month- exclusively objective guidelines linked to the degree of compliance with the corresponding obligations or their legal situation, the information arising from the “Central of debtors of the financial system” -when they reflect quality levels lower than those assigned by the entity-, the “Debtors in irregular situation of former financial entities” database and the situation arising from the application of refinancing guidelines. In case of discrepancies, the guideline indicating the highest level of uncollectibility risk must be considered. It is understood that the compliance with the obligations referred to in said guidelines takes place when new financings or refinancings destined to cancel pre-existing obligations are not resorted to, regardless of the modality (extensions, stays, term or margin increases -whether such modalities are express or tacit, decreases in installment amounts or payments, renewals, restructurings, etc.). In the case of refinancings, in order to determine an improvement in the debtor's classification, it will be necessary to take into account the specific guidelines provided for in each of the categories. For these purposes, refinancings granted to producers when this results from the application of provisions linked to the Agricultural Emergency Law will not be considered within that concept, without prejudice to which, for classification purposes, the delinquency in the delay of their obligations must be taken into account for the moment when the declared emergency expires. The treatment provided in that framework cannot imply an improvement in the classification assigned to the client based on their individual situation, pre-existing to the emergency, nor its application extend beyond the validity fixed for it. Without prejudice to what is established above, for the purposes of constituting provisions for uncollectibility risk, higher than the minimums established by this Institution in accordance with what is provided for in point 2.3. of the rules on “Minimum provisions for uncollectibility risk” -which will be individually imputable for debtors in situations other than normal and of a global character for those in normal situation- more rigorous criteria based on the objective guidelines referred to in the first paragraph of this point may be adopted, provided that this constitutes a policy of a general nature, which must be explicit in the “Classification and provision procedures manual”, without affecting the classification that should be assigned to the debtors included in accordance with these provisions and the objective criterion or criteria with studies on their behavior that
support the higher provisions (whether for the entire active portfolio or by type of financing) must be duly founded in it. The approval of such criteria and their modifications will require the authorization of the same officials who have the approval of “Significant Financings” (point 1.5.3. of the rules on “Credit management”). In order to determine an improvement in the debtor's classification that, as a consequence of having incurred delay in the payment of their refinanced obligations, has been recategorized in lower levels, it will be necessary to take into account the specific guidelines provided for in each of the categories, based on the cancellation of the minimum installments (financings with periodic, monthly or bimonthly payment) or the percentage of cancellation of the balance (by capital) of their refinanced obligations (financings with single, periodic payment greater than bimonthly or irregular). BORROWER CLASSIFICATION B.C.R.A.
Section 7. Classification of debtors in the consumer or housing portfolio.
Version: 10th COMMUNICATION “A” 5975
Validity:
18/05/2016

To this end, improvements in customer classifications cannot be made if they record a delay of more than 31 days in the payment of their refinanced obligations.

Unapplied collections and discounts granted prior to refinancing reduce the amount of the obligation subject to refinancing, and therefore are not computable for the improvement of the classification based on the parameters established for each payment modality of the refinancing. Therefore, the manner in which such concepts are imputed to the cancellation of the debt subject to refinancing will depend on the criterion chosen by each entity, without prejudice to the observance of other general provisions applicable in the matter.

Advance payments and/or advances made at the time of refinancing to access it or after its structuring will be computed, in terms of installments or percentage of capital amortization, depending on the payment modality of the refinancing, in relation to the capital balance of the refinanced obligation.

In order to verify compliance with commercial obligations included in this portfolio without resorting to new financings or refinancings, the following shall not be considered included in those definitions:

i) additional facilities granted with respect to current agreed margins, provided that the new credit support implies new disbursements of funds and does not exceed 10% of the quota assigned at the time of the last credit evaluation of the customer until it corresponds to be evaluated again;

ii) periodic renewals of credit for working capital nor new financings and refinancings associated with greater investment derived from the expansion of activities.

This, insofar as they are consistent with the normal course of business and there is capacity to meet the rest of the financial obligations.

When credit margins have been assigned to the debtor by specific loan lines and these are exceeded, such situations will not be considered refinancings provided that the maximum assistance limit agreed upon for all concepts based on their payment capacity is not exceeded, according to item ii) of point 1.1.3.2. of the "Credit Management" norms.

