Organic Law of the National Bank of the Army, Air Force and Navy

ORGANIC LAW OF THE NATIONAL BANK OF THE ARMY, AIR FORCE AND NAVY Published in the Official Gazette of the Federation on January 13, 1986.
Updated with reforms published in the same Gazette on June 24, 2002; April 9, 2012 and January 10, 2014.

ORGANIC LAW OF THE NATIONAL BANK OF THE ARMY, AIR FORCE AND NAVY INDEX Title One On the Society, Name, Object and Domicile Title Two General Operation of the Society
Chapter I
Objectives and Operations
Chapter II
Savings and Work Funds
Chapter III
Mortgage-Backed Loans
Chapter IV
Short-Term Loans
Title Three
Social Capital
Title Four
Administration and Oversight
Title Five
General Provisions
Transitory Articles
Statement of Reasons
References

ORGANIC LAW OF THE NATIONAL BANK OF THE ARMY, AIR FORCE AND NAVY TITLE ONE On the Society, Name, Object and Domicile
Article 1. This Law governs the National Bank of the Army, Air Force and Navy, National Credit Society, a development banking institution, with its own legal personality and assets.
Article 2. The Society, in its capacity as a development bank, will provide the public banking and credit service subject to the objectives and priorities of the National Development Plan, and especially of the National Development Financing Program, to promote and finance the activities and sectors entrusted to it in this Law.
Article 3. The National Bank of the Army, Air Force and Navy, as a development banking institution, shall have as its object to grant financial support to members of the Mexican Army, Air Force and Navy.
The operation and functioning of the Institution shall be carried out in compliance with the applicable legal framework and sound banking practices and usages, seeking to achieve within the sector entrusted to it in providing the public banking and credit service, the general objectives indicated in Article 3 of the Regulatory Law of the Public Banking and Credit Service.
Article 4. The domicile of the National Bank of the Army, Air Force and Navy, National Credit Society, a development banking institution, shall be that established in its Organic Regulations, but it may, with prior authorization from the Ministry of Finance and Public Credit, establish or close branches, agencies or any other type of offices in the country and appoint correspondents in the country or abroad.
Article 5. The duration of the society shall be indefinite.
TITLE TWO
General Operation of the Society
CHAPTER I
Objectives and Operations
Article 6. The Society, in order to ensure the development and competitiveness of the sector entrusted in the exercise of its object, shall be authorized to:
I. Financially support members of the Armed Forces, for the exercise of their professions or productive activities, not incompatible with the military function;
II. Act as a financial agent for companies and societies with which it operates;
III. Administer the savings and work funds of military personnel;
IV. Promote technical advice in favor of the entities indicated in fractions II and III of this Article, with the objective of promoting the increase in production; and
V. Promote joint financing and assistance actions with other credit institutions, development funds, trusts, credit auxiliary organizations and with the social and private sectors.
In the exercise of its powers, the National Bank of the Army, Air Force and Navy, National Credit Society, a development banking institution, shall adjust its programs to the financial policies established by the Federal Government and coordinate its activities with the entities responsible for the formulation and execution of said policy.
Article 7. To fulfill the objectives referred to in Articles 3 and 6 above, the Society may:
(5) I. Carry out the operations and provide the services referred to in Article 46 of the Law of Credit Institutions;
II. Grant loans to members of the Mexican Army, Air Force and Navy who are in active service or in retirement status, provided that they are receiving benefits from the Federal Treasury.
(5) The operations indicated in the aforementioned Article 46, fractions I and II, shall be carried out in accordance with Article 47 of said regulation;
III. Issue development bank bonds. These titles will seek to promote the development of the capital market and institutional investment, and may be placed among the general investing public, in which case the respective legal provisions will apply to them;
IV. Finance the acquisition, construction, expansion and repair of housing for members of the armed forces;
(5) V. Preferentially carry out with military personnel and legal entities of which they are part, the other active and passive operations of the Law of Credit Institutions authorized for development banking institutions; (6) V Bis. Carry out the investments provided for in Articles 75, 88 and 89 of the Law of Credit Institutions;
VI. Carry out the payment service for retirement and pension benefits; and
VII. The other analogous and related to the object of the Institution indicated by the Ministry of Finance and Public Credit, including that of financial agent of the Federal Government, in accordance with the applicable legal provisions.
(1) Article 8. The Ministry of Finance and Public Credit, as an exception to what is provided by Articles 48 of the Law of Credit Institutions and 26 of the Bank of Mexico Law, shall determine through general provisions the characteristics of the active operations, passive operations that do not imply the collection of public resources and services, except with respect to trusts, mandates and commissions, carried out by the Society to fulfill the objective and exercise the powers entrusted to it in its capacity as a development bank in this Law. (1) It corresponds to the Bank of Mexico, in accordance with its Law, to regulate through general provisions the characteristics of passive operations that imply the collection of public resources, trusts, mandates and commissions, operations in the money market, as well as financial operations known as derivatives that the Society enters into.
Article 9. The Federal Government shall at all times be responsible for the operations contracted by the National Bank of the Army, Air Force and Navy, National Credit Society, a development banking institution:
I. With national individuals or legal entities and with the mandatory deposits referred to in Article 55 of this Law; and
II. With foreign private, governmental and intergovernmental institutions.
Article 10. As an exception to what is provided in the last paragraph of Article 348 of the General Law of Credit Titles and Operations, in trust contracts entered into to guarantee the rights of the National Bank of the Army, Air Force and Navy, National Credit Society, a development banking institution, it may act in the same business as trustee and beneficiary.
CHAPTER II
Savings and Work Funds
Article 11. To constitute the savings fund, generals, officers or their equivalents in the Navy, in active service, must contribute a biweekly quota equivalent to 5% of their benefits. For the same purpose, the Federal Government shall make a contribution of equal amount. These funds will generate interest in favor of the holders, accumulated annually, which shall be fixed and, if applicable, adjusted upon proposal of the Board of Directors and with the authorization of the Ministry of Finance and Public Credit.
Article 12. Holders shall have the right to fully dispose of their savings funds, at the moment they obtain unlimited leave or are separated from active service.
Those who remain in active service shall have the right to dispose of the amount of their deductions every six years, counted from the date of their first contribution to the fund.
Article 13. The savings fund may be disposed of by persons designated by the holders as beneficiaries, in case of death, and in the absence of designation, their relatives according to the following precedence:
I. The spouse, or in their absence, the person with whom they have shared marital life during the five years immediately prior to their death, in concurrence with the deceased's children in equal shares;
II. The mother;
III. The father; and
IV. Those who justify their kinship with the fund holder; the closest shall exclude the more distant, in case of controversy, the judicial authority shall resolve.
Article 14. The work fund shall be constituted with the contributions that the Federal Government makes on behalf of each troop element or their equivalents in the Navy, from the date they are registered or re-enlisted, until they obtain unlimited leave, are separated from active service or are promoted to officer, plus interest in favor of their holders, accumulated annually, which shall be fixed and, if applicable, adjusted in accordance with Article 11 of this Law.
Article 15. The contribution that the Federal Government makes in accordance with the previous Article shall be equivalent to 10% of the annual benefits of troop personnel or their equivalents in the Navy.
Article 16. The work fund may be disposed of by troop elements or their equivalents in the Navy, who are separated from active service, obtain officer rank or are granted unlimited leave; and
By persons designated by troop elements or their equivalents in the Navy as beneficiaries in case of death and in the absence of designation, their relatives according to the precedence indicated in Article 13 of this Law.
Article 17. The Federal Government's contributions destined for the savings and work funds shall be administered to the Society in accordance with the terms established by the Ministries of Finance and Public Credit and of Programming and Budget, within the scope of their respective competencies.
Article 18. The Ministries of National Defense and Navy shall provide the Society with the data necessary to form the registry required for the administration of the funds and must promptly communicate to it the additions and removals of personnel, of generals, officers, and troops, or their equivalents in the Navy.
Article 19. The savings and work funds are unattachable and non-transferable. They may only be affected by debts due from the military personnel, resulting from the operations provided for in this Law, or by judicial order in the case of alimony. The right to claim them shall not prescribe.
Article 20. The National Bank of the Army, Air Force and Navy, National Credit Society, a development banking institution, shall administer the resources allocated to the savings and work funds, subject to the rules established by the Ministry of Finance and Public Credit and the provisions of this Law.
Article 21. When personnel of generals, officers, and troops or their equivalents in the Navy are removed from the jurisdiction of Military Justice and the Bank is notified thereof by the competent military authority, they may not dispose of their respective savings and work funds until there is a final resolution in accordance with the legislation of that jurisdiction.
Article 22. Loans shall be made in such a manner that the corresponding payments to repay the loaned amount, added to deductions for mortgage loans and those that must be made on any other debt with the Society, shall not exceed 50% of the retirement or pension benefit, if applicable.
(5) Article 23. The National Bank of the Army, Air Force and Navy, National Credit Society, a development banking institution, shall administer the resources allocated to the savings and work funds, which shall be destined for the granting of loans in accordance with the terms and conditions authorized by the Board of Directors and the requirements provided for in this Law. Unused amounts shall be invested to promote and finance the activities entrusted to the society in its capacity as a development bank.
CHAPTER III
Mortgage-Backed Loans
Article 24. Military personnel receiving benefits or retirement benefits from the Federal Treasury may obtain from the National Bank of the Army, Air Force and Navy, National Credit Society, a development banking institution, mortgage-backed loans in first place on urban real estate, to the extent of the resources available for this purpose. Such credits must be destined for:
I. Acquiring houses for the military's family housing;
II. Acquiring land on which the military's family house must be built;
III. Building houses for the military's housing;
IV. Making improvements or repairs to the military's family housing; and
V. Redeeming encumbrances on said real estate resulting from the operations referred to in the preceding fractions.
Article 25. Mortgage loans shall be subject, insofar as applicable, to the rules issued by the Board of Directors for this purpose.
Article 26. Houses acquired or built by military personnel for their family housing, with funds provided by the Bank, shall be exempt, from the date of their acquisition or construction, from all federal taxes and those of the Federal District, for the term that the credit remains outstanding. Contracts in which such acquisitions or credits are recorded shall also enjoy this exemption. This benefit shall cease when the real estate is alienated or destined for another purpose.
CHAPTER IV
Short-Term Loans
Article 27. The Society may grant short and medium-term loans, in accordance with the resources available for this purpose:
I. To military personnel with benefits or retirement benefits; and
II. To pensioners.
(7) Article 28. Repealed.
Article 29. The Ministries of National Defense and Navy shall inform the National Bank of the Army, Air Force and Navy, National Credit Society, a development banking institution, within a period not exceeding fifteen days, counted from the date they arise, of the following situations:
I. The additions and removals of Armed Forces personnel;
II. The leaves granted without pay;
III. The names and ranks of military personnel who have reached the age limit; and
IV. The names of the relatives that military personnel designate to enjoy the benefits granted by this Law, even when the military personnel are discharged or change beneficiaries.
(7) Article 30. Repealed.
(5) Article 31. Short and medium-term loans shall be granted in accordance with the rules issued by the Board of Directors for this purpose.
(7) Article 32. Repealed.
(5) Article 33. Debts for loans not covered by military personnel may be deducted, after six months of their maturity or in a shorter period with the authorization of the creditor, from their savings or work funds, and with respect to military personnel with retirement benefits and pensioners, the same shall be applied to retirement benefits or allowances they enjoy. The policies for the deductions referred to in this Article must be approved by the Board of Directors. TITLE THREE Social Capital
Article 34. The social capital of the National Bank of the Army, Air Force and Navy, National Credit Society, a development banking institution, shall be represented by equity contribution certificates in 66% of Series A and 34% of Series B. The nominal value of these titles shall be determined in its Organic Regulations.
Series A shall only be subscribed by the Federal Government, issued in a title that shall not carry coupons, which shall be non-transferable and at no time may change its nature or the rights it confers to the Federal Government itself.
Series B may be subscribed by the Federal Government, by entities of the Para-State Public Administration, by commercial societies formed by members of the Armed Forces, by members thereof who hold the rank of generals, officers or their equivalents in the Navy, and by Mexican individuals or legal entities.
The Ministry of Finance and Public Credit may authorize entities of the Federal Public Administration and of the governments of the federal entities and municipalities to acquire certificates of the aforementioned Series B in a proportion greater than that established in Article 15 of the Regulatory Law of the Public Banking and Credit Service.
Article 35. The net capital referred to in Article 34 of the Regulatory Law of the Public Banking and Credit Service shall be that fixed by the Ministry of Finance and Public Credit, hearing the opinion of the Bank of Mexico and the National Banking and Insurance Commission.
Article 36. At no time may foreign individuals or legal entities, nor Mexican societies whose statutes do not include a clause excluding direct and indirect foreigners, participate in any form in the capital of the Society.
Persons who violate the provisions of this Article shall lose, in favor of the Federal Government, the participation in question.
Article 37. The Ministry of Finance and Public Credit shall establish the form, proportions and other conditions applicable to the subscription, holding and circulation of Series B certificates.
TITLE FOUR
Administration and Oversight
Article 38. The administration of the National Bank of the Army, Air Force and Navy, National Credit Society, a development banking institution, shall be entrusted to a Board of Directors and a General Manager, within their respective spheres of competence.
(1) Article 39. The Board of Directors shall be composed of eleven counselors designated as follows:
I. Five counselors who will represent Series “A” of equity contribution certificates and who shall be from the following departments: the Ministries of National Defense, Navy and two from the Ministry of Finance and Public Credit, as well as from the Mexican Armed Forces Social Security Institute.
(3) Second paragraph.- Repealed.
(2) The Secretary of Finance and Public Credit shall preside over the Board of Directors.
(2) The substitutes for the aforementioned counselors shall preferably be public servants at the next lower level.
(5) In the absence of the Secretary of Finance and Public Credit, the Undersecretary of Finance and Public Credit shall have the status of President of the Board of Directors; in the absence of the latter, the substitute for the Secretary of Finance and Public Credit shall have the status of President; and in the absence of all the aforementioned, those designated by the present counselors from among the Series “A” counselors.
II. Four Counselors who will represent Series “B” designated as follows, one for each of the Ministries: National Defense, Navy, Finance and Public Credit and one from the Mexican Armed Forces Social Security Institute.
(3) Second paragraph.- Repealed.
For each principal counselor, a substitute shall be appointed in the form and terms in which the principals are appointed.
(3) Fourth paragraph.- Repealed.
(3) Fifth paragraph.- Repealed.
(2) III. Two counselors from Series "B" designated by the Federal Executive through the Ministry of Finance and Public Credit, who shall have the status of independent counselors.
The appointments of independent counselors must fall on persons of Mexican nationality who, due to their knowledge, honorability, professional prestige and experience, are widely recognized.
(2) The Board of Directors may invite to its sessions persons whose activities are related to the object of the Society.
(2) The agenda of the Board of Directors sessions must list the matters to be discussed and general matters shall not be included.
(5) Article 40. The Board of Directors shall meet at least quarterly and shall validly session with the attendance of five counselors.
Resolutions shall be taken by majority vote of the counselors present, with the President having a casting vote in case of a tie.
(2) Independent counselors shall not have substitutes and must attend at least seventy percent of the sessions convened in a fiscal year, and in case of failure, others with the same characteristics may be appointed in their place, provided that the absences are not justified in the judgment of the Board of Directors.
Article 41. In the event of the absence of the President of the Board, he shall be replaced by the counselor designated by the Ministry of National Defense as first substitute. In the absence of both, the counselors shall designate who shall replace him.
Article 42. The following may not be counselors:
(1) I. Persons who fall under the cases indicated in the second-to-last paragraph of Article 41 of the Law of Credit Institutions;
II. Persons who hold an elected office, while they are exercising the same;
III. Two or more persons who have, between them, kinship up to the third degree by blood or affinity; and
IV. Officials or employees of the Institution.
If any of the designated counselors comes to fall under any of the aforementioned circumstances during the exercise of their office, they shall be replaced by their substitute, for the entire duration of the impediment and without a new principal counselor being designated.
(2) V. Additionally, independent counselors shall not be designated persons who have:
(2) a) Financial link and/or labor link with the Society; (2) b) Important financial link and/or labor link with an individual or legal entity that is a creditor, debtor, client or supplier of the Society; (2) c) Conflict of interest with the Society, as clients, suppliers, debtors, creditors, important or of any other nature, and (2) d) Representation of associations, guilds, federations, confederations of workers, employers, or sectors of attention that relate to the object of the Society or are members of its governing bodies. (2) Counselors must communicate to the President of the Board of Directors about any situation that could result in a conflict of interest, as well as abstain from participating in the corresponding deliberation. Likewise, they must maintain absolute confidentiality regarding all those acts, facts or events that could affect the operation of the Society, including the

