Resolution SBS No. 3922-2021: Incorporates Ninth Final and Transitional Provision into the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions, Amends the Accounting Manual for Financial System Companies, Amends the TUPA of the SBS, and Issues Other Provisions

Los Laureles Nº 214 - Lima 27 - Perú Telf. : (511)6309000 Fax: (511) 6309239 1 Lima, 23 de diciembre de 2021 Resolución S.B.S.
N° 3922-2021
The Superintendent of Banks, Insurance and Private Pension Fund Administrators

CONSIDERING:

That, numeral 4 of Article 132 of the General Law of the Financial System and of the Insurance System and Organic Law of the Superintendence of Banks and Insurance – Law No. 26702 and its amendments (hereinafter, the General Law), establishes that in application of Article 87 of the Political Constitution, forms by which it is additionally sought to attenuate risks for the saver are the constitution of generic and specific portfolio provisions, individual or preventive global by groups or categories of credit, for the eventuality of unpaid credits;

That, by Resolution SBS No. 11356-2008 and its amendments, the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions was approved, hereinafter the Regulation, in which credit risk provisions applicable to different types of credit are established, based on the credit classification of debtors;

That, by Resolution SBS No. 895-98 and its amendments, the Accounting Manual for Financial System Companies was approved;

That, by Supreme Decree No. 184-2020-PCM and its amendments, the National Emergency State was declared as a consequence of the Coronavirus (COVID-19) outbreak, which has been extended by Supreme Decree No. 174-2021-PCM; and exceptional and temporary measures regarding the spread of COVID-19 have been established;

That, through various Multiple Letters, exceptional measures applicable to modifications of contractual conditions of credits for debtors affected by the emergency state, due to the situation caused by COVID-19, were established;

That, in order for financial system companies to constitute provisions to reflect the real deterioration of the debtor, due to rescheduling and other measures established by this Superintendence, it is necessary to modify the Regulation;

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That, likewise, it is necessary to modify the Accounting Manual for Financial System Companies, in order to adapt it to the aforementioned provisions;

That, in order to collect public opinions on the proposal, the pre-publication of the draft norm was established on the electronic portal of the Superintendence, under the provisions of Supreme Decree No. 001-2009-JUS and its amendments;

Having the approval of the Adjunct Superintendencies of Banking and Microfinance, Risks, Economic Studies, and Legal Advice; and,

In exercise of the powers conferred by numerals 7, 9, and 13 of Article 349 of the General Law, and based on the exceptional conditions established in Article 14 of Supreme Decree No. 001-2009-JUS and its amendments;

RESOLVES:

Article One.- Incorporate as the Ninth Final and Transitional Provision in the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions approved by Resolution SBS No. 11356-2008 and its amendments (the Regulation), the following:

“NINTH.- Reprogrammed Credits - COVID 19

Financial system companies, regarding COVID-19 reprogrammed credits, accounted for as Reprogrammed Credits - Sanitary Emergency State, in accordance with the provisions issued by the Superintendence, must apply the following:

1. Reprogrammed credits of debtors with Normal classification are considered credits of debtors with credit risk higher than Normal, corresponding to the credit risk level Potential Problem (CPP). Specific provisions corresponding to the CPP credit risk category are applied to these credits, in accordance with numeral 2.1 of Chapter III of this Regulation.

However, regarding debtors with Normal and CPP classification who have not made the payment of at least one complete installment including principal in the last six months at the close of accounting information, they correspond to the credit risk level Substandard. Likewise, in the case of debtors with Normal, CPP, and Substandard classification who have not made the payment of at least one complete installment including principal in the last twelve months, they correspond to the credit risk level Doubtful. Specific provisions corresponding to the Substandard or Doubtful credit risk category, respectively, are applied to these credits, in accordance with numeral 2.1 of Chapter III of the Regulation.

The above stated in this numeral is applicable to consumer, microenterprise, small enterprise, and medium enterprise credits.

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2. Regarding accrued interest (accounted for in account 1408) of reprogrammed credits, in a current accounting situation, corresponding to the credit portfolio of consumer, microenterprise, small enterprise, and medium enterprise, a specific provision requirement corresponding to the Substandard credit risk category will be applied, in accordance with numeral 2.1 of Chapter III of this Regulation.

However, regarding debtors who have not made the payment of at least one complete installment including principal in the last six months at the close of accounting information, specific provision requirements corresponding to the Loss credit risk category will be applied to such accrued interest, in accordance with Table 1 of numeral 2.1 of Chapter III of the Regulation.

3. The provisions stated in numerals 1 and 2 do not affect the debtor's classification in the Credit Report of Debtors.

4. Unpaid accrued interest at the date of rescheduling, recognized as income, which are capitalized due to the effect of rescheduling, must be reversed and registered as deferred income, being accounted for as income based on the new credit term and as respective installments are cancelled.