The evaluation of payment capacity based on the borrower's income will not be mandatory, insofar as specific evaluation methods are used or it concerns debtors for small amount loans under the terms of point 1.1.3.3. of the "Credit Management" norms.

The granting of this type of assistance does not prevent that, in the case that other credit facilities are granted to the same borrower, the provisions in the first paragraph of this point regarding the evaluation of the debtor's payment capacity must be observed.

BORROWER CLASSIFICATION
B.C.R.A.
Section 7. Classification of debtors in the consumer or housing portfolio.
Version: 10th
COMMUNICATION "A" 5975
Validity:
18/05/2016

7.2. Classification Levels.
7.2.1. Normal Situation.
It includes customers who attend to the payment of their obligations punctually or with delays not exceeding 31 days.

Temporary overdrafts in checking accounts will be considered normal compliance up to 61 days counted from their granting.

For the purpose of establishing the days of delay, in the case of financings instrumented through credit cards, the days resulting after imputing the minimum payment required in each statement to cancel the debt in descending order of age will be considered.

Debtors who have accessed refinancings of debts while classified in lower levels can only be included in this category to the extent that the guidelines established for each of the corresponding levels have been observed, and additionally, that the rest of their debts meet the conditions for the customer to be recategorized at this level.

Debtors who have refinanced their debts, even without incurring delays in the payment of their services, may remain in this category, when they have accessed, at most, two refinancings, within a term of 12 months, counted from the last refinancing granted.

For these purposes, assistance granted to debtors classified in this category will not be considered a refinancing whenever it implies greater debt by capital (net of interest and accessories that are capitalized) with respect to the amount owed previously for the same concept and the debtor's payment capacity is evaluated to face the obligations arising from that expansion of the credit margin.

Overdrafts in bank checking accounts for amounts exceeding the utilization margins duly agreed upon, or those that have been effected -regardless of their amount- without the account holder having a previously and expressly assigned margin, will also not be considered refinancing provided that such excesses are cancelled within 30 days.

In the event that refinancings are verified under conditions different from those indicated in the preceding paragraph, the reclassification of the debtor, at minimum, to the immediately lower level will correspond.

7.2.2. Low Risk.
It includes customers who register occasional non-compliance in the attention of their obligations, with delays of more than 31 up to 90 days.

Regarding the legal situation of the debtor, it will be considered if they maintain payment agreements resulting from judicial or extrajudicial homologated concordats (including homologated extrajudicial preventive agreements) due when at least 15% of the amount involved in the cited agreement has been cancelled.

BORROWER CLASSIFICATION
B.C.R.A.
Section 7. Classification of debtors in the consumer or housing portfolio.
Version: 6th
COMMUNICATION "A" 5975
Validity:
18/05/2016

Customers whose debts have been refinanced through periodic payment obligations (monthly or bimonthly) may be reclassified to the immediately higher level, when they have paid punctually or with delays not exceeding 31 days, with the payment of 1 installment, or, when it concerns single-payment financings, periodic superior to bimonthly or irregular, they have cancelled at least 5% of their refinanced obligations (by capital), plus the quantity of installments or the accumulated percentage that might correspond, respectively, if the refinancing had been granted having the debtor included in lower levels.

The debtor who, being classified in this category, has refinanced their debt (even if they have cancelled the installment cited in the preceding paragraph) and received additional credit under the terms referred to in point 2.2.5. of the norms on "Minimum Provisions for Uncollectible Risk", and insofar as such additional financing has not been cancelled, must remain in this category for at least 180 days counted from the date on which the additional credit was granted or from when the refinancing agreement was celebrated, whichever is more recent.

In the event that delays greater than 31 days are verified in the payment of the services of the refinanced debt counted from the inclusion of the debtor in this category, the immediate reclassification of the debtor to the level resulting from considering the total quantity of days obtained by adding the days of delay effectively registered from the first unpaid installment of the refinancing and the minimum delay days established normatively that correspond to the category in which the debtor is classified in the month in which the new delay is verified will correspond.

7.2.3. Medium Risk.
It includes customers who show some inability to cancel their obligations, with delays of more than 90 up to 180 days.

Regarding the legal situation of the debtor, it will be considered if they maintain payment agreements resulting from judicial or extrajudicial homologated concordats (including homologated extrajudicial preventive agreements) due when the 15% of the amount involved in the cited agreement has not yet been cancelled.

