Minimum Cash Requirements: Adjustments — BCRA — AR

COMMUNICATION “A” 6857
02/01/2020

TO FINANCIAL INSTITUTIONS:

Ref.: Circular
REMON 1 - 988

Minimum cash. Adjustments.

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

“- To replace, with effect from 1.1.20, the first and last paragraphs of point 1.5.2. of the rules on “Minimum cash” with the following:

“For those financial institutions that are adhered to that program the requirement will be reduced by an amount equivalent to 20 % of the sum of the peso financings that the institution grants:”

“This deduction may not exceed 1.5 % of the peso items subject to requirement, on average, of the month prior to the computation month, except when it is verified that the quotient between a) the amount referred to in the first paragraph –calculated with financings corresponding to the computation period of the requirement– and b) the peso items subject to requirement –on average, of the computation month– exceeds the value that this quotient verified in December 2019. In these cases, the financial institution may add the difference –with a limit of 1 %– to the 1.5 % limit referred to above.”

On the other hand, we send you the pages that, in replacement of those previously provided, should be incorporated into the reference rules. In this regard, it is recalled that on the page of this Institution www.bcra.gob.ar, accessing “Financial System - LEGAL AND REGULATORY FRAMEWORK - Compilations and summaries - Ordered texts of general regulations”, you will find the modifications made with texts highlighted in special characters (strikethrough and bold).

We greet you attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Enrique C. Martin
Deputy Manager of Issuance of Rules

Mirta M. Noguera
Manager of Applications
Regulations

ANNEX

For the purposes of computing financings to MSMEs, to determine the participation percentage, it will be taken into account whether they meet that condition at the time of granting the assistance, considering all outstanding financings. If the borrower ceases to meet the MSME condition, the financings granted up to that moment will be computed.

The moving average balance at the end of the last 12 months prior to the under report of the peso financings (Loans and Credits for Financial Leases) granted to MSMEs with respect to the total of those financings to the non-financial private sector of the institution will be considered.

1.5.2. Based on the granting of financings within the framework of the “AHORA 12” Program.

For those financial institutions that are adhered to that program the requirement will be reduced by an amount equivalent to 20 % of the sum of the peso financings that the institution grants:

1.5.2.1. As provided by the “AHORA 12” Program referred to in Joint Resolution No. 671/14 and 267/14 of the former Ministry of Economy and Public Finance and the former Ministry of Industry, respectively, whose purpose is the acquisition of goods and services included in the aforementioned resolution and its complementary rules.

For this purpose, the balance of the financings reached from the period prior to the computation of the requirement that meet the indicated requirements will be considered.

1.5.2.2. To non-financial companies issuing credit cards at an interest rate of up to 17 % nominal annual, to the extent that those companies have adhered to the “AHORA 12” Program.

For this purpose, the financings of the period prior to the computation of the requirement, measured in monthly average of daily balances, will be considered.

The financial institution must require and have documentation that proves that the borrowing company has allocated the funds to grant financings under the conditions of the aforementioned Program.

This deduction may not exceed 1.5 % of the peso items subject to requirement, on average, of the month prior to the computation month, except when it is verified that the quotient between a) the amount referred to in the first paragraph –calculated with financings corresponding to the computation period of the requirement– and b) the peso items subject to requirement –on average, of the computation month– exceeds the value that this quotient verified in December 2019. In these cases, the financial institution may add the difference –with a limit of 1 %– to the 1.5 % limit referred to above.

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Effective date:
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1.5.3. Based on cash withdrawals made through the institution's ATMs.

The requirement will be reduced by the amount resulting from the following expression, without being able to exceed the amount of the requirement previously determined, considering the provisions of the preceding point:

where:

Msi : monthly average of the total daily cash withdrawals from ATMs, corresponding to the previous month, located in the institution's operating premises, according to the jurisdiction in which it is located, in accordance with the provisions of the rules on “Categorization of localities for financial institutions”.

Mni : monthly average of the total daily cash withdrawals from ATMs, corresponding to the previous month, outside its operating premises (neutral) and according to the jurisdiction in which they are located, in accordance with the aforementioned categories.

Psi : weighting factor applicable to the amount Msi .

Pni : weighting factor applicable to the amount Mni .

Weighting factors applicable based on the categories in which the ATMs are located
i	Psi	Pni
1 (categories I and II)	0,95	1,65
2 (categories III and IV)	4,25	7,05
3 (categories V and VI)	7,50	14,80

For these purposes, those ATMs that – at a minimum – allow users to make cash withdrawals regardless of the entity of which they are clients and of the network administering those machines, and that – on a monthly average, counting business and non-business days – have remained accessible to the public for at least ten hours per day, shall be counted.