deliberations of the Board of Directors, while such information has not been made known to the public.

Article 43. The Board shall direct the Company in accordance with the terms provided by Article 20 and other related provisions of the Regulatory Law of the Public Banking and Credit Service.

The Board of Directors may agree on the carrying out of operations inherent to the purpose of the Company.

The agreements it issues, if any, regarding the operations provided for in fractions VI and XI of Article 30 of the Regulatory Law of the Public Banking and Credit Service, must consider the proposal of the General Director.

Article 44. The following are also powers of the Board of Directors:

I. Approve the Annual Activities Report presented to it by the General Director;
II. Approve the other specific programs and internal regulations of the Company presented to it by the General Director, in order to submit them to the authorization of the Ministry of Finance and Public Credit; and
(1) III. Appoint and remove, upon proposal of the General Director, the public officials of the institution who hold positions with the two administrative hierarchies below that of the latter and who meet the requirements established in article 24 of the relevant Law; (5) IV. Approve the budget and the modifications that correspond to make during the exercise, in accordance with the applicable provisions; (5) V. Approve, upon proposal of the human resources and institutional development committee, in accordance with what is provided in article 42, fraction XVIII of the Law of Credit Institutions, the organizational structure, salary scales and benefits, wage policy and for the granting of extraordinary perceptions for the fulfillment of goals subject to performance evaluation, taking into account the conditions of the labor market prevailing in the Mexican financial system; promotion policies, promotions and retirements; selection, recruitment and training guidelines; separation criteria; and the other economic and social security benefits established for the benefit of the public servants working in the Company; (6) VI. Approve the policy for determining the interest paid on savings and work funds, to be submitted to the authorization of the Ministry of Finance and Public Credit; (6) VII. Establish the terms and conditions for granting loans from savings and work funds, and (6) VIII. Approve the policies for the discounts provided for in article 33 of this Law.

Article 45. The General Director shall be appointed by the Federal Executive, and such appointment must fall on a General or Chief of the Army, Air Force or its equivalent in the Navy.

Article 46. The General Director shall be in charge of the administration and legal representation of the National Bank of the Army, Air Force and Navy, National Credit Company, development banking institution, without prejudice to the attributes corresponding to the Board of Directors, to which effect it shall have the following powers and functions:
(1) I. In the exercise of its legal representation attributes, it may celebrate or grant all kinds of acts and documents inherent to the purpose of the Company. It will have the broadest powers to carry out acts of ownership, administration, lawsuits and collections, even those that require special authorization according to other legal or regulatory provisions. In virtue thereof and in an enunciative manner, they may issue, endorse and negotiate credit instruments, file complaints and grant forgiveness, exercise and withdraw judicial actions, including in the amparo trial; commit to arbitrators and compromise, grant general and special powers with all the faculties that compete to them, even those requiring special clause, substitute them, revoke them and grant substitution faculties to the attorneys-in-fact, obtaining express authorization from the Board of Directors when it comes to granting general powers for acts of ownership; (6) I Bis. Inform the Ministry, prior to the authorization of the corresponding instances, of the operations that could be linked to the purpose of other development banking institutions;
II. Execute the resolutions of the Board of Directors;
III. Carry the corporate signature;
IV. Act as General Trustee Delegate;
(6) IV Bis. Decide on the designation and hiring of the public servants of the Company, different from those indicated in article 42 of the Law of Credit Institutions, as well as the designation and removal of trustee delegates; administer personnel as a whole, and establish and organize the offices of the institution;
V. Those indicated by the Organic Regulation; and
VI. Those delegated to it by the Board of Directors.
(2) Article 46 bis. Causes for removal of "B" series councilors and independent councilors are:
(2) I. Mental incapacity, as well as physical incapacity that prevents the correct exercise of their functions for more than six months; (2) II. Not complying with the agreements of the Board of Directors or acting deliberately in excess or defect of their attributes; (2) III. Using, for their own benefit or that of third parties, the confidential information available to them by reason of their position, as well as disclosing said information without the authorization of the Board of Directors, and I (2) IV. Knowingly submitting false information to the consideration of the Board of Directors. (2) In addition to the causes for removal indicated in this provision, "A" series councilors and the General Director shall be removed from their office when their responsibility is determined through a final resolution issued by a competent authority, by being in any of the situations contained in the Federal Law of Administrative Responsibilities of Public Servants. (5) Article 47. The supervision of the Company will be carried out by the bodies and in the terms indicated in the Law of Credit Institutions and the general character provisions issued by the National Banking and Securities Commission.

Article 48. The councilors, the General Director, the directors, the sub-directors, the managers and the trustee delegates of the Company, will only be obliged to answer positions or give testimony in court on behalf of the same, when the positions and questions are formulated by means of official letter, which they will answer in writing within the term set by the respective authorities.
(3) Article 49. (Repealed)

FIFTH TITLE
General Provisions

Article 50. The Ministry of Finance and Public Credit will interpret the present Law for administrative purposes and may issue complementary provisions that are required in its application.

Article 51. The operations and services of the Company will be governed by what is provided in this Law and subsidiarily by the Regulatory Law of the Public Banking and Credit Service, by the Organic Law of the Bank of Mexico, and by the other applicable provisions.
(1) Article 52. The Company will formulate annually its financial programs, general budgets of expenses and investments, as well as its operational programs in accordance with the guidelines, measures and mechanisms established for that effect by the Ministry of Finance and Public Credit.
(1) The modalities in the allocation of resources will be authorized by the Ministry of Finance and Public Credit, in the terms of article 31 of the Law of Credit Institutions, which will seek the best use and most appropriate channeling of the institution's resources, within the framework of management autonomy required for its effective functioning, in accordance with the applicable legal provisions.

