“2018 - YEAR OF THE CENTENARY OF THE UNIVERSITY REFORM”

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION “A” 6541
19/07/2018

TO THE FINANCIAL INSTITUTIONS,
TO THE NON-FINANCIAL CREDIT CARD ISSUING COMPANIES, TO THE CREDIT PORTFOLIO MANAGERS OF EX-FINANCIAL INSTITUTIONS, TO THE TRUSTEES OF FINANCIAL TRUSTS COMPRISED IN THE FINANCIAL INSTITUTIONS ACT, TO THE REPRESENTATIVES OF FOREIGN FINANCIAL INSTITUTIONS NOT AUTHORIZED TO OPERATE IN THE COUNTRY, TO THE OTHER NON-FINANCIAL CREDIT PROVIDERS, TO THE NON-FINANCIAL PURCHASE CARD ISSUING COMPANIES:

Ref.: Circular
OPRAC 1 - 953
RUNOR 1 - 1411

Disclosure of the “Total Financial Cost” (CFT). Adjustments.

We are writing to inform you that this Institution has adopted the following resolution:

“1. Replace items 3.2. and 3.4.1. and the second paragraph of item 4.1. of the rules on “Interest rates in credit operations” with the following:

“3.2. Disclosure in documents.

In all operations, regardless of how they are documented, contracts, receipts, debit notes or other documents used in dealings with clients, where interest rates or amounts are specified, must expressly record the following aspects:

3.2.1. The annual contractual interest or discount rate agreed upon, in percent with at least one decimal place.

3.2.2. The equivalent annual effective interest rate calculated on a due-date basis, in percent with at least one decimal place.

3.2.3. Whether the interest rate is fixed or variable, indicating in the latter case the parameters to be used for its determination and the frequency of change.

3.2.4. Total financial cost (CFT), for which the provisions of item 3.4. shall be considered.

For the calculation of the CFT, the interest rate, commissions and charges in effect at the time of contracting shall be taken into account, expressly indicating whether these items may be modified in accordance with the parameters and criteria pre-established in the contract.

In the case of operations with parties falling within the definition of users of financial services, in addition:

i) The numerical value of the CFT and the “%” sign shall be identified in a legible and prominent manner according to one of the following criteria:

a) with at least twice the size –in the same font and preserving all proportions of stroke thickness, height and width– of that used for the other information included in the document in question; or

b) in a highlighted typeface and/or in a standout color –in the same font and size and preserving all proportions of height and width– relative to that used for the other information included in the document in question.

ii) The provisions of item 2.3.3. of the rules on “Protection of users of financial services” shall apply.”

“3.4.1. Definition.

It shall be expressed as an annual effective rate, in percent with at least one decimal place, and shall be determined by adding to the interest rate the effect of the commissions and charges associated with the operation, regardless of their nature, taking into account the following indicative criteria.”

4.1. In print media or in other media other than those provided for in item 4.2.

…

“Rates shall be disclosed in percent with at least one decimal place, distinguishing those corresponding to peso operations from those in foreign currency.”

2. Repeal the last paragraph of item 3.4. of the rules on “Interest rates in credit operations”.

3. Replace item 4.4.1.2. of the rules on “Communication by electronic means for environmental protection” with the following:

“4.4.1.2. On the interest rates for overdrafts without agreements in current accounts and the compensatory and punitive interest rates for credit card financing that they offer to their clients, for peso operations, with the following details:

i) Annual nominal interest rate.

ii) Annual effective interest rate.

iii) Total financial cost (CFT).

iv) The highest and lowest interest rates, when there is more than one rate for the aforementioned lines, expressed in the terms of the preceding items.

In all cases, rates shall be expressed in percent with at least one decimal place.

The total financial cost shall be placed in a prominent position relative to the rest of the variables disclosed. Its numerical value and the “%” sign shall be identified in a legible and prominent manner according to one of the following criteria:

a) with at least twice the size –in the same font and preserving all proportions of stroke thickness, height and width– of that used to inform the level of the annual nominal rate; or

b) in a highlighted typeface and/or in a standout color –in the same font and size and preserving all proportions of height and width– relative to that used to inform the level of the annual nominal rate.”