5. Regarding payments and cancellation, the provisions established in literal b) of numeral 5.2 of Chapter I of this Regulation must be considered.

6. Companies may not, in any case, generate profits or better results from the reversal of provisions, and must reallocate them for the constitution of mandatory specific provisions.

7. The aforementioned provisions do not apply in the following cases:
   a) if the operation corresponds to agricultural credits with payments less frequent than monthly; or, b) if the operation corresponds to any government program, for which the corresponding norms or clarifications must be applied.
   The Superintendence may establish specific guidelines, in order to clarify the application of the aforementioned provisions.”

Article Two.- Modify the Accounting Manual for Financial System Companies, approved by Resolution SBS No. 895-98 and its amendments, in accordance with the Annex attached to this Resolution, which is published on the Institutional Portal (www.sbs.gob.pe), in accordance with the provisions of Supreme Decree No. 001- 2009-JUS and its amendments.

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Article Three.- To request this Superintendence for the authorization of the adaptation period referred to in numeral 2 of Article Five of this resolution, the following documentation must be submitted by January 7, 2022. The Superintendence will have a period of 15 business days to issue a response.

1.- Request duly signed by the General Manager or Joint Management and substantiated.
2.- Certified copy of the Board of Directors meeting minutes where the extension request was presented and approved.
3.- Support report from the corresponding instance presented to the Board of Directors of the company, detailing the calculation of the economic and financial impact as of December 31, 2021, of the required provisions, which must include at least the following:
a) Identification of operations subject to the provisions required by the Ninth Final and Transitional Provision of Resolution SBS No. 11356-2008 and amendments. b) Calculation of the required provisions for capital and interest of the reprogrammed portfolio, differentiated by credit type and risk category (no payment of a complete installment including principal in the last 12 months, no payment of a complete installment including principal in the last 6 months, and the rest of reprogrammed). c) Impact on financial statements (balance sheet, income statement), capital ratio, effective equity, legal limits, among others, as of December 31, 2021, of the provisions required by the Ninth Final and Transitional Provision. d) Planning and adaptation horizon to constitute the required provisions, with the respective impact on financial statements (balance sheet, income statement), capital ratio, effective equity, legal limits, among others. e) Detail of the equity strengthening actions proposed by the company. 4.- Database of reprogramed credits used for the calculation of the previous numeral, at the operation level, with operation identifier (CCR), SBS code, aligned classification, capital balance deducting deferred income, accrued interest balance, SBS credit type, segmentation (no payment of a complete installment including principal in the last 12 months, no payment of a complete installment including principal in the last 6 months, and the rest of reprogrammed), and required provision calculated (differentiated by capital and interest).

Article Four.- Incorporate procedure No. 205
“Authorization of adaptation period for the constitution of provisions, referred to in numerals 1 and 2 of the first paragraph of the Ninth Final and Transitional Provision of the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions approved by Resolution SBS No. 11356-2008” into the Single Text of Administrative Procedures – TUPA of the Superintendence of Banks, Insurance, and AFP approved by Resolution SBS No. 1678-2018 and amendments, in accordance with the text attached to this Resolution and published on the institutional portal (www.sbs.gob.pe).

Article Five.-

1. This Resolution enters into force the day after its publication in the official newspaper El Peruano, except for what is established in Article Two, which enters into force from the information corresponding to the month of December 2021.

What is established in numeral 2 of section II of the Annex approved by Article Two enters into force from the information corresponding to the month of March 2022.

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2. The provisions referred to in numerals 1 and 2 of the first paragraph of the Ninth Final and Transitional Provision of the Regulation approved by Article One of this Resolution must be constituted by December 31, 2021, unless authorized by this Superintendence, which in no case may extend the constitution of specific provisions for consumer, microenterprise, and small enterprise credits regarding the following:
   a) For the capital of credits as established in the first paragraph of numeral 1. b) For the accrued interest as established in the first paragraph of numeral 2 for those credits that have not made the payment of at least one complete installment including principal in the last 6 months.

3. For financial system companies that as of December 31, 2021, have requested COFIDE to adhere to the Program for Strengthening the Equity of institutions specialized in microfinance, approved by DU No. 037-2021 and its amendment, the constitution of provisions for the amounts exceeding those indicated in literals a) and b) of the previous numeral, for balances registered as of December 31, 2021, may be made until the date they receive State contributions. Nevertheless, for accrued interest from January 1, 2022, the effective date established in numeral 1 of this Article applies.

4. The identification of the credits stated in the second paragraph of numeral 1 and second paragraph of numeral 2 of the first paragraph of the Ninth Final and Transitional Provision of the Regulation, is performed based on the information at the close of the month of the report date, or if such information is not available, the identification may be performed based on the information at the close of the month prior to the report month, which must be communicated to the Superintendence. In both cases, the required provisions must be calculated regarding capital and interest balances at the close of the month of the report date.