Article 53. Prior to the authorization of the Ministry of Finance and Public Credit, the Company must constitute the reserves and funds necessary for the adequate fulfillment of the object entrusted to it by this Law. The amounts that have been taken to such reserves and funds will not be considered operating surpluses.

Once the amount of the surplus is fixed and the amount corresponding to pay the respective tax and the participation of workers in the profits of the Institution is separated, the balance will be applied in the terms provided by the Organic Regulation.
(4) Article 54. The Federal Government will contribute to the National Bank of the Army, Air Force and Navy, National Credit Company, development banking institution, the quantities necessary to cover the obligations imposed by this Law on the Company, regarding the savings fund and work fund, to which effect, the Ministry of Finance and Public Credit will supervise that in the Expenditure Budget of the Federation corresponding, the respective items are included.

Article 55. Cash deposits that students entering military schools are obligated to constitute, in order to guarantee their progress, shall be made in the National Bank of the Army, Air Force and Navy, National Credit Company, development banking institution.

Article 56. The public servants of the Company, regardless of what is stated in this Law, will be preferably military personnel.
(5) Article 57. The Company will have a human resources and institutional development committee, which will be integrated as follows:
(5) Three representatives of the Ministry of Finance and Public Credit; the Undersecretary of Expenditures, the Undersecretary of Finance and Public Credit and the Head of the Development Banking Unit; (5) A person designated by the Board of Directors, who by his knowledge and professional development, has extensive experience in the area of human resources; (5) A member of the Board of Directors who has the character of independent; (5) The General Director of the Company, and (5) A representative of the National Banking and Securities Commission with voice, but without vote. (5) The General Director of the Company will abstain from participating in the sessions of the Committee, which have as their object to emit opinions or recommendations regarding his salary, economic and social security benefits. (5) This Committee will advise and propose, the salary scales and benefits, wage policy and for the granting of extraordinary perceptions for the fulfillment of goals subject to performance evaluation; promotion policies, promotions and retirements; selection, recruitment and training guidelines; separation criteria; and the other economic and social security benefits established for the benefit of the public servants working in the Company.

(5) The Ministry of Finance and Public Credit will establish criteria in matters of occupational structure, salary movements, extraordinary perceptions and benefits, which must be observed by the Committee. Likewise, the Company will provide the aforementioned Ministry with the information it requests.
(5) This Committee will meet at the request of the General Director of the Company, who will send the respective summons to its members, where he will establish the agenda, as well as the place and date for the holding of the session. Its decisions will be taken by majority of votes. The Undersecretary of Finance and Public Credit, who will preside over it, will have a casting vote in case of a tie. Likewise, the Committee will have a technical secretary, who will have voice, but without vote. (5) Except for the independent councilor and the professional with experience in the area of human resources, the other members of the Committee will have their respective substitutes, who will be preferably public servants of the next lower immediate level and must have at least general director level. (5) In case of absence of the Undersecretary of Finance and Public Credit, without prejudice to the right to vote of his substitute, the Head of the Development Banking Unit will preside over the Committee and exercise the casting vote. (6) Article 58.- The Company will provide assistance and legal defense services to the members of its Board of Directors, committees established by the same or provided for by normative provision and to the public servants who work or have worked in the institution itself, with respect to the acts that these people carry out in the exercise of the functions entrusted to them by law and in accordance with the Guidelines issued for such effect by the Ministry of Finance and Public Credit. (6) The aforementioned assistance and legal defense will be provided even when the indicated persons cease to perform their functions or provide their services to the Company, provided that it concerns acts carried out in the performance of their functions or activities in service of the Company. (6) Legal assistance and defense will be provided from the resources available to the Company for these purposes. In case that the competent authority issues a final resolution against the subject of legal assistance, causing it to become final, such person must reimburse the Company for the expenses and any other disbursement that it had made by reason of the assistance and legal defense. (6) What is provided in this article will apply without prejudice to the obligation that subjects of assistance and legal defense have to render the reports required of them in terms of the applicable legal provisions as part of the performance of their functions.

TRANSITORY PROVISIONS
(Decree by which the Organic Law of the National Bank of the Army, Air Force and Navy is issued, published in the Official Gazette of the Federation on January 13, 1986) FIRST. This Law will enter into force the day after its publication in the Official Gazette of the Federation.
SECOND. This Law repeals the Organic Law of the National Bank of the Army, Air Force and Navy, dated December 27, 1978.
THIRD. The authorizations, powers, mandates and other legal acts and administrative measures, granted, dictated or celebrated based on the Law that is repealed, will remain in force until they are revoked or modified by the competent bodies and authorities.
FOURTH. The Organic Regulation of the Company must be issued within a period not exceeding 180 days, counted from the date of validity of this Law. During this period, the one issued on July 29, 1985, will continue in force.
FIFTH. The corporate domicile of the National Bank of the Army, Air Force and Navy, National Credit Company, development banking institution, will be the city of Mexico, Federal District, until the Organic Regulation referred to in the previous Article is issued.

Mexico, D.F., on December 21, 1985. - Fernando Ortíz Arana, Dip. President.- Socorro Díaz Palacios, Sen. Presidentess.- Reyes Rodolfo Flores Zaragoza, Dip. Secretary.- Guillermo Mercado Romero, Sen. Secretary.- Signatures.
In compliance with what is provided by fraction I of Article 89 of the Political Constitution of the United Mexican States and for its due publication and observance, I issue this Decree in the residence of the Federal Executive Power, in the City of Mexico Federal District, on the twenty-third day of the month of December of nineteen hundred eighty-five.- Miguel de la Madrid H.- Signature.- The Secretary of Governance, Manuel Bartlett D.- Signature.- The Secretary of National Defense, Juan Arévalo Gardoqui Signature.- The Secretary of the Navy, Miguel Angel Gómez Ortega.- Signature.- P.A. of the Secretary of Finance and Public Credit, The Acting Undersecretary of the Office, Francisco Suárez Dávila.- Signature.- The Secretary of Programming and Budget, Carlos Salinas de Gortari.- Signature.

TRANSITORY PROVISIONS
(Decree by which various provisions of the Law of Credit Institutions; of the Organic Law of Nacional Financiera; of the Organic Law of the National Bank of Foreign Trade; of the Organic Law of the National Bank of Public Works and Services; of the Organic Law of the National Bank of the Army, Air Force and Navy; of the Organic Law of the National Savings Bank and Financial Services and of the Organic Law of Federal Mortgage Society are reformed, added and repealed, published in the Official Gazette of the Federation on June 24, 2002)
ARTICLE FIRST.- This Decree will enter into force the day after its publication in the Official Gazette of the Federation.
ARTICLE SECOND.- The Ministry of Finance and Public Credit will make known the rules to determine the quotas referred to in article 55 bis of the Law of Credit Institutions, as well as the investment regime of the trusts, which must be constituted by development banking institutions within the following ninety natural days counted from the entry into force of this Decree.
ARTICLE THIRD.- Development banking institutions will be subject to the Current General Conditions of Work, until new ones are issued and they enter into force.
ARTICLE FOURTH.- All provisions that oppose the laws that are reformed, added and repealed in this Decree are repealed.
ARTICLE FIFTH.- Procedures that had been initiated prior to the entry into force of this Decree, in accordance with the laws that are reformed, added and repealed, will continue to be governed by the provisions in force on the date of publication of this Decree.
ARTICLE SIXTH.- The human resources planning and institutional development committee must be integrated and enter into functions within a period not exceeding ninety natural days counted from the date on which this Decree enters into force.
ARTICLE SEVENTH.- The comprehensive risk management committee must be integrated and will enter into functions within 60 business days following the date on which this Decree enters into force.
ARTICLE EIGHTH.- With regard to the modification to article 7o. of the Organic Law of Nacional Financiera, the references contained in the legal orders where it indicates that the deposits of titles, securities or sums in cash that have to be made by or before the administrative or judicial authorities of the Federation or by or before the administrative authorities of the Federal District, as well as the sums in cash, titles or values that the judicial or administrative authorities of the Federation seize and those that the administrative authorities of the Federal District seize, are constituted in Nacional Financiera, National Credit Company, it must be understood that the same may be constituted in national credit companies, development banking institutions that are authorized by law for such effect.
ARTICLE NINTH.- The State Consultative Councils and National referred to in articles 33 and 34 of the Organic Law of the National Bank of Public Works and Services must be integrated and enter into functions within 180 natural days following the date on which this Decree enters into force.
Mexico, D.F., on April 30, 2002.- Dip. Beatriz Elena Paredes Rangel, Presidentess.- Sen. Diego Fernández de Cevallos Ramos, President.- Dip. Adrián Rivera Pérez, Secretary.- Sen. Sara Isabel Castellanos Cortés, Secretary.- Signatures".
In compliance with what is provided by fraction I of Article 89 of the Political Constitution of the United Mexican States, and for its due publication and observance, I issue this Decree in the Residence of the Federal Executive Power, in the City of Mexico, Federal District, on the twenty-first day of the month of June of two thousand two.- Vicente Fox Quesada.- Signature.- The Secretary of Governance, Santiago Creel Miranda.- Signature.

TRANSITORY PROVISIONS
(Decree by which various Federal Laws are reformed, with the object of updating all those articles that make reference to the Ministries of State whose denomination was modified and to the Government of the Federal District insofar as it is pertinent; as well as eliminating the mention of administrative departments that no longer have validity, published in the Official Gazette of the Federation on April 9, 2012) First. This decree will enter into force the day after its publication in the Official Gazette of the Federation. Second. From the date on which this Decree enters into force, the provisions that contravene or oppose it are left without effect. Mexico, D.F., on February 21, 2012.- Dip. Guadalupe Acosta Naranjo, President.- Sen. José González Morfín, President.- Dip. Laura Arizmendi Campos, Secretary.- Sen. Renán Cleominio Zoreda Novelo, Secretary.- Signatures." In compliance with what is provided by fraction I of Article 89 of the Political Constitution of the United Mexican States, and for its due publication and observance, I issue this Decree in the Residence of the Federal Executive Power, in the City of Mexico, Federal District, on thirty of March of two thousand twelve.- Felipe de Jesús Calderón Hinojosa.- Signature.- The Secretary of Governance, Alejandro Alfonso Poiré Romero.- Signature.

Transitory Dispositions
(Decree by which various provisions in financial matters are reformed, added and repealed and the Law to Regulate Financial Groupings is issued, published in the Official Gazette of the Federation on January 10, 2014)
ARTICLE TWENTY-FIRST.- In relation to the modifications referred to in Articles Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth and Twentieth of this Decree, we will adhere to the following:
I. The Congress of the Union, when issuing the regulatory laws referred to in the second paragraph of the transitory article of the Decree by which various provisions of the Organic Law of the Federal Public Administration are reformed, added and repealed, published in the Official Gazette of the Federation on January 2, 2013, will foresee a special control and evaluation system for development banking institutions that is in accordance with their nature and functions, avoids duplication of supervision and monitoring mechanisms and contributes to the efficiency of said institutions.

II. From the entry into force of this Decree, trust workers of development banking institutions shall be excluded from the application of the general working conditions of the respective institution. Without prejudice to the foregoing, the acquired rights of trust workers who are working in a development banking institution on the date of entry into force of this Decree shall be respected, with the appropriate provisions being made in the remuneration and pension manuals referred to in Article 43 Bis of the Credit Institutions Law, as amended in the terms of this Decree.