Furthermore, we are sending you the sheets that, replacing those previously provided, are to be incorporated into the rules on “Interest rates in credit operations” and “Communication by electronic means for environmental protection”. In this regard, it is noted that a normative interpretation has been incorporated into item 1.3. of the rules cited above.

Finally, it is recalled that on this Institution’s website www.bcra.gob.ar, by accessing “Sistema Financiero - MARCO LEGAL Y NORMATIVO - Ordenamientos y resúmenes - Textos ordenados de normativa general”, the modifications made will be found with texts highlighted in special characters (strikethrough and bold).

We send you our best regards.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Darío C. Stefanelli
Senior Manager of Issuance and
Regulatory Applications

Agustín Torcassi
Deputy General Manager of Regulations

ANNEX

INTEREST RATES IN CREDIT OPERATIONS OF THE CENTRAL BANK OF THE ARGENTINE REPUBLIC (B.C.R.A.)
Section 1. General aspects.

1.1. Basic criterion.

Compensatory interest rates shall be freely agreed upon between financial institutions and clients, taking into account, where applicable, the provisions established in cases of specific regimes.

In financings linked to credit card operations, the provisions established in Section 2 shall be observed.

1.2. Forms of agreement.

1.2.1. Fixed rate.

Fixed interest rate loan contracts may not contain clauses providing for their modification under certain circumstances, except where they result from decisions adopted by a competent authority.

1.2.2. Variable rate.

Variable interest rate loan contracts shall clearly specify the parameters to be used for their determination and the frequency of change.

1.3. Settlement basis.

Interest may only be settled on the balances of capital actually lent and for the periods during which it has been at the disposal of clients.

When calculating the effective rate to be applied in each interest accrual period from a nominal rate, the quotient between the numerator and denominator, annualized, must always be equal to one, for example 12 x 30/360 or 12 x 30,41666/365.

1.4. Application modalities.

Rates shall be applied in arrears, except in single-payment operations at maturity, where the advance form may also be used, as agreed with clients.

1.5. Fixed divisor.

1.5.1. General.

365 days.

1.5.2. Housing mortgage loans and automobile chattel loans.

360 days, in operations covered by the origination and administration manuals for such loans.

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3.1. Objective.

Interest rates shall be expressed in a homogeneous and transparent manner within the financial market so that credit users have comparable elements for their evaluation.

3.2. Disclosure in documents.

In all operations, regardless of their documentation, contracts, receipts, debit notes or other documents of relationship with clients, where rates or interest amounts are specified, express record of the following aspects shall be made:

3.2.1. Contractually agreed annual interest or discount rate, in percent with at least one decimal place.

3.2.2. Annual effective interest rate equivalent to the calculation of interest in arrears, in percent with at least one decimal place.

3.2.3. Fixed or variable nature of the interest rate, indicating in the latter case the parameters to be used for its determination and the frequency of change.

3.2.4. Total financial cost (CFT), for which the provisions of point 3.4 shall be considered.

For the calculation of the CFT, the interest rate, commissions and charges in force at the time of contracting shall be taken into account, expressly indicating whether those concepts may be modified in accordance with the parameters and criteria pre-established in the contract.

In the case of operations with subjects included within the definition of users of financial services, additionally:

i) The numerical value of the CFT and the “%” sign must be identified legibly and prominently according to any of the following criteria:

a) with at least twice the size –in identical font and preserving all proportions of stroke thickness, height and width– of that used for the other information included in the document in question; or

b) in a highlighted typeface and/or in a prominent color –in identical font and size and preserving all proportions of height and width– with respect to that used for the other information included in the document in question.

ii) The provisions of point 2.3.3. of the standards on “Protection of users of financial services” shall apply.

3.3. Calculation of the effective annual interest rate.

The following formulas shall be used.