1.6. One-off increases in requirement due to liability concentration.

When an excessive concentration of liabilities (in holders and/or terms) is verified, which implies a significant risk with respect to the individual liquidity of the financial entity and/or has a significant negative effect on systemic liquidity, additional minimum cash holdings may be set on the included liabilities of the financial entity and/or such complementary measures as are deemed pertinent.

This situation shall be considered to be configured when, among others, any of the following factors is present:

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A high percentage of liabilities is concentrated in a single holder or holders.
In term obligations, the term is short.
The aforementioned liabilities represent a significant percentage with respect to the integration of the minimum cash requirement and/or the total private-sector deposits in the entity.

1.7. Transfers.

1.7.1. Admitted margin.

The integration of the minimum cash requirement of the average position for the period may not be less than 80 % of the requirement resulting from the following expression:

EEMA (n) = EEF (n) + ENI (n-1)

Where

EEMA (n): adjusted minimum cash requirement corresponding to period “n”.

EEF (n): minimum cash requirement according to current rules corresponding to period “n”.

ENI (n-1): requirement not integrated in period “n-1”.

Period: month or two-month period, as applicable.

1.7.2. Utilization period.

The admitted transfer of the requirement not integrated in each period to the following position may be made up to a maximum of six periods, counted from the first – inclusive – in which its utilization is opted for in accordance with the provisions above or from the first position immediately following that in which the transferred defects are offset or a charge is paid on them.

For its calculation, the numerals transferred from the period to which they correspond shall be counted, divided by the number of days of the period to which the transfer is made.

1.7.3. Optional treatment for two-month periods.

It may be opted to integrate in the months of July and December of each year the transfers of the requirement not integrated in pesos from the previous month, maintaining the computation method in force for the requirement of each two-month period.

For this purpose, those responsible for managing the entity's liquidity policy must inform the Superintendency of Financial and Exchange Entities (SEFyC) that they have exercised that option.

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1.8. Defect in the application of resources in foreign currency. The defect in the application of resources corresponding to foreign-currency deposits, net of cash balances in the entities, in custody in other financial entities, in transit and in Securities Transporters (TV), determined in a month shall be counted as an equivalent amount in the calculation of the minimum cash requirement of that same period of the respective currency.

1.9. Increase in the requirement for non-compliance with the rules on “Credit line for productive investment”. The defect in the application of Cupo 2013 verified – as of 1.7.13 or 1.1.14, as the case may be, when it is the first tranche and 1.1.14 or 1.7.14, as the case may be, when it is the second tranche – shall be counted as an equivalent amount in the calculation of the minimum cash requirement on average in pesos, from those dates and for 24 months.

The defect in the application of Cupo 2014 verified – as of 1.7.14 or 1.1.15, as the case may be, when it is the first tranche and as of 1.1.15 or 1.7.15, as the case may be, when it is the second tranche – shall be counted as an equivalent amount in the calculation of the minimum cash requirement on average in pesos, from those dates and for 24 months.

Non-compliance with the provisions of the second paragraph of point 3.5.3.2. of the rules on “Credit line for productive investment” (register as of 30.9.14 agreements for at least 50 % of the total amount of the second tranche of Cupo 2014 and at least 50 % to MSMEs) shall generate an increase in the minimum cash requirement on average in pesos for an equivalent amount from the day following its verification (1.10.14) for 3 months.

Non-compliance with the provisions of the third paragraph of point 3.5.4.1. of the rules on “Credit line for productive investment” (register as of 31.3.15 agreements for at least 30 % of the total amount of the first tranche of Cupo 2015) shall generate an increase in the minimum cash requirement on average in pesos for an equivalent amount from the day following its verification (1.4.15) for 3 months.

Non-compliance with the provisions of the third paragraph of point 3.5.4.2. of the rules on “Credit line for productive investment” (register as of 30.9.15 agreements for at least 30 % of the total amount of the second tranche of Cupo 2015) shall generate an increase in the minimum cash requirement on average in pesos for an equivalent amount from the day following its verification (1.10.15) for 3 months.

The defect in the application of the second tranche of Cupo 2015 verified – as of 1.4.16 or 1.7.16, as the case may be – shall be counted as an equivalent amount in the calculation of the minimum cash requirement on average in pesos, from those dates and for 24 months.

This, without prejudice to the provisions of point 8.3. of the rules on “Credit line for productive investment”.

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Effective date:
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MINIMUM CASH