III. Within a period of sixty natural days following the entry into force of this Decree, national credit societies shall extinguish the trust constituted in terms of Article 55 Bis of the Credit Institutions Law.

IV. The social banking functions provided for in the reform to Article 3 of the Organic Law of the National Savings Bank and Financial Services shall be implemented by the institution starting from January 1, 2014; therefore, in the FEDERAL EXPENDITURE BUDGET FOR THE FISCAL YEAR 2014, the allocation of resources shall be provided to strengthen the equity of the National Savings Bank and Financial Services so that it can fulfill its purpose as Social Banking.

V. Within a period of ninety natural days, the Secretariat of Finance and Public Credit shall carry out an evaluation of the subsidies, support, programs, funds, and trusts granted and administered by the entities of the Federal Public Administration, with the purpose of diagnosing the feasibility of channeling them through a new single system of agricultural and rural financing and promotion.

VI. When this or other decrees, codes, laws, regulations, or legal provisions issued prior to this Decree, as well as all contracts, agreements, and other legal acts celebrated by the institution, refer to Rural Financial Institution, it shall be understood that they refer to the National Financial Institution for Agricultural, Rural, Forestry and Fisheries Development.

TRANSITIONAL PROVISIONS OF THE DECREE
(Decree reforming, adding, and repealing various provisions in financial matters and issuing the Law to Regulate Financial Groupings, published in the Official Gazette of the Federation on January 10, 2014)

UNIQUE. This Decree shall enter into force the day following its publication in the Official Gazette of the Federation, except for what is provided in ARTICLES TWENTY-FIFTH, fraction I; THIRTIETH, fractions IV and VI; FORTIETH, fractions I and II; and FIFTIETH, fractions I and II, which shall enter into force on the dates established in said provisions.

Mexico, D.F., November 26, 2013.- Dep. Ricardo Anaya Cortes, President.- Sen. Raúl Cervantes Andrade, President.- Dep. Javier Orozco Gomez, Secretary.- Sen. María Elena Barrera Tapia, Secretary.- Signatures.

In compliance with what is provided in fraction I of Article 89 of the Political Constitution of the United Mexican States, and for its due publication and observance, I issue this Decree in the Residence of the Federal Executive Power, in Mexico City, Federal District, on January 9, two thousand fourteen.- Enrique Peña Nieto.- Signature.- The Secretary of the Interior, Miguel Ángel Osorio Chong.- Signature.

STATEMENT OF REASONS
(Decree of January 13, 1986)
The revolutionary opening initiated in 1910 achieved its consolidation with the (sic) discharge of the old Federal Army in the signing of the Treaties of Teoloyucan, thus giving way to the consolidation of the Constitutional Army, the People's Army. The new Popular Army emerged from the Mexican Revolution, consolidated with the promulgation of the Charter of Querétaro on February 5, 1917, has been a fundamental pillar in the (sic) maintenance of public liberties and the political and social independence of Mexicans.

Within this context, it was obligatory for the Mexican state to provide our glorious National Army with authentic instruments that would provide its members with the constitutional benefits guaranteed to all Mexicans, in a country decisively resolved to penetrate the (sic) path of concord and the (sic) work towards modernity.

To this effect, the Government of the Republic instituted the National Bank of the Army and Navy, S.A. de C.V., under the (sic) protection of its Organic Law published in the Official Gazette of the Federation on December 31, 1946, which at that time, given the needs of financing members of the Mexican Army, answered, since its main objective consists of granting credits to members of the National Army and Navy and supporting commercial societies integrated by military elements. With insight, the Permanent Constituent addressed the need to attend to the new and just claims to which the military class is entitled within a permeable and dynamic society.

Thus arose the current Organic Law of the National Bank of the Army, Air Force and Navy, S.A., of December 27, 1978, which, in addition to expanding its coverage to members of the Air Force, in consideration that the Armed Institute has historically presented an essential factor for the tranquility and prosperity of our homeland, also incorporated within the banking operations, multiple banking functions tending to strengthen its support and services in a particular way to the Mexican Army, in parallel with the civilian population that requires its services.

The new Mexican financial scheme, emanating from the nationalization of banking, obliges us to rethink actions and strategies within development banking, adjusting it to the substantive guidelines that indicate in the National Development Plan, Planning Law, National Financing Program for Development and the current Regulatory Law of the Public Service of Banking and Credit. The adaptation of the current Organic Law of the National Bank of the Army, Air Force and Navy, National Credit Society, constitutes an urgent need within the global effort to harmonize our financial structures in concordance with national reality.

On January 13 of this year, the Regulatory Law of the Public Service of Banking and Credit was published in the Official Gazette of the Federation, which formally replaced the one issued on December 31, 1982, which bears the same name. This law arises from the need to have adequate and modern legislation, which will promote the more efficient participation of the financial system so that banking can define an order of priorities for its operation and own nature, which in turn will give direction to the banking contribution in development plans and programs.

On July 12 of this year and based on what is provided in articles two and nine transitional of the Regulatory Law of the Public Service of Banking and Credit, the Federal Executive under my charge, issued the (sic) decree by which the (sic) National Bank of the Army, Air Force and Navy, Anonymous Society, was transformed into the National Bank of the Army, Air Force and Navy, National Credit Society, Institution of banking and development.

In compliance with what is established by the referred Banking Law and its corresponding transformation decree, the National Bank of the Army, Air Force and Navy, National Credit Society, in its capacity as a development banking institution and in support of national development policies and the protection of public interests, seeking the satisfaction of its sector entrusted by this Organic Law, will continue to carry out the activities and operations that are proper to its nature within those of economic direction of the State, mixed economy and democratic planning consecrated in the Magna Carta.

Likewise and within the framework referred to in the bill of the law, the general objectives pursued by the new banking law have been integrated into its text, such as the promotion of national savings,

the efficient channeling of financial resources, as well as the promotion and financing of activities corresponding to its sector. Thus also, specifically, those operations that have been characteristic of it and that it carries out for the benefit of the armed forces are regulated, in addition to which its government bodies preserve the modalities and particularities that have been its own and which require sectoral specialization.

As a general objective of financing policy, as expressed in the (sic) National Financing Program for Development, is the (sic) to support the economic and social strategy of the Development Plan, taking into account the existence of resources, the priorities of the country and the visibility of the processes of investment projects. So that the (sic) National Bank of the Army, Air Force and Navy, National Credit Society, refers to, it corresponds to efficiently and equitably channel its resources to achieve an equal distribution for the (sic) well-being of the members of the Mexican Army, Air Force and Navy. Therefore, the (sic) project presented imposes on the National Credit Society the obligation to subject the provision of its services to the guidelines of the National System of Democratic Planning.

In accordance with the current financial system and in order to satisfactorily participate in the attention of the requirements of the national economy, in times of crisis as a planning towards the (sic) future, the coordination of the institution, as a development bank, with the promotion funds will be established, in order to promote the (sic) structural change to support the (sic) development of the productive infrastructure of the activities and regions prioritized in response to the National Financing Program for Development.

The regulatory environment contemplated in this initiative and the consequent activity of the institution define, with respect to the objectives and operations recorded in articles 6th and 7th, respectively, a new organization in which its promotional character is revalued seeks to strengthen its financial operation, such that it is not limited (sic) its capacity for promotion and shows, on the one hand its efficiency, not only in financial results, but also in the expeditious and timely attention of the demand for credits for the (sic) development of the military sector, fundamentally.

The activity of the institution, as noted in articles 2nd and 3rd, is inscribed in the (sic) scheme of the National System of Democratic Planning, while it is imperative to seek the (sic) well-being of the military sector (sic). Financial programming is therefore imperative and a condition for the (sic) achievement of national aspirations.

Article 56 supported by the (sic) 10 of the Regulatory Law of the Public Service of Banking and Credit, which in turn relates to the faculty that the Planning Law grants to the Secretariat of Finance and Public Credit, to estimate and obtain resources and guide the transformation of the National Bank of the Army and Air Force and Navy, National Credit Society, into a development banking institution, in terms of article 1st of the project, incorporates the decision of the Mexican State that the public service of banking and credit, which society provides, shall be carried out subject to the objectives and priorities of the National Development Plan and especially of the National Financing Program for Development, to promote and finance its activities, and as stated in the (sic) article 3rd, of the initiative shall be oriented to seek the (sic) well-being of the members of the Mexican Army, Air Force and Navy.

By authorizing within the objectives and operations of the bank the commitment to promote joint financing and assistance actions with other credit institutions, promotion funds, trusts, auxiliary credit organizations and with the social and private sectors, the guidelines of the policy that establishes the (sic) National Financing Program for Development are strengthened in a planning scheme.

In congruence with the new financial policy of harmonizing programs and public responsibility, with the need for flexibility and management autonomy of institutions, bypassing schemes and rigid norms, easily surpassed by the economic and social variants of the country, the (sic) new order refers the conditions and requirements of credits to the Organic Regulation, to the agreements of the Board of Directors and of course to the determinations of the Secretariat of Finance and Public Credit.

By assuming the (sic) Federal Government the commitment to respond at all times for the operations concerted by the institution with national natural or legal persons, or of mandatory deposits, savers and credit users are guaranteed not only a sound use of the courses

financial managed by the (sic) bank, but also, in front of any imponderable event the Mexican State responds of the optimal exercise of the public service of banking and credit.

In the (sic) article 19 of the initiative, it is established that savings and work funds are unseizable and non-transferable and that they can only be reduced by judicial disposition in case of alimony, in addition to that the (sic) right to claim them is of an imprescriptible nature. On the (sic) subject, by subjecting the reference funds to what the (sic) jurisdictional body resolves in cases of food, it is guaranteed to minors, and to those who concur with this right, their exact fulfillment in concordance with civil legislation.

Article 25 of the initiative extends the right of mortgage loans to acquire or build a house for habitation to active duty military personnel, which previously were only subject to treatment by the Institute of Social Security for the Mexican Armed Forces (ISSFAM). The addition of this right to active military personnel constitutes a solid social advance in observance of the constitutional guarantee of the right to housing that in the case of beneficiaries of this right, will be able to cover their amortizations monthly and not biweekly as is currently happening in compliance with the current law.

Regarding the formation of the bank's social capital, the initiative establishes that it will be represented by capital contribution certificates, in 66 percent of series "A" and can only be subscribed by the (sic) Federal Government, and that series "B" can be subscribed by the (sic) Federal Government, by entities of the parastatal public administration, by commercial societies formed by members of the Armed Forces, by members who have the (sic) rank of generals, chiefs or their equivalents in the Navy and by Mexican natural or legal persons. Formally, the (sic) control and adequate conduct of the bank by the Federal Government is being guaranteed, as holder of the capital contribution certificates of series "A" and with the participatory concurrence of other sectors holders of series "B" certificates, the interests of the public user of banking services.

This, regardless of the fact that in this way compliance with what is ordered by the Regulatory Law of the Public Service of Banking and Credit is being fulfilled.