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3.3.1. Operations in which, according to the contract, interest is calculated in arrears for periodic or full collections, and determined proportionally from an annual rate:

3.3.2. Operations in which, according to the contract, interest is calculated in advance and collected in full, determined proportionally from an annual rate:

In the foregoing expressions:

i: effective annual interest rate, equivalent to the calculation of interest in arrears on balances, in percent, with two decimals.

is: annual interest rate contractually applied, in percent.

d: annual discount rate contractually applied, in percent.

m: number of days corresponding to each of the subperiods of interest collection when collected periodically, or of the operation when collected on a single occasion. When such subperiods are on fixed days for monthly, bimonthly, etc. periods, they shall be considered for these purposes as 30 days, 60 days, etc., respectively.

df: 365 or 360, according to the fixed divisor that must be used.

3.4. Total financial cost.

3.4.1. Definition.

It shall be expressed as an effective annual rate, in percent with at least one decimal, and shall be determined by adding to the interest rate the effect of the commissions and charges associated with the operation, whatever their concept, taking into account the following guiding criteria.

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3.4.2. Computable concepts.

3.4.2.1. Integration of social contributions of financial entities of a cooperative nature associated –directly or indirectly– with the financings.

3.4.2.2. Commissions for the entity's intermediation in real estate purchase-sale transactions linked to loans granted for their acquisition, to the extent that it exceeds the normal market value.

For this purpose, the commissions that the seller must pay shall also be considered when they are borne by the buyer.

3.4.2.3. Premiums and other expenditures for the contracting of insurance in relation to the borrowers and the assets subject to the financings, when they are required as a condition for obtaining the credit -adjusting, where applicable, to the provisions of the rules on “Protection of users of financial services” in this matter-.

3.4.2.4. Account opening and maintenance expenses for deposit accounts and those linked to credit and/or purchase cards associated with the financings.

3.4.2.5. Asset appraisal charges.

3.4.2.6. Charges for postal mailing of debit notices and other notifications, such as those related to the servicing of amortization and interest services of the financings.

3.4.2.7. Value added tax on interest in the case where the borrower is a final consumer.

3.4.3. Non-computable concepts.

3.4.3.1. Commissions for agreements on the use of funds in the form of overdrafts, to the extent that they strictly correspond to the allocation and are not linked to the capital actually used.

3.4.3.2. National, provincial and municipal taxes that levy:

i) Pledge and personal loans.

ii) The acquisition of assets (except real estate) on which liens or guarantees are constituted as security for the credit assistance granted by the entity.

iii) The acquisition of real estate, unless the financial entity intermediates in the purchase-sale transaction, in which case the taxes shall be computable in the part corresponding to the seller when the buyer, for any reason, bears them.

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iv) The constitution of mortgages as security for loans granted by the entity.

The value added tax on interest in transactions with final consumers shall, for the purposes of this rule, have the treatment indicated in point 3.4.2.7.

3.4.3.3. Rates, tariffs and other remunerations for services of public agencies such as those responsible for the collection of taxes, property registries and public service companies, corresponding to:

i) Issuance of debt certificates, registration of assets, etc., with respect to assets whose acquisition is the object of the financing granted by the entity.

ii) The constitution of liens and guarantees as security for financings granted by the entity.

Only to the extent that it corresponds to the reimbursement of the exact amount of those concepts, with the exception that when the financial entity intermediates in the real estate purchase-sale transaction, the taxes shall be computable in the part corresponding to the seller when the buyer, for any reason, bears them.

3.4.3.4. Notary fees, including the reimbursement of expenses for notarial processing of:

i) Issuance of debt certificates, registration of assets, etc., with respect to assets whose acquisition is the object of the financing granted by the entity.

ii) The constitution of liens and guarantees as security for financings granted by the entity.

Only to the extent that it does not exceed the normal market value, with the exception that when the financial entity intermediates in the real estate purchase-sale transaction, the concepts shall be computable in the part corresponding to the seller when the buyer, for any reason, bears them.

3.4.3.5. Tax on interest paid and the financial cost of corporate indebtedness.

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INTEREST RATES IN CREDIT OPERATIONS B.C.R.A.
Section 4. Advertising.