In order to determine the amount of cancellation, it is admitted to compute 50% of the additional guarantees offered originally, constituted on assets not linked to the debtor's exploitation -with the exception of mortgages on rural real estate which, therefore, will be computable-, observing the coverage margins established in the norms on "Guarantees".

Customers whose debts have been refinanced through periodic payment obligations (monthly or bimonthly) may be reclassified to the immediately higher level, when they have paid punctually or with delays not exceeding 31 days, with the payment of 2 consecutive installments, or, when it concerns single-payment financings, periodic superior to bimonthly or irregular, they have cancelled at least 5% of their refinanced obligations (by capital), plus the quantity of installments or the accumulated percentage that might correspond, respectively, if the refinancing had been granted having the debtor included in the lower level.

BORROWER CLASSIFICATION
B.C.R.A.
Section 7. Classification of debtors in the consumer or housing portfolio.
Version: 6th
COMMUNICATION "A" 5975
Validity:
18/05/2016

The refinanced debtor who has complied with the provisions in the preceding paragraphs, as applicable, may be reclassified to the immediately higher level if, additionally, the rest of their debts meet, at minimum, the conditions provided in the cited level.

The debtor who, being classified in this category, has refinanced their debt (even if they have cancelled the installments or percentage established previously) and received additional credit under the terms referred to in point 2.2.5. of the norms on "Minimum Provisions for Uncollectible Risk", and insofar as such additional financing has not been cancelled, must remain in this category for at least 180 days counted from the date on which the additional credit was granted or from when the refinancing agreement was celebrated, whichever is more recent.

7.2.4. High Risk.
It includes customers with delays of more than 180 days up to one year.

It will also include debtors who have requested preventive bankruptcy, celebrated an extrajudicial preventive agreement not yet homologated or whose bankruptcy has been requested, as long as it has not been declared, for obligations equal to or greater than 20% of the customer's equity or for obligations between 5% and less than 20% of the equity when the request for bankruptcy persists after 90 days have elapsed since it was requested. In the event that the request for bankruptcy is lifted, the debtor may be reclassified to higher levels, according to the previous situation, if the conditions provided there are observed.

In the case of debtors who have requested preventive bankruptcy or extrajudicial preventive agreement or are under judicial management, who verify delays of up to 540 days.

Customers whose debts have been refinanced through periodic payment obligations (monthly or bimonthly) may be reclassified to the immediately higher level, when they have paid punctually or with delays not exceeding 31 days, with the payment of 3 consecutive installments, or, when it concerns single-payment financings, periodic superior to bimonthly or irregular, they have cancelled at least 10% of their refinanced obligations (by capital), plus the quantity of installments or the accumulated percentage that might correspond, respectively, if the refinancing had been granted having the debtor included in the lower level. In the case of debtors who have requested preventive bankruptcy, the immediate reclassification to the next lower level will correspond when delays of more than 540 days are verified.

BORROWER CLASSIFICATION
B.C.R.A.
Section 7. Classification of debtors in the consumer or housing portfolio.
Version: 7th
COMMUNICATION "A" 5975
Validity:
18/05/2016

11.1. For the purposes of computing the 12-month term referred to in point 7.2.1., linked to the permanence of refinanced debtors in situation 1, the refinancings that have been granted since 1.5.07 will be taken into account.

11.2. The provisions of Section 7. will enter into force, at the latest on 1.3.08, without prejudice to which entities must observe the following conditions until their systems are fully adapted to the new regime applicable for the treatment of refinancings of the consumer portfolio, without exceeding the aforementioned date:

Aspects	Refinancings originated From 1.5.07 to 26.11.07	Refinancings originated From 27.11.07 to 29.2.08
Classification of debtors.	The classification prior to the refinancing is maintained.
Minimum provisions for uncollectible risk.	The norms in force on 30.4.07 will be applied.	The provisions prior to the refinancing are maintained.

During the transition, from 27.11.07 and until 29.2.08 and as long as their operational systems have not been adapted to these provisions, financial entities may resort to a manual procedure to apply the present regime, insofar as the reclassification to a higher level is backed by pertinent documentation.