As a corollary of the comments provided above, it can be concluded that the initiative of the Organic Law of the National Bank of the Army, Air Force and Navy, National Credit Society, Institution of banking and development responds to the contemporary needs of the public service of banking and credit, to which the military sector legitimately has access, and from a legal perspective, its articles and substantive functions adjust to the constitutional order and its regulatory law.

In this environment, in the (sic) universe of general principles on the philosophy of financing for the (sic) development, which is sketched in the lines above, the initiative submitted to the consideration of the H. Congress of the Union, consists of five titles, in 57 articles and 5 transitional provisions.

The first title deals with the denomination of the society, its object, domicile and duration: in general terms, it specifies the (sic) new character of the bank as a national credit society and institution of banking and development; as such, it is recorded the imperative to link itself to the National System of Democratic Planning and especially to the National Development Plan in the (sic) National Financing Program for Development. As the fundamental objective of the bank, the military sector is established towards which the (sic) bank, must orient the public service of banking and credit to satisfy this area the priority financial needs of this vital segment of the national population.

The second title, of the objectives and of the operations, where the new structure and conception of the society as development banking is really inscribed. In this regard it is worth remembering that the Regulatory Law of the Public Service of Banking and Credit, in its article 3rd, authorizes the Congress of the Union for the organic laws of development banking institutions to record the specific objectives that imprint their definitive, promotional and promotional nature.

In the (sic) third title, the social capital and the (sic) net capital are treated, unlike the current law, taking into consideration what was stated by the (sic) Organic Regulation, the social capital is integrated with capital contribution certificates of series "A" and "B", the first of which represents 66% of the total capital, will only be subscribed by the (sic) Federal Government; series "B" which represents the (sic) 34% of the capital, can be subscribed by the (sic) Federal Government, by the governments of the federative entities and of the municipalities, or by their respective a (sic) parastatal entities. Everything related to the form, proportions and other conditions applicable to the subscription, holding and circulation of these latter certificates, is attributed to the Secretariat of Finance and Public Credit.

As for the net capital, the (sic) corresponding provision empowers the Secretariat of Finance and Public Credit, to determine it, hearing the opinion of the Bank of Mexico, and of the National Banking and Insurance Commission.

The administration and supervision of the society are treated in the (sic) fourth title, it is reiterated that the administration of the society will correspond to the Board of Directors and the General Director, in their respective scopes of competence. That is integrated by 9 councilors, 5 representatives of series "A", who will be the holders of the secretaries of National Defense, of the Navy and two of the Secretariat of Finance and Public Credit, as well as the (sic) Institute of Social Security for the Mexican Armed Forces. Series "B", shall be integrated by 4 councilors in the following way: one from the Secretariat of National Defense and one from the Navy, as well as two from the Secretariat of Finance and Public Credit.

The requirements to be a councilor and the (sic) quorum of attendance and voting of the Council are contemplated, respectively, in articles 42 and 43. To avoid unnecessary repetitions the (sic) article 44 of the project, refers to article 20 of the Regulatory Law of the Public Service of Banking and Credit, which in turn establishes the faculties of this body, in the (sic) following provision the faculty is granted to approve the (sic) annual activity report presented by the (sic) general director, as well as the specific programs and internal regulations formulated by said official, prior sanction of the Secretariat of Finance and Public Credit.

With the (sic) purpose of guaranteeing an efficient and professional administration of the society, the (sic) general director is required to meet the conditions established by the (sic) article 24 of the referred Law.

With regard to the faculties of the general director, those of the current law are preserved, without prejudice to the fact that the (sic) Organic Regulation or the (sic) Board of Directors, grants or delegates other diverse ones for the better administration of the institution.

In the (sic) article 48, the supervision of the society is provided for with the existence of two commissioners, one designated by the Secretariat of General Comptroller of the Federation, by virtue of the generic attribution that this dependency competes to; the (sic) other commissioner shall be designated by the councilors of series "B". In the (sic) fulfillment of their assignment, the commissioners will have all the faculties and obligations recorded by the applicable Regulatory Law and by the (sic) Organic Regulation of the society.

The Consultative Commission referred to in the (sic) article 27 and of the order that regulates the (sic) public service of banking and credit, is introduced the (sic) project in the (sic) provision 50, with a reference to the substantive norm.

In the (sic) fifth title, various general provisions are grouped that comprise different scenarios. The regime of legal suppletoriness refers, in its order, to financial legislation and applicable provisions without making an exhaustive reference to it.

In the (sic) article 53, the Secretariat of Finance is empowered to dictate the guidelines according to which the programs, budgets and estimates of the society are formulated. Specific attribution is granted to said dependency to authorize the allocation of resources within the philosophy of flexibility and management autonomy indispensable for the (sic) effective functioning of the bank.

Finally, the faculty of the Secretariat of Finance and Public Credit to interpret the law and issue the provisions required for its adequate application is reiterated.

In the transitional articles, the (sic) start of the validity of the law in question is provided for; the abrogation of the current order and the obligation to publish the (sic) Organic Regulation within a term of 180 days.

In exercise of the faculty conferred on the Federal Executive under my charge, article 71, fraction I, of the Political Constitution of the United Mexican States, in relation to what is stipulated by articles 28, fifth paragraph and 73, fraction X of the same order, I come to submit to the H. Congress of the Union, the present initiative of

EXPLANATORY MEMORANDUM
(Decree of June 24, 2002)
Development banking institutions exist to serve those individuals who, due to market imperfections, are not served by private financial intermediaries. In most cases, these are sectors and individuals who are not subjects of credit for financial intermediaries due to cost reasons, risk level, lack or insufficiency of guarantees, geographic reasons, adverse selection due to lack of experience, lack of credit history, among others. These institutions are integrated into the coordination of a medium- and long-term development policy directed by the Federal Government itself, oriented toward channeling financial resources to specific sectors and projects. To fulfill this mandate and given the current, highly dynamic and competitive environment, it is necessary to increase the operational capacity of development banking, as well as the efficiency of the services they offer, to foster and strengthen financial intermediaries, and to expand their coverage. To achieve the above, some modifications to various regulations are required, as indicated below:
In the administrative sphere, the modernization and efficiency in the use of resources is sought. In this sense, it will correspond to the board of directors of each institution to approve the general budgets without the need to resort to various instances to obtain authorization, as long as they remain within the parameters of programmed spending, given that national credit societies do not use fiscal resources for their expenses and investments, and must observe the general rules in budget matters applicable to the specific case. In order to have greater capacity to act in response to the requirements of the different sectors served by development banking in the country and to face competition in the global environment in which they operate, it is necessary to direct the efforts of development banking to their substantive activities. For this, it requires adopting agile actions that allow it to make its purchases, hire services, leases, and public works in a timely manner both in the country and abroad, for the correct functioning of these institutions, which is why they will not be subject to the Law on Acquisitions, Leases and Services of the Public Sector nor to the Law on Public Works and Services Related to Them. Notwithstanding the above, this Decree records the need to establish the guidelines under which these activities will be carried out in compliance with what is provided in Article 134 of the Constitution. The board of directors will have additional powers in matters of budgets for expenses and investment, acquisitions, leases, services, public works, salaries, and benefits, in order to make the reform consistent with regard to administrative modernization. At all times, constitutional principles will be observed, where, as a general rule, the obligation to assign through public bidding will prevail, in transparent processes that allow each institution to obtain the best market conditions in terms of price, quality, financing, and timeliness. Likewise, it will be sought to ensure economy, efficiency, honesty, and impartiality in the respective processes. Only in those cases where public bidding is not suitable, they will be carried out through restricted invitation procedures or direct award, for which the board of directors itself, without departing from constitutional principles, will establish the bases, policies, and procedures that will regulate the contracts, agreements, orders, or accords that development banking enters into for its acquisitions, leases, services, and public works. The administrative body of the societies is granted the power to create the salary and benefits committee and the comprehensive risk management committee. The first of these as a support body that will advise and propose to the board of directors of each institution, the terms and conditions under which the relationships between development banking institutions and their workers will be developed, in accordance with market conditions and the
possibilities of each development banking institution, in line with the sector, eliminating discretionary powers and providing greater legal security. In terms of risk management, the board of directors is authorized to create this type of committee, with the objective that these risks are diversified and the maximum limits of direct and contingent liabilities are contained, in congruence with what various prudential provisions indicate. The Ministry of Finance and Public Credit will establish global maximums for each institution to meet its needs for current spending, physical investment, net debt levels, internal and external, net financing, and financial intermediation, with the objective of controlling the impact of aggregate demand in accordance with the established macroeconomic policy. With the objective of clearly establishing the competence of the Ministry of Finance and Public Credit to determine the characteristics of active, passive, and service operations and that of the Bank of Mexico, in the case of passive operations that imply the collection of resources from the public, trusts, mandates, commissions, money market operations, as well as financial operations known as derivatives, a reform is incorporated into each organic law of the national credit societies in this sense, which seeks to clearly establish the scope of competence of each of the two institutions. With the intention that development banking institutions only serve the sectors that correspond to them according to their purpose and do not divert resources to specific sectors or persons or those belonging to groups with common interests, different from financial intermediaries, the board of directors of each institution will establish the limits for credit operations in this case. With the purpose of avoiding the use of fiscal resources by development banking institutions to meet the guarantee that the Federal Government grants them by operation of law, an obligation is incorporated on the part of the national credit societies to contribute resources to a trust that will have among its purposes supporting the fulfillment of their obligations derived from the collection they carry out from the general public, as well as to contribute to the strengthening of the capital of said societies, in order to ensure their permanence in the medium and long term. Better corporate practices are incorporated into the administrative bodies of development banking, which aim to strengthen these decision-making bodies, since by granting greater powers to the board of directors, it is necessary at the same time to develop some measures that allow for better performance of its members. In this sense, the figure of the independent advisor is incorporated, an appointment that must fall on persons who, due to their knowledge, experience, and professional prestige, are widely recognized; these advisors will represent the "B" series of capital contribution certificates. With the purpose that
independent advisors assume their responsibility, they will have no substitutes and in certain matters, their vote will be decisive, as some decisions must have qualified majorities determined by the vote of these advisors. It is important to highlight that independent advisors must not have any link with the society that represents a conflict of interest, in addition to the confidentiality they must keep in matters that are debated within the respective collegiate body. The reform also seeks to reaffirm the participation of development banking institutions through private financial institutions that assume total or partial risk of recovery of support, notwithstanding that there are some exceptions in operations that, given their nature or special circumstances, must be addressed directly. Without a doubt, this reform implies greater freedom for development banking institutions, which will result in the optimization of resources. However, it is necessary to have information on the goals set, expenditure exercise, program compliance, information that will be delivered to the Federal Executive, through the Ministry of Finance and Public Credit, which will also be sent to the Congress of the Union in an annex together with the Reports on the Economic Situation, Public Finances, and Public Debt. For the reasons stated above, the Federal Executive under my charge, in the exercise of the power conferred by Article 71, Fraction I, of the Political Constitution of the United Mexican States, through that Honorable Chamber of Deputies, submits to the consideration of the Honorable Congress of the Union the following initiative.

