JPRF-F-2024-098 — Reforming Chapter IX on Credit Portfolio Segmentation and Section II on Risk Asset Classification in the Monetary, Financial, Securities and Insurance Resolutions Codification

Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Governmental Financial Management Platform. Red Block, 8th floor
| Postal Code: 170507 | Quito - Ecuador |
Resolution No. JPRF-F-2024-098
THE FINANCIAL POLICY AND REGULATION BOARD
CONSIDERING:
That, Article 82 of the Constitution of the Republic of Ecuador establishes that the right to legal security is based on respect for the Constitution and the existence of prior, clear, public legal norms applied by competent authorities; That, Article 84 ibidem determines that any body with regulatory power shall have the obligation to formally and materially adapt laws and other legal norms to the rights provided for in the Constitution; That, number 6 of Article 132 of the Supreme Norm grants public control and regulation bodies the authority to issue norms of a general nature in matters within their competence, without being able to alter or innovate legal provisions; That, Article 226 of the Magna Carta prescribes that State institutions shall exercise only the competencies and powers attributed to them in the Constitution and the law; That, Article 227 of the Supreme Charter provides that public administration constitutes a service to the community governed by the principles of effectiveness, efficiency, quality, hierarchy, decentralization, concentration, coordination, participation, planning, transparency, and evaluation; That, Article 308 ut supra determines that financial activities are a matter of public order and may be exercised in accordance with the law, with prior authorization from the State; these activities shall have the fundamental purpose of preserving deposits and meeting financing requirements to achieve the country's development objectives, and shall intermediated captured resources efficiently to strengthen national productive investment and socially and environmentally responsible consumption, for which the State will promote access to financial services and the democratization of credit; That, Article 309 of the Fundamental Law provides that the national financial system is composed of the public, private, and popular and solidarity sectors, which intermediated public resources. Each of these sectors shall have specific and differentiated control norms and entities, which shall be responsible for preserving their safety, stability, transparency, and solidity; That, Article 13 of the Organic Code of Monetary and Financial Law, Book I, reformed by the Organic Reformatory Law to the Organic Code of Monetary and Financial Law for the Defense of Dollarization, published in the Official Register Supplement No. 443 of May 3, 2021, created the Financial Policy and Regulation Board as a public law legal entity, responsible for formulating credit, financial, securities, insurance, and comprehensive prepaid health care services policy and regulation; That, numbers 1, 2, and 3 of Article 14 of the aforementioned Organic Code provide that it corresponds to the Financial Policy and Regulation Board to formulate credit, financial, including insurance policy, comprehensive prepaid health care services, and securities policies; issue regulations that allow maintaining the integrity, solidity, sustainability, and stability of the
national financial system; and, issue micro-prudential regulations for the national financial sector;

Resolution No. JPRF-F-2024-098

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Governmental Financial Management Platform. Red Block, 8th floor
| Postal Code: 170507 | Quito - Ecuador |
That, Article 14.1, number 1 of the aforementioned Organic Code mandates that the Financial Policy and Regulation Board shall regulate the activities and operation of financial entities; That, Article 150 of the aforementioned Organic Code prescribes that: “Entities of the national financial system shall be subject to the regulation issued by the Monetary and Financial Policy and Regulation Board.”; That, General Provision Twenty-Ninth of the aforementioned Organic Code, Book I, provides that in existing legislation where reference is made to the "Monetary and Financial Policy and Regulation Board," it shall be replaced by "Financial Policy and Regulation Board"; That, Transitional Provision Fifty-Fourth ibidem, Book I, provides that resolutions contained in the Codification of Monetary, Financial, Securities and Insurance Resolutions of the Monetary and Financial Policy and Regulation Board and norms issued by control bodies shall remain in force until the Monetary Policy and Regulation Board and the Financial Policy and Regulation Board decide what is appropriate, within the scope of their competencies; That, through Resolution No. JPRF-F-2023-086 of November 15, 2023, the Financial Policy and Regulation Board reformed Chapter IX “Norms regulating the segmentation of the credit portfolio of entities of the national financial system”, as well as Section II “Elements of the qualification of risk assets and their classification”, Chapter XVIII “Qualification of risk assets and constitution of provisions by entities of the public and private financial sectors under the control of the Superintendence of Banks” of Title II “National Financial System”, Book I “Monetary and Financial System”, of the Codification of Monetary, Financial, Securities and Insurance Resolutions with the aim of stimulating productive growth, investment, job generation, consumption, and consequently contributing to financial stability and economic development; That, the Technical Secretariat of the Financial Policy and Regulation Board, through Memorandum No. JPRF-ST-2024-0021-M of February 26, 2024, submits to the President of the Board the Technical-Legal Report No. JPRF-CTCJ-2024-002 of February 26, 2024, issued by the Technical Coordination of Policy and Regulation of the Financial System and the Legal Coordination of Policy and Financial Norms of this Board; That, the Financial Policy and Regulation Board, in an extraordinary session held by technological means, convened on February 28, 2024, and carried out via video conference on February 29, 2024, reviewed the Memorandum No. JPRF-ST-2024-0021-M of February 26, 2024, issued by the Technical Secretariat of the Board; as well as the aforementioned Technical-Legal Report No. JPRF-CTCJ-2024-002, in addition to the corresponding draft resolution; That, the Financial Policy and Regulation Board, in an extraordinary session held by technological means, convened on February 28, 2024, and carried out via video conference on
February 29, 2024, reviewed and approved the following Resolution; and, In exercise of its functions,

Resolution No. JPRF-F-2024-098

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Governmental Financial Management Platform. Red Block, 8th floor
| Postal Code: 170507 | Quito - Ecuador |
RESOLVES:
ARTICLE FIRST.- The First General Provision of Chapter IX “Norms regulating the segmentation of the credit portfolio of entities of the national financial system”, and of Section II “Elements of the qualification of risk assets and their classification”, Chapter XVIII “Qualification of risk assets and constitution of provisions by entities of the public and private financial sectors under the control of the Superintendence of Banks”, Title II “National Financial System”, Book I “Monetary and Financial System” of the Codification of Monetary, Financial, Securities and Insurance Resolutions, is reformed, as follows:
“FIRST.- The application of this norm shall govern prospectively; therefore, these provisions shall not be applied to credit operations previously granted, nor even in cases of restructurings or refinancings, and the segment determined at the time of the concession of the original credit must be maintained.”
FINAL PROVISION.- This Resolution shall enter into force as of March 1, 2024, without prejudice to its publication in the Official Register; and, it shall be published on the institutional website of the Financial Policy and Regulation Board within a maximum term of two days from its issuance.
NOTIFY.- Given in the Metropolitan District of Quito, on February 29, 2024.
THE PRESIDENT,
Mgs. María Paulina Vela Zambrano
The Master María Paulina Vela Zambrano, President of the Financial Policy and Regulation Board, processed and signed the aforementioned Resolution in the Metropolitan District of Quito, on February 29, 2024.- I CERTIFY.
TECHNICAL SECRETARY,
Mgs. Nelly Arias Zavala