Circular REMON 1 - 1004: LELIQ. Minimum Cash. Adjustments.

“2020 - YEAR OF GENERAL MANUEL BELGRANO”
COMMUNICATION “A” 6937 19/03/2020
TO FINANCIAL ENTITIES:
Ref.: Circular
REMON 1 - 1004
LELIQ. Minimum Cash. Adjustments.
____________________________________________________________ We address you to inform you that this Institution adopted the resolution that, in its pertinent part, establishes:

“1. It is ordered that, from 20.3.2020 to 30.4.2020, holdings of BCRA Liquidity Notes (LELIQ) –including those corresponding to passive transfer operations carried out by financial entities with the BCRA– that exceed those admitted for the integration of the minimum cash requirement in pesos, provided for in point 1.3.15. of the regulations on “Minimum Cash”, may not exceed the equivalent of 90% of those excess holdings registered on 19.3.2020. For the purpose of adjusting, they must decrease their holdings as they collect them.

2. It is established, with effect from 20.3.2020, a decrease in the average minimum cash requirement in pesos by an amount equivalent to 40% of the sum of peso financings to Small and Medium Enterprises (SMEs) –according to the definition contained in the regulations on “Determination of the condition of micro, small or medium-sized enterprise”– agreed at a nominal annual interest rate of up to 24%, and at least 50% of the amount of these financings must be allocated to working capital lines, such as payment of salaries and coverage of deferred checks.
   The average monthly balance of the financings achieved in the period prior to the computation period that meet the conditions indicated will be considered.
   Financings granted to other financial entities and non-financial credit providers may be included in this sum, provided that: i) within 3 business days from the date they receive assistance, those entities allocate the funds to grant financings to SMEs under the conditions of this point, and ii) they have a special external audit report –registered in the “Register of Auditors” of the SEFyC–, which complies with what is provided for in point 1.5.4. of the regulations on “Minimum Cash”.

Financings computed for these purposes may not be considered for the decreases in the minimum cash requirement provided for in points 1.5.1. and 1.5.4. of the regulations on “Minimum Cash”.
This deduction may not exceed 4% of the concepts in pesos subject to the average requirement, of the month prior to the computation.

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3. It is ordered that, from the month of May 2020, the holding of LELIQ that exceeds those admitted for the integration of the minimum cash requirement in pesos, provided for in point 1.3.15. of the regulations on “Minimum Cash”, may not exceed –at all times– the holding resulting from the following table, in accordance with the financings computed in the previous period:

SME Financing as a Percentage of Potential Credit	Admitted Excess Holding (as a Percentage of those registered on 19.3.2020)
100%	90%
< 100% up to 75%	85%
< 75% up to 50%	80%
< 50% up to 25%	75%
< 25%	70%

where “potential credit to SMEs” is defined for this scheme as the sum of:
− 10% of the LELIQ holdings that exceed those admitted for the integration of the minimum cash requirement in pesos, provided for in point 1.3.15. of the regulations on “Minimum Cash”, registered on 19.3.2020; and − the amount of the decrease in the average minimum cash requirement in pesos provided for in point 2 or 4% of deposits, whichever is less. The amount of financings to SMEs to be considered –respecting the conditions provided for in point 2.– will correspond to the increase registered between the average monthly balance of the financings included in the period and that of said financings on 19.3.2020.

4. Replace the last paragraph of point 1.5.2. of the regulations on “Minimum Cash” with the following:
   “This deduction may not exceed 6% of the concepts in pesos subject to the requirement, on average, of the month prior to the computation.”

Likewise, we inform you that we will subsequently send you the sheets that, in replacement of those previously provided, it will be necessary to incorporate into the regulations of the reference.

CENTRAL BANK OF THE ARGENTINE REPUBLIC
Enrique C. Martin Matías A. Gutiérrez Girault
Submanager of Emission of Regulations
Manager of Emission of Regulations