EXPLANATORY MEMORANDUM
(Decree of April 9, 2012)
In our country, at the federal level, in accordance with what is provided in Article 80 of the Constitution of the Political Constitution of the United Mexican States, there is a Supreme Executive Power of the Union, which is deposited in a single individual whom we call President of the United Mexican States.
Article 90 of this same instrument provides that the Federal Public Administration will be Centralized and Para-state in accordance with the Organic Law issued by Congress.
In this way, the Organic Law of the Federal Public Administration establishes the bases for the organization of the Federal Public Administration, centralized and para-state.
According to this Law, the President of the Republic is assisted, in the exercise of his attributes and for the dispatch of administrative order affairs entrusted to each of the State Secretariats and para-state entities.
This Law states in its article 1 that the Centralized Administration is integrated by the Presidency of the Republic, the State Secretariats, the Administrative Departments, and the Legal Counsel of the Federal Executive.
On the other hand, decentralized organisms, state participation companies, national credit institutions, national auxiliary credit organizations, national insurance and surety institutions, and trusts, make up the para-state public administration.
Administrative centralization is the fundamental form in which public entities of an administrative nature are organized, and its main quality is that centralized entities are related to each other by a constant hierarchical link. At the top of the centralized public administration is the President of the Republic, and subordinate to him are all those lower public organs.
Currently, the Organic Law of the Federal Public Administration provides, in its article 26, that for the dispatch of administrative order affairs, the Executive Power has the following Administrative dependencies:

• Ministry of the Interior.
• Ministry of Foreign Affairs.
• Ministry of National Defense.
• Ministry of the Navy.
• Ministry of Public Security.
• Ministry of Finance and Public Credit.
• Ministry of Social Development.
• Ministry of Environment and Natural Resources.
• Ministry of Energy.
• Ministry of Economy.
• Ministry of Agriculture, Livestock, Rural Development, Fisheries and Food.
• Ministry of Communications and Transport.
• Ministry of the Public Function.
• Ministry of Public Education.
• Ministry of Health.
• Ministry of Labor and Social Welfare.
• Ministry of Agrarian Reform.
• Ministry of Tourism.
• Legal Counsel of the Federal Executive.
  Throughout the history of our country, the federal public administration has been updated and transformed. The organizational structure of public administration has evolved, such that the competencies of the administrative organs that make it up have been redistributed or reassigned on several occasions.
  Competence consists of a series of legal powers and obligations that the legislation attributes to the organs of administration. This fixes the circumstances in which the organ has the obligation to act or abstain in a certain matter or area of administration, and determines the degree of action and the territorial surface in which the action of the organ will be circumscribed. And linked to competence is the denomination that each administrative organ receives, which establishes the attributes that correspond to each of them. It is for this reason that the denomination that the organs of public administration receive must be consistent throughout our legal order. The lack of timely updating of the names of the dependencies in the different federal laws has had harmful consequences on the legal certainty that must prevail, both in inter-institutional relations and in the relationship of institutions with individuals. In the conception of the economist, Douglass C. North, the function of institutions is to reduce uncertainty by providing a structure for daily life. Thanks to institutions, understood as rules and norms of coexistence, we can foresee the consequences of our conduct or the reactions of others and thus carry out the human exchanges that constitute the matter of our daily life. Institutions are mechanisms of social order and cooperation that order the behavior of a group of individuals through the elaboration and implementation of rules. Thus, institutions transcend human lives and intentions by identifying with the permanence of a social purpose: to give order to society. In any legal system, to be effective, not only must the normative assumption exist, but it must be accurate, clear, and explicit with reality to be applied, and to not create a difficulty in the sense of the provision itself. In this way, it is necessary to keep updated the denomination of the various dependencies of the Federal Public Administration in all laws and in the various regulations in which reference is made to them, since if this is not done, a lack of legal logic and certainty is promoted, not only by the simple denomination of the dependency, but by the inconsistencies and possible contradictory effects when these entities do not respond punctually to the denominations found in legal norms. It is of great importance that at all times legal security, enshrined in articles 14 and 16 of the Political Constitution of the United Mexican States, prevails in the relationship between government and governed. The need for this legal security has been expressed in various jurisprudence theses that are transcribed below:
  a. Jurisprudence Thesis P./J 10/94 of the Plenary Tribunal of the Supreme Court of Justice of the Nation, published in the Gaceta del Seminario Judicial de la Federación, Number 77, May 1994, page 12, rubric: "Competence, its justification is an essential requirement of the authority's act":
  ".... the guarantee of justification enshrined in Article 16 of the Political Constitution of the United Mexican States, carries with it the idea of accuracy and precision in the citation of legal norms, which empower the administrative authority to issue the act of molestia in question, attending to the legally protected value by the constitutional requirement, which is the possibility of granting certainty and legal security to the individual against the acts of authorities that affect or infringe their legal interest and, therefore, ensure the prerogative of their defense, against an act that does not meet the necessary legal requirements...". b. Contradiction of Theses 94/2000-SS. Between those sustained by the Third Collegiate Tribunal in Administrative Matters of the Sixth Circuit and the First and Fourth Collegiate Tribunals in Administrative Matters, both of the First Circuit. October 26, 2001. Unanimity of four votes. Absent: Juan Díaz Romero. Reporter: Guillermo I. Ortiz Mayagoitia. Secretariat: Lourdes Margarita García Galicia. Jurisprudence Thesis 57/2001. Approved by the Second Chamber of this High Tribunal, in private session on October 31, two thousand one, with the rubric: "Administrative authorities. They are obliged to cite the legal provisions that justify their competence":
  "Article 16 of the Federal Constitution prescribes that acts of molestia, to be legal, must come from a competent authority and meet the essential formalities that give them legal efficacy, which means that every act of authority must be issued by who is legitimized for it, expressed in the act of molestia itself, the device, agreement, or Decree that grants such legitimization, since if not, the governed is left in a state of defenselessness by not being able to examine if the action of the issuing authority is within the respective competence scope".
  c. Appendix to the Semanario Judicial de la Federación 1917-1995, Volume VI, Common Matter, page 111, thesis 165, rubric: "Competence. Its justification is an essential requirement of the authority's act." Matters: Constitutional-Administrative, Type: Jurisprudence by repetition of criteria.
  "...It is indispensable that both the attributes of the authority, as well as its competence and its name or identification as a legal entity remain clear and expressly contemplated in the norms that give it life and legal attributes for greater security and certainty of the governed..."
  However, there are still gaps in the articles of many federal laws, in which reference, validity, and responsibility are still given to dependencies and institutions that no longer exist; or to institutions that have changed their denomination and even their functions.
  The first-level legal framework must be adapted to the social and political conditions of the country and it is a task of our legislative work to give certainty and legal security to the citizen through the updating of current legislation.
  In addition to the above, on November 13, 2007, the Decree by which articles 29, 73, 90, 92, 93, 95, 110, and 111 of the Political Constitution of the United Mexican States are reformed was published in the Official Journal of the Federation, through which the denominations of some State Secretariats were updated and Administrative Departments, which were mentioned in our Magna Carta, were eliminated. The second transitory article of said Decree provided as follows: "The Congress of the Union at the beginning of the validity of this Decree will make the corresponding updates to federal legislation, in accordance with what is stipulated in this Decree. The states and the Federal District must adapt their laws

in accordance with the provisions of this Decree, no later than six months after its publication in the Official Journal of the Federation.

Thus, the purpose of this initiative is to follow up and continue the task of the Mexican Congress, to update in all Federal Laws the current denominations of all the State Secretariats cited in them.

Finally, it is important that the technological advances of our time become part of the tools that allow us to improve legislative work and therefore, in order that in the future any change in the denomination of the State Secretariats can be reflected in the respective laws, a database of federal laws is attached with this initiative in an electronic device, in which their denominations are updated, including the changes included in this initiative. This database will allow the respective laws to be updated when, for some reason, it is decided to change the name of the State Secretariats, thus providing the legal certainty that is required to have in all laws.

For all the above stated and founded, the following is submitted to the consideration of this Sovereignty:

INITIATIVE WITH PROJECT OF DECREE THAT REFORMS VARIOUS FEDERAL LAWS IN ORDER TO UPDATE ALL THOSE ARTICLES THAT REFERENCE THE STATE SECRETARIATS WHOSE DENOMINATION WAS MODIFIED AND THE FEDERAL DISTRICT GOVERNMENT IN THE RELEVANT PART; AS WELL AS TO ELIMINATE THE MENTION OF ADMINISTRATIVE DEPARTMENTS THAT ARE NO LONGER IN FORCE.

STATEMENT OF MOTIVES
(Decree of January 10, 2014)

Development Banking has long been a promoter of savings and investment in the development of the financial system, the growth of the industrial plant and projects of great regional impact, as well as major infrastructure works, companies and sectors key to national development. However, it is necessary that Development Banking has better tools to expand access to credit for those who have financing needs since, even having the ability to pay, they are not given the facilities to obtain the resources that allow them to acquire the necessary support to raise their economic development.

Development Banking has been a complementary alternative to the private financial sector. The promotion system has as one of its functions, completing markets seeking to promote the participation of the private sector without competing with said sector. The resources of the federal government are not sufficient to finance the total development of the country, hence the need to enhance them and use them as inducers of private sector participation, efficiently.

In addition, regarding control mechanisms, there are professional administrations that adhere to sound banking practices and observe regulation similar to that of commercial banking. Nevertheless, Development Banking must achieve a greater impact on the economy, consolidate the capabilities it has to resolve the problems of the sectors it attends and advance in the promotion of financing for small and medium-sized enterprises, support Mexican exporting companies and the opening of new markets, allowing, in turn, the importation of capital goods to make the country more productive.

For this reason, it is necessary to support Development Banking with a regulatory framework that, taking into account the strength of its balance sheet, allows it at the same time to implement policies that add to both the creation and preservation of jobs and investments, and that also contributes, in an effective and efficient manner, to the productive activity of the country, the creation of value and growth of the countryside and that, in turn, allows and supports popular savings for the benefit of the well-being of Mexican families.

The main objective of this initiative is to flexibilize the regulatory framework governing Development Banking, in order to contribute to the development of the financial system and strengthen the institutions themselves.

The strength of Development Banking comes mainly from the support provided by the Federal Government, which allows triggering credit in productive and strategic activities that would not otherwise receive it. For this purpose, it is required: (i) that its mandate be clearly defined within the legal framework, (ii) that unnecessary restrictions not be imposed on it, and (iii) that it be allowed to obtain the indispensable elements for its compliance, in order to manage its resources effectively for the benefit of the country.

In this sense, this initiative strengthens Development Banking by clarifying its mandate, in which it is specified that this is the promotion of the economy through the attention of strategic sectors that face limitations in having access to financing alternatives; likewise, unnecessary restrictions for its development are eliminated; and thirdly, the regulatory framework is modified to ensure that Development Banking can obtain the resources it requires for the fulfillment of its mandate, mainly human capital, necessary for good management, granting it flexibility to manage them appropriately. With these elements, clear and solid bases are laid for good management.

The success of Development Banking will be determined by the capacity of its administrators and governing bodies to carry out adequate diagnoses of the sectors set as objectives that must be attended, as well as by their capacity to generate programs and products, complementary to public policies that adequately resolve the specific problem affecting strategic sectors at each moment. The proposed regulatory framework lays the foundations for this management to be successful and productive, but it does not replace the effort that must accompany it, which must be demanded from Development Banking at all times.

