2020 - YEAR OF GENERAL MANUEL BELGRANO

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION “A” 7140
15/10/2020

TO FINANCIAL INSTITUTIONS:

Ref.: Circular
OPRAC 1 - 1067
REMON 1 - 1030
LISOL 1 - 917
RUNOR 1 - 1612

Financing line for productive investment of MSMEs. Minimum cash. Spot transactions to be settled and forward transactions, repos, collateralized loans, other derivatives and mutual investment funds. Financial services within the framework of the health emergency declared by Decree No. 260/2020 CORONAVIRUS (COVID-19). Adjustments . ____________________________________________________________

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

“1. Approve, with effect from 16.10.2020, the rules on “Financing line for productive investment of MSMEs” attached in the Annex.

2. Provide that financial institutions that as of 16.10.2020 are included in group A, in accordance with the provisions of Section 4. of the rules on “Authorities of financial institutions”, and those that –not included in said group– operate as financial agents of the National, provincial, Autonomous City of Buenos Aires and/or municipal governments, must grant –within the framework of the Emergency Assistance Program for Work and Production (ATP) created by Decree No. 332/2020– financing up to a maximum limit equivalent to the amount resulting from the number of salaried employees (F. 931) multiplied by the amount of the Minimum Vital and Mobile Wage plus 20%, to the MSMEs on the list that will be provided by the Federal Administration of Public Revenues, which may have a guarantee as established by FOGAR and as of 1.11.2020 may be allocated for the deductions provided in points 1.5.5. and 1.5.7. of the rules on “Minimum cash”. The remaining financings that financial institutions grant from the day following the dissemination of this communication will be voluntary and may not be allocated to the deductions provided in points 1.5.4., 1.5.5. and 1.5.7.

The provisions of the preceding point will be optional for the remaining financial institutions.

3. Repeal point 2.1.3. of the rules on “Financial services within the framework of the health emergency declared by Decree No. 260/2020 CORONAVIRUS (COVID-19)”.

4. Establish that, for the purposes of calculating the limit for the net surplus position in BCRA Liquidity
   Letters (LELIQ) provided in Section 8. of the rules on “Spot transactions to be settled and forward transactions, repos, collateralized loans, other derivatives and mutual investment funds”, financial institutions must adhere to the following:

i. Point 8.1.2.:

a. Financial institutions covered by the Line regulated in point 1. of this communication and non-covered institutions that are branches or subsidiaries of G-SIBs:

− shall be governed by the limits established with effect from 1.9.2020 inclusive;

− when computing the “potential credit to MSMEs” –in accordance with the provisions of point 8.1.2.2.– they shall add the amount equivalent to 40% of the financings allocated to the Line;

− the amount of financings to be considered in the last paragraph of point 8.1.2. shall include the financings allocated to the Line.

b. Other financial institutions: they will have the option to apply the provisions of the preceding subparagraph provided that they compute financings that fully fall within the conditions of the Line, observing the limits applicable to them depending on whether they are financial institutions of group C not included in subparagraph 3.i.a. of this communication (in force as of 1.5.2020) or other institutions not covered by the Line (in force as of 1.9.2020).

ii. Point 8.3.:

a. Financial institutions covered by the Line regulated in point 1. of this communication and non-covered institutions that are branches or subsidiaries of G-SIBs: when computing the “percentage reached” they shall include, in the “amount of financings to be considered”, the financings allocated to the Line that have been granted to MSMEs not reported in the “Central de deudores del sistema financiero”, and in the denominator of that ratio they shall compute the amount equivalent to 40% of these financings.

b. Other financial institutions: they will have the option to apply the provisions of the preceding subparagraph.”

Subsequently we will send you the sheets that, replacing those previously provided, should be incorporated into the referenced rules.

We greet you attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Darío C. Stefanelli
María D. Bossio
Principal Manager of Issuance and
Regulatory Applications
General Deputy Manager of Financial Regulation

ANNEX

B.C.R.A.
FINANCING LINE FOR PRODUCTIVE
INVESTMENT OF MSMEs
Annex to
Comm. “A”
7140

Section 1. Covered institutions.

Financial institutions that as of 16.10.2020 are included in group A, in accordance with the provisions of Section 4. of the rules on “Authorities of financial institutions”, and those that –not included in said group– operate as financial agents of the National, provincial, Autonomous City of Buenos Aires and/or municipal governments.

Section 2. Quota.

Covered financial institutions must maintain, from 16.10.2020 and until 31.3.2021, a balance of covered financings that is at least equivalent to 7.5% of their deposits from the non-financial private sector in pesos, calculated based on the monthly average of daily balances of September 2020.

In the case of covered institutions that are not included in group A, the minimum percentage to apply will be 25% of that provided above.

Section 3. Applications.

3.1. Purpose.

The quota defined in Section 2. must be granted to MSMEs in accordance with the definition in force in the rules on “Determination of the condition of micro, small or medium-sized enterprise”.

MiPyMEs are excluded:

3.1.1. with agricultural activity that maintain a stockpile of their wheat and/or soybean production for a value greater than 5 % of their annual harvest capacity. The financial entity shall be responsible for verifying that the applicant is not included in this exclusion, requesting information and documentation that proves it;

3.1.2. that after 19.3.2020 have imported final consumer goods, except in the case of medical products and/or supplies.