11.3. The new minimum debt cancellation percentages required for the reclassification of categories of points 6.5.2.1. -items vi) to viii)-, 6.5.3.5., 6.5.3.6., 6.5.3.10., 6.5.4.5., 6.5.5.2. and 6.5.2.2. and 7.2.2., 7.2.3., 7.2.4. and 7.2.5. will be applicable from January 2010. Consequently, until that date, the following percentages will continue to be applicable: 20% to reclassify from situation 5 to 4; 15% from situation 4 to 3 and 10% from situation 3 to 2.

11.4. Until 31.12.17, for those producers to whom the provisions linked to the Agricultural Emergency Law apply, for the purposes of computing the term of default to consider a debtor, according to what is provided in the norms on "Borrower Classification", classified in:

category 1 (to which points 6.5.1. and 7.2.1. -normal situation- refer): incurring up to 75 days of delay in the payment of their obligations is admitted;
category 2 (according to points 6.5.2. and 7.2.2. -special monitoring or low risk, respectively): this term will be 76 and up to 135 days of delay;
category 3 (according to points 6.5.3. and 7.2.3. -problems or medium risk, respectively): this term will be 136 and up to 225 days of delay.

The treatment dispensed within this framework cannot imply an improvement in the classification assigned to the customer based on their individual situation, pre-existing to the declaration of emergency, nor its application extend beyond the validity fixed for it.

BORROWER CLASSIFICATION B.C.R.A.
Section 11. Transitional Provisions.
Version: 7th
COMMUNICATION "A" 5975
Validity:
18/05/2016

BORROWER CLASSIFICATION
ORDERED TEXT ORIGIN NORM
Sec. Point Para. Com. Annex Point Para.
OBSERVATIONS
6.5.5. last "A" 2216 I I.d.5. According to Com. "A" 2826.
"A" 2216 I I.d.6. According to Com. "A" 2440. i) "A" 2216 I I.d.6. i) According to Com. "A" 2440. ii) "A" 2216 I I.d.6. ii) According to Com. "A" 2440. iii) "A" 2216 I I.d.6. iii) According to Com. "A" 2440. iv) "A" 2216 I I.d.6. iv) According to Com. "A" 2580. 6.5.6.1. last "A" 2440 2. last
6.5.6.2. "A" 2287 2. Modified by Com. "A" 2890 (point 3.), 5183, 5671 and 5740. Includes interpretative clarification.
b), 2nd paragraph
"A" 2287 2.3. Modified by Com. "A" 2497 (point 1.) and 5183. except b), last paragraph "A" 2287 2.5. Modified by Com. "A" 2497 (point 1.).
6.5.6.3. "A" 2573 1. According to Com. "A" 4545, 4972 (point
10) and 5557.
6.
6.6. last
"A" 2216
"A" 4060
I I.c.
10.
Modified by Com. "A" 2932 (point 6.) and 3339.
7.1. 1st "A" 2216 I II. 1st According to Com. "A" 3142, 4325 (point
1.), 4559 (point 7.), 4648, 4660,
4683, 4738, 4972 (point 10) and
5975.
7.2.1. "A" 2216 I II.1. According to Com. "A" 4648, 4660, 4683 and
4738.
7.2.2. "A" 2216 I II.2. According to Com. "A" 4648, 4660, 4683,
4738 and 4972 (point 10).
7.2.3. "A" 2216 I II.3. According to Com. "A" 4648, 4660, 4683,
4738 and 4972 (point 10).
7.2.4. "A" 2216 I II.4. Includes interpretative clarification.
According to Com. "A" 4310 (point 2),
4648, 4660, 4683, 4738, 4972 (point 10) and 4975.
7.2.5. "A" 2216 I II.5. Includes interpretative clarification.
According to Com. "A" 4310 (point 2),
4648, 4660, 4683, 4738, 4972 (point 10) and 4975.
7.2.6. "A" 2216 I II.6. According to Com. "A" 2440.
7.3. "A" 2216 I II. 1st and 2nd Modified by Com. "A" 2932 (point 6.) and 3339.
7.
7.4. "A" 4891 7.
8. 8.1. "A" 2216 I 5. Modified by Com. "A" 2562.
9.1. "A" 2227 unique 5.2.1. last According to Com. "A" 2649.
9. 9.2. "A" 2227 unique 5.1.5. According to Com. "A" 2649.
"A" 2227 unique 5.2.2.
10.1. "A" 2389 According to Com. "A" 5593 (point 4.).
10.2.1. "A" 2703 3. According to Com. "A" 3145 (point 1.).
10.2.2. "A" 2703 4.
10.
10.3. "A" 3141 4. According to Com. "A" 5275.