4.1. In graphic media or in other media different from those provided in point 4.2.

The advertising offer, through any mass or individual medium (newspapers, magazines, billboards on public roads or on construction sites, Internet, brochures, correspondence, etc.), or in other places different from customer service locations, in which specific credits are promoted –such as mortgage loans for housing, pledge loans for automobiles, personal loans or through credit cards–, making mention of the number of installments and/or their amount and/or the interest rate, shall determine that the entities must display in a legible and prominent manner the following information:

4.1.1. Nominal annual interest rate.

4.1.2. Effective annual interest rate.

4.1.3. Total financial cost.

4.1.4. Fixed or variable nature of the interest rate.

The rates shall be displayed as a percentage with at least one decimal, discriminating those corresponding to transactions in pesos from those in foreign currency.

The advertising of the total financial cost shall be placed in a typography in a prominent color, of identical font and of a size at least five times larger –preserving all proportions of stroke thickness, height and width– than that used to inform the level of the nominal annual rate.

4.2. Advertising by radio, television or telephone media.

In radio or television advertising of the operations mentioned in point 4.1. and only when reference is made to installment amounts and/or the level and/or type of interest rate, it shall be appropriate to additionally inform the total financial cost.

Television advertising of the total financial cost must be placed in a typeface in a highlighted color, of identical font and of a size at least five times larger – preserving all proportions of stroke thickness, height and width – than that used to inform the level of the nominal annual rate.

4.3. Advertising of installments.

In advertising – whatever the medium – of installment values with respect to specific cases (such as financing of a certain housing unit or a vehicle or a personal loan), the amount shown must result from the calculation that includes all the concepts that will be borne by the borrowers (amortization of principal, interest, premiums for insurance required in the contract, account maintenance expenses associated with the loan, value added tax (VAT) and other concepts included in the first installment – whether or not they form part

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B.C.R.A.
ORIGIN OF THE PROVISIONS CONTAINED IN THE RULES ON “INTEREST RATES IN CREDIT OPERATIONS”

TEXT AS AMENDED				SOURCE RULE
Sec.	Point	Para.	Comm.	Annex Chap.	Sec. Point Para.
1.	1.1.	1st	“A” 49	Sole II	1.1.	1st	S/Comm. “A” 2390 (point 1.) and 5482.
		2nd	“A” 3052				S/Comm. “A” 5590 (point 1.) and 5853.
	1.2.1.		“A” 49	Sole II	1.1.	2nd	S/Comm. “A” 2390 (point 1.).
	1.2.2.		“A” 49	Sole II	1.1.	3rd	S/Comm. “A” 2390 (point 1.).
	1.3.		“A” 49	Sole II	1.2.		S/Comm. “A” 6541.
	1.4.		“A” 49	Sole II	1.3.		S/Comm. “A” 2689 (point 1.).
	1.5.1.		“A” 49	Sole II	1.4.
	1.5.2.		“A” 2385 “A” 2586		2. 2.	1st 1st
	1.6.1.	1°	“A” 3044
		2°	“A” 476		1.	2°
	1.6.2.		“A” 476		3.
	1.6.3.		“A” 476		4.
	1.6.	Last	“A” 3052
	1.7.		“A” 49	Sole II	1.5.		S/Com. “A” 476, 3052 and 5482.
2.	2.1.1.	1°					Law 25.065 (art. 16 para. 1°). S/Com. “A” 3123, 3266, 4003 and 5323.
		2°	“A” 5323		6.		S/Com. “A” 5477.
		3°	“A” 5323		6.
	2.1.2.						Law 25.065 (art. 16 para. 2°). S/Com. “A” 3123, 4003, 5150, 5323 and 6258.
	2.1.3.						Law 25.065 (art. 20).
	2.2.1.						Law 25.065 (art. 18).
	2.2.2.	1°					Law 25.065 (art. 21).
		2°					Law 25.065 (art. 18 para. 2°).
	2.3.		“A” 5500
	2.4.						Law 25.065 (art. 16 last para.). S/Com. “A” 5905.
	2.5.		“A” 5849		1.
	2.6.		“A” 3052
3.	3.1.		“A” 49	Sole II	2.		S/Com. “A” 2689 (item 2.).
	3.2.	1°	"A" 49	Sole II	2.1.	1°	S/Com. "A" 2689 (item 2.).
		Last	"A" 5482				S/Com. 6474 and 6541.
	3.2.1.		"A" 49	Sole II	2.1.	1°	S/Com. "A" 2689 and 6541.
	3.2.2.		"A" 3052				S/Com. "A" 6541.
	3.2.3.		"A" 49	Sole II	2.1.	2°	S/Com. "A" 2689 (item 2.).
	3.2.4.		"A" 49	Sole II	2.1.	1°	S/Com. "A" 2689 (item 2.), 5482 and 6474.
	3.3.1.		"A" 49	Sole II	2.1.1.		S/Com. "A" 2689 (item 2.) and "B" 8858.
	3.3.2.		"A" 49	Sole II	2.1.2.		S/Com. "A" 2689 (item 2.) and "B" 8858.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