In order for Development Banking to be able to fulfill its object more efficiently and agilely, its operation must be modernized, so it is considered necessary to make modifications to various legal instruments, in order to strengthen its action and operation, endowing it with greater management autonomy, facilitating the granting of credit by its institutions, flexibilizing its investments and freeing it from additional restrictions beyond those of multiple banking.

1.- Mandate of Development Banking Institutions: Inclusion, Promotion of Innovation and Gender Perspective.

Currently, the mandate of Development Banking establishes that in the development of its functions, its capital must be preserved and maintained, which has led to the inhibition of the granting of credit by confusing a restriction that must be imposed on the fulfillment of its mandate to seek a prudent management of the entrusted public resources; with the very object of Development Banking. In this regard, it is proposed that the institutions have as their fundamental mandate facilitating access to credit and financial services, determining rates, terms, risks of operations and types of business.

It is privileged as an objective, to strengthen Development Banking to expand credit with special emphasis on priority areas for national development, in accordance with what is provided in commitment 62 of the Agreements for economic growth, employment and competitiveness of the Pact for Mexico. The expansion of access to financing and financial services will generate the conditions for greater economic activity and, therefore, economic growth, generating a virtuous circle of investment and growth.

Without prejudice to the above, the importance is recognized that institutions guarantee their sustainability through the efficient, prudent and transparent channeling of resources.

In this way, officials and Boards of Directors of Development Banking will be allowed to formulate programs for attention to their target sectors that imply incurring in measurable and foreseeable risks, as well as in projects with a longer maturation period, without affecting sustainability in the medium term.

Additionally, it is proposed to add a section IX Ter to article 42 of the Law of Credit Institutions, through which the faculty is granted to determine rates, terms, risks of operations and types of business, among others, which will allow adjusting their strategic plans to make the most efficient use of resources and support sectors that, in terms of said policies, require financing.

Additionally, in accordance with what is provided in numeral 2.7 of the Pact for Mexico “Transform banking and credit into a lever for the development of households and companies”, and aware of the importance that represents for human development that, access to financing is generalized for men and women and the generation of new ideas is promoted; it is established that Development Banking must create programs for the attention of the priority areas of national development that promote financial inclusion.

Likewise, it is foreseen that Development Banking offers financial services that promote innovation, the creation of patents, the generation of other industrial property rights and provides technical assistance and training in the matter.

Consequently, it is proposed to establish specific programs and products to address the gender perspective and promote equality between men and women.

2.- Human Resources

In addition to the explicit and implicit capital and support that the Government provides to Development Banking that allows it to absorb risks and thus boost economic activity, the main element with which these institutions have is their human capital. Quality human resources are what will allow Development Banking to attend effectively and agilely to its mandate.

A limitation to expand the financing of Development Banking to new sectors and operations has been the capacity to recruit and, above all, to organize in an agile and effective manner the human resources that have the necessary profile to be able to create new tools, programs or carry out in-depth credit analysis since this requires experience in various specialized sectors. Likewise, difficulties have been found to retain the talent developed within the institutions themselves, since when this matures, in many cases it is recruited by private sector institutions that offer career opportunities against which Development Banking is impossible to compete.

In this regard, it is considered necessary that development banking institutions grant remunerations that have as their purpose to recognize the labor effort and the contribution to the achievement of the objectives of the institution in which one works, establishing for this a manual of remunerations, retirements, rights and obligations specific for the trusted workers in the proposal for reform to article 43 Bis of the Law of Credit Institutions and to article 3 of the Regulatory Law of Section XIII Bis of Section B, of Article 123 of the Political Constitution of the United Mexican States; since these perform qualified technical work and with specialization in their various functions aligned with the objectives of the institution, will allow delivering better results to society. Thus, development banking institutions will have high-level professional workers whose incentive is the various benefits in order to deliver high-level results, remaining in the institution itself.

Additionally, as a measure of transparency, the obligation is established for development banking institutions to include their approved pay scales in their respective budget projects and to report on the amounts destined for the payment of remunerations, retirements, pensions and other benefits when rendering the Public Account.

2.1.- Human Resources and Institutional Development Committees.

It is proposed to have human resources committees that can propose adequate structures and remunerations and that take into account the situation of the labor market in the Mexican financial system according to the criteria determined by the Ministry of Finance and Public Credit, who will preside and have a casting vote; this will allow banks to have greater autonomy to organize their internal structures while the participation of government departments will be in the context of their participation in the governing bodies, thus achieving that their decisions are always oriented to ensure the best functioning of the bank.

Likewise, it is intended that the General Director of the Society abstains from participating in the sessions of the Committee that have as their object to issue opinions or recommendations regarding their salary, economic and social security benefits.

This Committee will advise and propose in terms of the general working conditions, salary and benefit scales, salary policy and the granting of extraordinary perceptions for the fulfillment of goals subject to performance evaluation; promotion policies, promotions and retirements; selection, recruitment and training guidelines; separation criteria; and other economic and social security benefits established for the benefit of public servants who work in each Society.

The Ministry of Finance and Public Credit will establish criteria in matters of occupational structure, salary movements, extraordinary perceptions and benefits, which must be observed by the Committee; likewise, the Society will provide the indicated Ministry with the information it requests.

It is proposed that in order to homologate the regulatory framework of Development Banking, the Undersecretary of Finance and Public Credit be the one who presides the Committee, having a casting vote in case of a tie; in case of absence of the Undersecretary in citation, the Head of the Development Banking Unit will preside the Committee and exercise the casting vote.

2.2.- Faculty of the Board of Directors to Approve the General Conditions of Work of the Institution and the Manual of Remunerations, Retirements, Rights and Obligations.

In the current text, section XVIII of article 42 of the Law of Credit Institutions establishes as a faculty of the Board of Directors the approval of the General Conditions of Work, while according to section XIX of said article, this governing body can only issue an opinion on the matter.

In this sense, it is proposed to reform the aforementioned sections, in order for the Board of Directors to approve the General Conditions of Work upon proposal of the Human Resources and Institutional Development Committee, taking into account the opinion of the union in cases where applicable, which will provide legal certainty to the public servants working in the institutions of Development Banking.

Likewise, section XIX Bis of article 42 of the Law of Credit Institutions is incorporated as a faculty of the Board of Directors to approve the manual of remunerations, retirements, rights and obligations of the trusted workers upon proposal also of the Human Resources and Institutional Development Committee.

3.- Flexibilization of the operation of development banks.

3.1.- In matters of human resources.

It is proposed to reform section XVIII of article 42 of the Law of Credit Institutions in order to establish that the Board of Directors approves, without requiring additional authorizations from any dependency of the Federal Public Administration, the organic structure, salary policy, salary and benefit scales, as well as the granting of extraordinary perceptions for the fulfillment of goals subject to performance evaluation and other actions that it has, attending to the proposals of the Human Resources and Institutional Development Committee; which will allow the Board of Directors to focus its decisions on strategic operational issues of the institution.

In order to extend and make congruent the modification to the Law of Credit Institutions, this attribution is embodied in each of the corresponding organic laws.

3.2.- Restrictions of Multiple Banking unnecessarily extended to Development Banking.

The restrictions contained in article 106, sections XVI and XVII, of the Law of Credit Institutions, were established in order to prevent resources destined to capitalize banks from originating in the institution itself or well, that said resources remained in the same group since this discourages the contribution of resources, seeking with this to ensure better capitalization of credit institutions.

However, the prohibitions contained in the aforementioned sections, by providing that they apply to credit institutions, have an impact on Development Banking preventing them from taking shares of financial institutions as collateral or acquiring certain titles or securities issued by them.

As a result of the above, it is proposed to add a paragraph in article 47 establishing that said restrictions are not applicable to Development Banking, and that there will be no concentration of capital whatsoever, except by the Federal Government since they are public entities and by virtue of being the capital of the Government itself.

With this reform, the financing options offered by Development Banking will be expanded to facilitate the extension of credit to companies in which it may be necessary to take control in unfortunate events such as the collection of a guarantee, in order to safeguard the payment of the credit.

The prohibition of acquiring shares of other credit institutions or receiving them as collateral has as its objective to prevent said institutions from artificially increasing their capital with cross operations; however, in the case of Development Banking, there is no motivation to carry out said operations. Maintaining the prohibition would imply that Development Banking could not support financial entities in case they required capitalization, as has been necessary in other countries.

3.3.- Of the investments of Development Banking.

Articles 75, 88 and 89 of the Law of Credit Institutions provide that Development Banking institutions may make investments in the social capital of various types of societies if they are authorized to do so in their respective legislation.

The above constitutes an additional unnecessary regulation to which Development Banking is subject compared to multiple banking and that affects its operation, due to the fact that private banks can carry out said investments by provision of the Law of Credit Institutions itself.

Therefore, it is considered necessary to carry out a reform to articles 75, 88 and 89 first paragraph, of the Law of Credit Institutions to establish that credit institutions, including both multiple banking institutions and development banking institutions; may make investments in the companies referred to in said legal provisions.

Regarding the investments of Development Banking in the companies provided for in article 75 of the Law of Credit Institutions, section III of the same article provides that in the case of investments by percentages greater than 15% of the capital of the company in which one participates and for terms greater than three years “when it comes to companies that develop new long-maturation projects or carry out activities susceptible to promotion”, authorization from the National Banking and Securities Commission will be required; however, the second paragraph of the same article establishes that when the investments of Development Banking institutions are made with respect to companies that carry out “activities susceptible to promotion” the authorization will correspond to the Ministry of Finance and Public Credit and that, for this purpose, this dependency will determine which activities are promotional.

In this sense, in the current text of this section, the investments that Development Banking can make to support risk capital are not clearly determined, since the phrase “activities susceptible to promotion” applies by definition to all activities in general that Development Banking or promotion banking, as it is also called, carries out.

For the above, it is proposed to add a section IV to said article 75 of the Law of Credit Institutions to establish that in the case of development banking institutions, investments by percentages and terms greater than those previously mentioned, may be made when it comes to companies that carry out activities related to their object. With this precision in the text of the law, greater legal certainty will be granted by indicating in which cases Development Banking can carry out this type of investment.

3.4.- Empower the Board of Directors to issue norms or general bases for the contracting of services, as well as for the cession of assets and liabilities of the institution.

Currently, Article 42, second paragraph, of the Credit Institutions Law establishes that the Board of Directors, representing the institution, may agree to carry out all operations inherent to its purpose.

In this regard, it is proposed to reform fraction X of Article 42 of the Credit Institutions Law, establishing as a faculty of the Board of Directors the approval of policies and general bases for the contracting of services that the institution requires to carry out its operations.

The foregoing will allow the governing body to be expressly authorized to determine the most efficient way to carry them out, and, if possible, to contract some operations with third parties or consolidate the operation of areas among various development banks.

On the other hand, fraction XI Bis of Article 42 of the Credit Institutions Law establishes the faculty of the Board of Directors to approve the assignment of assets and liabilities of the institution, which obligates these operations to be conditioned to the consent of the governing body; therefore, it is proposed to reform said fraction, so that the Board approves the norms or general bases for the assignment of assets and liabilities of the institution, determining in its case the particular operations that must be submitted to the Board itself, thus avoiding having to authorize each of the operations.

4.- Transparency in the collection of revenues from development banking institutions.