5. From the effective date of this Resolution, the Eighth Final and Transitional Provision of the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions approved by Resolution SBS No. 11356 and its amendments is repealed.

Register, communicate, and publish

MARIA DEL SOCORRO HEYSEN ZEGARRA
Superintendent of Banks, Insurance, and AFP

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ANNEX
MODIFICATIONS TO THE ACCOUNTING MANUAL FOR FINANCIAL SYSTEM COMPANIES

I. Modify Chapters III “Catalog of Accounts” and IV “Description and Dynamics of Accounts” of the Accounting Manual for Financial System Companies, in accordance with the following:

1. Incorporate the following analytical accounts and sub-analytical accounts in account 1409
   “(Provisions for credits)”:
   1409.12.07 Specific provisions for COVID-19 reprogrammed portfolio
   1409.12.07.01 Capital
   1409.12.07.02 Interest

2. Incorporate the following analytical accounts and sub-analytical accounts in account 4302
   “Provisions for uncollectibility of credits”:
   4302.12.07 Specific provisions for COVID-19 reprogrammed portfolio
   4302.12.07.01 Capital
   4302.12.07.02 Interest

3. Modify the last paragraph in the description of account 1409 “(Provisions for credits)” in accordance with the following:

Specific provisions for the COVID-19 reprogrammed portfolio in accordance with the provisions established in the Ninth Final and Transitional Provision of the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions, are accounted for in analytical accounts 1409.02.07, 1409.03.07, 1409.12.07, and 1409.13.07, having as counterpart analytical accounts 4302.02.07, 4302.03.07, 4302.12.07, and 4302.13.07, respectively, and provisions constituted for capital must be distinguished from those constituted for interest.

II. Modify Chapter V “Complementary Information” of the Accounting Manual for Financial System Companies, in accordance with the following:

1. Modify Annex No. 5 “Report on Debtor Classification and Provisions” and its methodological notes, in accordance with the following:

a. Substitute in section V “Balance Sheet Figures” of the section “BALANCE OF ANNEX No. 5 WITH BALANCE SHEET FIGURES”, the box Direct Credits, in accordance with the following:

DIRECT CREDITS

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Direct credits: 1401+1403+1404+1405+1406-
2901.01-(2901.02-2901.02.07)-2901.07.02-
2901.08.01+(1408.02(p)+1408.03(p)+1408.12
(p)+1408.13(p))

b. Substitute in section V “Balance Sheet Figures” of the section “BALANCE OF ANNEX No. 5 WITH BALANCE SHEET FIGURES”, the box “Specific Provisions” for Direct Credits, in accordance with the following:

Specific Provisions
V19=1409.02.01+1409.02.07+1409.03.01+1409.03.07+ 1409.04.01+1409.05.01+1409.06.01+1409.07.01+ 1409.08.01+1409.09.01+1409.10.01+1409.11.01+ 1409.12.01+1409.12.07+1409.13.01+1409.13.07

c. Substitute the first paragraph of the general description of the Methodological Notes of Annex No. 5 and its complementary annexes, in accordance with the following text:

“For the preparation of Annexes No. 5, 5-A, 5-B, and 5-D, information corresponding to the amount of capital of direct credits as well as indirect credits will be included, excluding accrued interest and commissions from current credits (except those referred to in the Ninth Final and Transitional Provision of the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions), interest and commissions collected in advance, income and deferred commissions resulting from the refinancing and restructuring of credits, and profit from the financed sale of adjudicated and recovered goods, as applicable.”

d. Modify the fourth paragraph in the general description of the Methodological Notes of Annex No. 5 and its complementary annexes, with the following text:

COVID-19 Reprogrammed Credits referred to in the Ninth Final and Transitional Provision of the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions

Regarding COVID-19 reprogrammed credits referred to in the first paragraph of the Ninth Final and Transitional Provision of the Regulation for the Evaluation and Classification of the Debtor and the Requirement of Provisions, it will be reported as follows:

• The capital referred to in numeral 1 must be reported with CPP, Substandard, or Doubtful classification, as applicable.
• The accrued and unpaid interest referred to in numeral 2 must be reported with Substandard or Loss classification, as applicable.
• The specific provisions required referred to in numerals 1 and 2 will follow the guidelines corresponding to General Treatment, as stated in numeral 14 of the notes of Annex No. 5, except for what is established in the second paragraph of numeral 2, which will apply provisions in accordance with Table 1 of numeral 2.1 of Chapter III of the Regulation for the Evaluation and Classification and Requirement of Provisions.”

2. Modify Annex No. 6 “Credit Report of Debtors – RCD” in accordance with the following:

Incorporate into the Catalog of Accounts of the RCD the following sub-analytical accounts corresponding to items 14 “Credits”:

1409020701 Capital
1409020702 Interest
1409030701 Capital
1409030702 Interest
1409120701 Capital
1409120702 Interest
1409130701 Capital
1409130702 Interest