INTEREST RATES ON CREDIT OPERATIONS

CONSOLIDATED TEXT			SOURCE RULE					OBSERVATIONS
Sec.	Item	Para.	Com.	Annex Chap. Sec.		Item Para.
3.	3.4.		"A" 49	Sole II				S/Com. "A" 5592 (item 1.) and 6173.
	3.4.1.		"A" 49	Sole	II	2.1.	1°	S/Com. "A" 2689 (pto. 2.), 3052, 5482, 5592 (pto. 1.), 6173 and 6541.
	3.4.2.1.		"A" 49	Único II		2.3.		S/Com. "A" 2689 (pto. 2.).
	3.4.2.2.		"A" 49	Único II		2.3.		S/Com. "A" 2689 (pto. 2.).
	3.4.2.3.		"A" 49	Único II		2.3.		S/Com. "A" 2689 (pto. 2.) and 5592 (pto. 1.).
	3.4.2.4.		"A" 49	Único II		2.3.		S/Com. "A" 2689 (pto. 2.).
	3.4.2.5.		"A" 49	Único II		2.3.		S/Com. "A" 2689 (pto. 2.) and 5592 (pto. 1.).
	3.4.2.6.		"A" 49	Único II		2.3.		S/Com. "A" 2689 (pto. 2.) and 5592 (pto. 1.).
	3.4.2.7.		"A" 49	Único II		2.3.		S/Com. "A" 2689 (pto. 2.).
	3.4.3.1. to 3.4.3.5.		"A" 49	Único II		2.3.		S/Com. "A" 2689 (pto. 2.).
4.	4.1.		"A" 49	Único II		2.2.		S/Com. "A" 2689, 3052, 4621, 5684 and 6541.
		Últ.	"A" 4621	Único				S/Com. "A" 5853, 5887, 5905 and 6191.
	4.1.1. to 4.1.3.		"A" 49	Único II		2.2.2.	1°	S/Com. "A" 2689 (pto. 2.), 4621 and 5853.
	4.1.4.		"A" 49	Sole II		2.2.3.		S/Com. “A” 2689 (item 2) and 4621.
	4.2.		“A” 49	Sole II		2.2.	4°	S/Com. “A” 2689 (item 2), 4621, 5684, 5853, 5887, 5905 and 6191.
	4.3.		“A” 49	Sole II		2.2.2.	2° and 3°	S/Com. “A” 2689 (item 2), 3052 and 4621.
	4.4.		“A” 49	Sole II		2.2.2.	5°	S/Com. “A” 2689 (item 2) and 4621.
	4.5.		“A” 49	Sole II		2.2.4.		S/Com. “A” 4621, 5887, 5905 and 6191.
5.	5.1.1.	1°	“A” 1827			4.	1°	S/Com. “A” 3052.
		2°	“A” 2667
		3°	“A” 1828				Sec- ond-to-last
	5.1.2.		“A” 1828				Last
	5.1.3.		“A” 1864	Sole		1.		S/Com. “A” 2134.
	5.2.		“A” 1828			1.
	5.3.		“A” 1828			3.
	5.4.		“A” 1828			4.		S/Com. “A” 3052.
	5.5.							Communiqué No. 14290.
	5.6.		“A” 1864				Last	S/Com. “A” 3052.
6.	6.1.		“A” 5849			7.		S/Com. “A” 5891.