For these purposes, the simple average of the daily balances of the outstanding financings during the period between 16.10.2020 and 31.3.2021 shall be considered.

At least 30 % of the quota must be allocated to the provisions of point 4.1.

3.2. Compliance defects.

Financial entities may count for compliance with the quota of Section 2. the financings allocated in points 1.5.4., 1.5.5. and 1.5.7. of the rules on “Minimum Cash” and that have been disbursed up to 15.10.2020.

Section 4. Eligible financings.

4.1. Financing of MiPyME investment projects.

Financing of investment projects destined for the acquisition of capital goods and/or the construction of facilities necessary for the production of goods and/or services and the marketing of goods and/or services.

Financings agreed under other special credit regimes may not be classified as eligible application to the extent that the funds for such assistance are provided to the entity for that specific purpose or have the character of contingent liabilities.

4.2. Working capital and discounting of deferred payment checks and other documents to Mi-PyMEs.

It may be allocated to the financing of working capital, discounting of deferred payment checks and MiPyME Electronic Credit Invoices by companies that comply with the provisions of point 2.2.1. of the rules on “Credit Evaluations”, to clients that meet the condition of MiPyME.

The values to be discounted must come from the collection of sales operations and/or provision of services corresponding to the activity of the discounting MiPyME. This condition may be verified by means of the sworn statement made by the client and/or by any other means that the entity deems sufficient.

4.3.Special.

4.3.1. Providers of human health services, authorized by the competent body of the corresponding jurisdiction, that do not meet the condition of MiPyME, to the extent that they provide hospitalization services within the framework of the Health Emergency established by Decreto N°260/2020 and it is destined for the purchase of medical supplies and equipment;

4.3.2. Non-MiPyME clients, to the extent that the funds are destined for the acquisition of machinery and equipment produced by local MiPyMEs.

4.3.3. Financings 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 financial activity and other permitted activities”–, provided that they allocate the funds to the granting of the financings provided in points 4.1. and/or 4.2., under the conditions established in these rules.

The entities must apply the funds to the destinations provided in this point within a period no greater than 10 business days between the date on which they receive the assistance from the financial entity and its credit application to MiPyME.

For the purposes of its allocation, there must be a special report from the external auditor of the financial entity not covered on its compliance, which must contain, in addition to the characteristics specified in Section 9., the dates and amounts of each application to the destinations provided herein.

Section 5. Terms and conditions of the financings.

5.1. Maximum interest rate.

The maximum interest rate to be applied shall be:

5.1.1. Destinations of point 4.1.: 30 % fixed nominal annual.

5.1.2. Destinations of points 4.2. and 4.3.: 35 % fixed nominal annual.

In the case of credits with third-party reimbursements, the gross TNA of the reimbursement to the financial entity must be considered.

5.2. Currency and terms.

The financings of point 4.1. must be denominated in pesos and have –at the time of disbursement– an average term equal to or greater than 24 months, weighting for this purpose the principal maturities, without the total term being less than 36 months.

The operations of point 4.2. must also be in pesos and shall not have a minimum term.

Section 6. Main obligations of financial entities in the operation.

6.1.Require and have the documentation that proves compliance with the required conditions.

6.2.Assume full and absolute responsibility for the correct processing and execution of operations with its clients, as well as all credit risks arising from the loans that they approve and grant.

6.3.Verify that the borrower and the credit fall within these regulations.

6.4.Open a specific file for each financing that they grant, with all the information corresponding to the application, evaluation and pertinent documentation, in accordance with the provisions of point 3.4. of the rules on “Debtor Classification”.

6.5. Consider that the interest rates to be applied for financings that they eventually grant in order to complement this line –whatever their concept: additional margin, working capital, etc.– must be related to the average rates charged to the clientele for those destinations in order not to distort the objective of this regime.

Section 7. Other provisions.

7.1.Syndicated loans.

The entities may integrate this portfolio through loans granted jointly with

other entities, in the corresponding proportion.

7.2. Early cancellations.

In the event that early cancellations are admitted, the right to cancellation shall be solely in favor of the borrowers.

Section 8. Information regime.

Financial institutions must comply with the information regime established in this regard for the purposes of controlling this operation.

Section 9. Special external auditor's report.

The covered financial institutions must submit a special external auditor's report, registered in the "Registry of auditors" of the Superintendency of Financial and Exchange Institutions, on compliance with the destinations, terms and other conditions established in these rules, in accordance with the model that will be made known for this purpose.

This special report must not contain limitations on the scope of the tasks, nor an opinion with qualifications or a disclaimer of opinion.

The participation of the external auditor in all aspects required in this operation falls within the provisions established in the Minimum Standards on External Audits.

The entity may also comply with the preceding requirement by submitting a special report from its Internal Audit whose procedures, scope and conclusions conform to the aforementioned conditions and model.

Section 10. Non-admitted charges.

Financings granted without fully complying with the conditions provided herein may not be charged as application of resources of this regime.

Section 11. Non-compliances.

11.1. Increase in the minimum cash requirement.

The failure to apply the quota of Section 2. will generate an increase in the minimum cash requirement on average in pesos as from the requirement of 1.4.2021 for an amount equivalent to that shortfall increased by 20% and for a period of 5 months, without prejudice to the application of the provisions of point 11.2.

11.2. Sanctions.

The provisions of article 41 of the Law on Financial Institutions shall apply.