BORROWER CLASSIFICATION
ORDERED TEXT ORIGIN NORM
Sec. Point Para. Com. Annex Point Para.
OBSERVATIONS
11.1. "A" 4683 4.
11.2. "A" 4738
11.3. "A" 4975 7.
11.
11.4. "A" 5975 6.

B.C.R.A. ORDERED TEXT OF THE NORMS ON "GUARANTEES" -IndexSection 1. Classes.
1.1. Preferred "A".
1.2. Preferred "B".
1.3. Remaining guarantees.
Section 2. Conditions.
2.1. Consideration of preferred guarantees.
2.2. Supporting documentation.
Section 3. Computation.
3.1. Coverage margins.
3.2. Partial coverage with preferred guarantees.
Section 4. Transitional Provisions.
Correlation Table.
Version: 5th
COMMUNICATION "A" 5975
Validity:
18/05/2016

4.1. Until 31.12.17, Preferred "A" guarantees will be considered those that the National, provincial, City of Buenos Aires Autonomous and/or municipal governments agree to producers reached by the provisions of the Agricultural Emergency Law for the assistance that financial entities grant them, provided that they consist in the assignment in guarantee of their resources coming from the federal and/or provincial coparticipation of taxes, royalty funds and/or others of similar characteristics and/or from the collection of their own taxes.

GUARANTEES B.C.R.A.
Section 4. Transitional Provisions.
Version: 1st
COMMUNICATION "A" 5975
Validity:
18/05/2016

GUARANTEES
ORDERED TEXT ORIGIN NORM
Section Point Paragraph Com. Annex Point Paragraph
Observations
2.1. 1st "A" 2448 Statement of financial position of debtors (point 6.1.2.2.2.).
2.1. 2nd "A" 2932 unique 2.1. 2nd
2.
2.2. "A" 2216 I 1. 4th
3.1. "A" 2932 unique 3.1.
3.1.1. "A" 2932 unique 3.1.1. According to Com. "A" 3918.
3.1.2. "A" 2932 unique 3.1.2.
3.1.3. "A" 2932 unique 3.1.3. According to Com. "A" 3918.
3.1.4. "A" 2932 unique 3.1.4.
3.1.5. "A" 2932 unique 3.1.5. According to Com. "A" 3918, 4242 and
4741.
3.1.6. "A" 2932 unique 3.1.6. According to Com. "A" 3918.
3.1.7. "A" 2216 I 1. 3rd, g) According to Com. "A" 2932.
3.1.8. "A" 2216 I 1. 3rd, h) According to Com. "A" 2932.
3.1.9. "A" 2216 I 1. 3rd, i) According to Com. "A" 2932.
3.1.10. "A" 2932 unique 3.1.11. According to Com. "A" 3104 and 4522.
3.1.11. "A" 2932 unique 3.1.12. According to Com. "A" 3918.
3.1.12. "A" 2932 unique 3.1.13.
3.1.13. "A" 2932 unique 3.1.14.
3.1.14. "A" 2419 1. 1st, ii) According to Com. "A" 2932, 3314,
3918, 4551, point 2. and 4559, point 3.
3.1.15. "A" 2932 unique 3.1.18. According to Com. "A" 3918.
3.1.16. "A" 2932 unique 3.1.19. According to Com. "A" 3141, 3918,
4242, 4465 and 5275.
3.1.17. "A" 3114 2. According to Com. "A" 4242.
3.1.18. "A" 3259 2. According to Com. "A" 5067.
3.1.18.1. "A" 4559 5.
3.1.18.2. "A" 4559 5.
3.1.18.3. "A" 3259 2. According to Com. "A" 3314, 3918 and
4559, point 5.
3.1.18.4. "A" 3259 2. According to Com. "A" 3918, point
4.
3.1.18.5. "A" 3259 2. According to Com. "A" 3314, point
3.
3.1.18.6. "A" 3314 6.
3.1.19. "A" 3314
3.1.20. "A" 4491 1. According to Com. "A" 4501.
3.
3.2. "A" 2216 II 5th According to Com. "A" 3918.
4. 4.1. "A" 5975 7.