COMMUNICATION BY ELECTRONIC MEANS FOR
B.C.R.A.
ENVIRONMENTAL CARE
Section 4. Information to be disseminated in customer service premises.

4.4.1.1. The one provided for in point 4.5.

4.4.1.2. On the interest rates for overdrafts without current account agreements and the compensatory and punitive interest rates for credit card financing offered to their customers, for transactions in pesos with the following detail:

i) Nominal annual interest rate.

ii) Effective annual interest rate.

iii) Total financial cost (CFT).

iv) The highest and lowest interest rates, when there is more than one rate for the aforementioned lines, expressed in the terms of the preceding points.

In all cases, rates must be expressed as a percentage with at least one decimal place.

The total financial cost must be placed in a privileged position with respect to the other variables displayed. Its numerical value and the “%” sign must be identified legibly and prominently according to one of the following criteria:

a) at least twice the size – in the same font and preserving all stroke thickness, height and width proportions – of that used to report the nominal annual rate level; or

b) in a highlighted typeface and/or prominent color – in the same font and size and preserving all height and width proportions – compared to that used to report the nominal annual rate level.

4.4.1.3. On the interest rate, as a percentage with two decimal places, of fixed-term deposits in pesos corresponding to the shortest term offered to their customers, with the following detail:

i) Nominal annual interest rate.

ii) Effective annual interest rate.

4.4.1.4. The scope of the deposit guarantee under Law 24.485 and complementary regulations (type of transaction, whether or not it is included in the regime, guaranteed percentage and amount, exceptions, etc.), in accordance with the provisions of point 6. of the rules on “Application of the deposit guarantee insurance system”.

4.4.1.5. On the retail exchange rates offered by the entity. In every place where exchange transactions in traveler's checks and banknotes with customers are carried out, the retail exchange rates offered by the entity must be displayed, separately specifying any expense or commission, if any, for the purchase and sale of traveler's checks and banknotes of the currencies with the highest transaction volume.

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Effective date:
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B.C.R.A.

CENTRAL BANK
OF THE ARGENTINE REPUBLIC

ORIGIN OF THE PROVISIONS CONTAINED IN THE RULES ON “COMMUNICATION BY ELECTRONIC MEANS FOR ENVIRONMENTAL CARE”

CONSOLIDATED TEXT			SOURCE RULE					OBSERVATIONS
Sec.	Point	Para.	Com.	Annex	Chap.	Sec.	Point	Para.
	1.1.		“A” 5886
	1.1.1.		“A” 5886
	1.1.2.		“A” 5886
	1.1.3.		“A” 5886
	1.1.4.		“A” 5886
	1.2.		“A” 5886
	1.2.1.		“A” 5886
	1.2.2.		“A” 5886
	1.2.3.		“A” 5886
1.	1.2.4.		“A” 5886						S/Com. “A” 6279 and 6348.
	1.2.5.		“A” 5886
	1.3.		“A” 5886
	1.4.		“A” 5886
	1.4.1.		“A” 5886
	1.4.2.		“A” 5886
	1.4.3.		“A” 5886
	1.4.4.		“A” 5886
	1.4.5.		“A” 5886
2.		1°	“A” 5886
	2.1.		“A” 5886
	2.2.		“A” 5886
3.	3.1.		“A” 6042				10.
	3.2.		“A” 6042				11.		S/Com. “A” 6188 and 6448.
	3.3.		“A” 6448				6.
4.	4.1		“A” 6419				1.		S/Com. “A” 6462.
	4.2.		“A” 6419				1.
	4.3.		“A” 6419				1.
	4.4.		“A” 6419				1.		S/Com. “A” 6462 and 6541.
	4.5.		“A” 6419				1.
	4.6.		“A” 6419				1.		S/Com. “A” 6462.
5.	5.1.		“A” 6419				2.
	5.2.		“A” 6419				2.
	5.3.		“A” 6419				2.