In Article 10, fifth paragraph, of the 2013 Federal Revenue Law, it is established that when the Ministry of Finance and Public Credit establishes a revenue due to the sovereign guarantee of the Federal Government or regarding recoveries of capital from development banks, the resources obtained may be destined to their capitalization or to foster actions that allow compliance with the mandate of such banking.

To hear the institutions previously within the procedure for the collection of revenues, it is planned to include the faculty of the Board of Directors to propose to the Ministry of Finance and Public Credit the deadlines and dates for the payment of revenues that arise, for which it is proposed to add to Article 42 a fraction VIII, in which the proposal of deadlines and dates for the payment of revenues that arise due to the sovereign guarantee of the Federal Government, which will be presented to the Ministry of Finance and Public Credit, as well as the capital requirements of the institution, is agreed upon.

5.- Financial intermediation.

Article 31 of the Credit Institutions Law establishes that development banking institutions shall annually formulate their operational and financial programs, their general budgets of expenses and investments, as well as income estimates.

Likewise, it is established that National Credit Societies must submit to the authorization of the Ministry of Finance and Public Credit the limits of net external and internal indebtedness; net financing and the limits of financial intermediation. For the purposes of the foregoing, the Ministry of Finance and Public Credit must make known the concepts that make up financial intermediation in the Report on the economic situation, public finances, and public debt, as applicable.

Regarding this, it is proposed that financial intermediation be defined in Article 31 of the Credit Institutions Law and contain at least the net constitution of preventive credit reserves plus the operational deficit of development banking institutions.

6.- Functioning of Development Banking

6.1.- Control and Surveillance.

It is proposed to add an Article 44 Bis to the Credit Institutions Law, regarding the surveillance of development banking institutions, so that the Ministry of Public Function and internal control bodies only have competence to carry out control and surveillance of development banking institutions and the Rural Financial Institution, in the following matters:

• Budget and fiscal responsibility;
• Contracting derived from the Laws on Acquisitions, Leasing, and Services of the Public Sector and Public Works and Related Services;
• Conservation, use, destination, affectation, alienation, and write-off of movable and immovable property;
• Administrative responsibilities of public servants, provided that it is not the competence of the National Banking and Securities Commission, and
• Transparency and access to public information.

This system of control and surveillance in banking matters, in accordance with best practices, will avoid duplication of functions and unnecessary administrative burdens. The National Banking and Securities Commission, the Bank of Mexico, and the Ministry of Finance and Public Credit would review the banking aspect within their competence, and the Ministry of Public Function through its internal bodies would have competence to carry out control, evaluation, and surveillance of the administrative provisions applicable to development banking institutions in the aforementioned administrative matters.

In congruence with the foregoing, the provisions regarding social surveillance in the various Organic Laws of development banks are reformed to provide that it will be carried out in accordance with the Credit Institutions Law and the provisions issued by the National Banking and Securities Commission.

Finally, it is established in the transitional provisions that the Congress of the Union will provide a control system for development banking institutions in accordance with their nature and functions, when issuing the regulatory laws referred to in the second paragraph of the second transitional article of the Decree reforming, adding, and repealing various provisions of the Organic Law of the Federal Public Administration, published in the Official Gazette of the Federation on January 2, 2013.

6.2.- Sessions of the Board of Directors.

It is foreseen that the Board of Directors will focus on strategic issues, eliminating operational matters that it cannot currently delegate, and meeting regularly, at least six times a year.

In this sense, the proposal aims for the meetings of the Board of Directors to be once every two months, meeting validly with at least half of the number of councilors who make up the Board of Directors in each of the banks and the Rural Financial Institution; this is always provided that two-thirds of the councilors are met among the councilors, representing series “A”.

6.3.- Powers of the General Manager to remove fiduciary delegates of the institution and obligation to inform the Ministry of Finance and Public Credit about relevant operations.

In this point, it is proposed to reform Article 43, second paragraph, of the Credit Institutions Law, adding the procedure for the designation of special fiduciary delegates of public trusts that are considered paraestatal entities; these designations must be granted by the institution, without proceeding before its respective Board of Directors and at the request of the public servants or competent bodies of the corresponding public trust, in accordance with the legal provisions of federal or state order.

In this sense, to extend this faculty to the organic laws, the designation and removal of fiduciary delegates, the administration of personnel as a whole, and the establishment and organization of the institution's offices are incorporated.

In addition to the foregoing, it is intended that the General Manager of the institution inform the Ministry of Finance and Public Credit prior to the holding of the governing body's sessions, regarding operations in which potential competence conflicts may arise among the various development banking institutions, in order to determine the applicable policy.

6.4.- Legal assistance and defense.

In this category, it is intended that National Credit Societies be authorized to provide legal assistance and defense services to members of their Board of Directors, committees established by the same or provided by regulatory provision, as well as to public servants who work or have worked in the institution itself; with respect to the acts that these persons carry out in the exercise of the functions entrusted to them by law and in accordance with the guidelines issued for this purpose by the Ministry of Finance and Public Credit.

These services will be provided even when the indicated persons cease to perform their functions or provide their services to the Society, provided that it concerns acts carried out in the performance of their functions or activities in the service of the Society.

The mentioned services will be provided from the resources with which the Society has for these purposes.

In the event that the competent authority issues a final resolution against the subject of legal assistance that becomes final, such person must reimburse the Society for the expenses and any other disbursement that the latter has made due to legal assistance and defense.

Finally, it is proposed that the subjects benefited by these services be obligated to submit reports when requested for this purpose, in accordance with the applicable legal provisions and considering that these reports are contemplated as part of their functions.

6.5.- Credit analysis.

Development Banking has the priority function of attending to sectors that do not have access to financing for various reasons, including risk levels; however, it is currently restricted by the measure provided in Article 65 of the Credit Institutions Law, which provides that institutions must estimate the payment viability of credits by the accredited parties or counterparties through a quantitative and qualitative analysis, which allows establishing their credit solvency and payment capacity, which must be observed without prejudice to considering the monetary value of the guarantees offered.

With the reform, it is intended to add a fourth paragraph to the cited article, in order to maintain the operation of the productive plant and that in those cases where immediate attention is required, they can be granted considering the viability of the credit against the guarantee, supporting the sectors of the economy that do not have access to financial services and, above all, in extraordinary situations such as the current ones where immediate actions are required for the preservation of employment. Likewise, it is highlighted that the recovery of credits is secured with the guarantee exhibited and prudent operation will be maintained based on current regulation.

6.6.- Constitution of trust to strengthen capital.

The Credit Institutions Law provides for the constitution of a trust in development banking institutions with resources captured by them and aimed at strengthening their capital.

Currently, Development Banking is regulatorily obligated to have ample levels of capitalization in accordance with international standards, so it is unnecessary to have the aforementioned trusts. In this sense, the proposal is to repeal Article 55 Bis of the aforementioned Law.

7. Additional reforms to the Organic Laws of development banking institutions.

7.1.- From the National Bank of the Army, Air Force, and Navy, National Credit Society, Development Banking Institution.

Of loans

For the particular case of the National Bank of the Army, Air Force, and Navy, National Credit Society, Development Banking Institution, it is proposed to include medium-term loans, the terms and conditions for the granting of loans, and other faculties of the Board of Directors; eliminating the maximum caps on short-term loans as well as the prohibition that prevented the granting of another loan while a previous one remained unsettled.

With this reform, the institution will be endowed with the faculty to administer the resources affected to the savings and labor funds, which will be destined to the granting of loans in accordance with the terms and conditions authorized by the Board of Directors and the requirements provided in this Law. The unused amounts will be invested, to foster and finance the activities entrusted to the society as a development bank.

7.2.- From the National Bank of Public Works and Services, National Credit Society, Development Banking Institution.

Of the object of the society

In the case of the National Bank of Public Works and Services, National Credit Society, Development Banking Institution (BANOBRAS), the proposal is directed so that, in addition to financing and refinancing, support is given to projects related directly or indirectly to public or private investment.

In this sense, Article 3 of the Organic Law of the National Bank of Public Works and Services is reformed.

Of guarantees and sureties

So that BANOBRAS can grant guarantees and sureties without needing to obtain authorization from the Ministry of Finance and Public Credit in legal equality with the other entities of Development Banking, it is proposed to reform fraction VI of Article 7 of its organic law.

Trust contracts

It is proposed to authorize BANOBRAS to act as trustee and beneficiary and to carry out operations with its own society in compliance with trusts, in accordance with what is established by Article 46, fraction XV of the Credit Institutions Law.

7.3.- From the Federal Mortgage Society, National Credit Society, Development Banking Institution

It is proposed to update the reference made in Article 4, fraction VI, of the Organic Law of the Federal Mortgage Society, National Credit Society, Development Banking Institution (SHF), since the current text refers to the fact that the society may carry out the celebration of contracts to cover, totally or partially, the risks assumed by the Society due to the provision of consulting services, and it should refer to the operations established in fractions V and V Bis of the same article.

Sovereign Guarantee

In accordance with the fourth paragraph of Article 2 of the transitional provisions of the Decree by which the Organic Law of the Federal Mortgage Society is issued, added on June 24, 2002 (errata of July 8, 2002), it was established that the obligations contracted by SHF from January 1, 2014, would not have the guarantee of the Federal Government.

Regarding this, it is considered that for SHF to fulfill its purpose, it will require continued funding through the issuance of securities in financial markets, for which it must have the guarantee of the Federal Government, which will allow it to access better conditions (e.g., rates and terms).

For this, the Federal Government must respond for the passive operations contracted by the society, both with national natural and legal persons and with foreign private, governmental, and intergovernmental institutions. To this effect, it is proposed to add an Article 8 Bis to the Organic Law of the Federal Mortgage Society, by which this case is provided so that it has the same guarantee as the other development banking institutions.

7.4.- From the Rural Financial Institution.

Vice Presidency of the Board of Directors

It is proposed that in the absence of the Secretary of Finance and Public Credit, who will serve as president of the Board of Directors, it will be the Secretary of Agriculture, Livestock, Rural Development, Fishing, and Food; in the absence of the first two, the council will be presided over by the Undersecretary of Finance and Public Credit or the substitute of the Secretary of Finance and Public Credit, and, in the absence of all the aforementioned, those designated by the present councilors. The foregoing makes it necessary to reform Article 30 of the Organic Law of the Rural Financial Institution.

8.- OTHER REFORMS.

8.1.- General Law of Titles and Credit Operations

Of appraisals

The General Law of Titles and Credit Operations is supplementary in the legal framework of development banking institutions, in accordance with the Credit Institutions Law.

Regarding this, it is proposed that the total nominal amount of an issuance of participation certificates will be fixed by a report formulated by a National Credit Society, prior to an appraisal practiced on the fiduciary assets subject to that issuance.

The National Credit Society, when formulating its report and fixing the total nominal amount of an issuance, will take as a basis the commercial value of the assets and, if they are amortizable certificates, will estimate a prudent safety margin on this for the investment of the corresponding holders. The report formulated by these institutions will be definitive.

For the foregoing reasons and in exercise of the faculty conferred upon me by Article 71, fraction I, of the Political Constitution of the United Mexican States, I submit to the consideration of the Honorable Congress of the Union, the following Initiative of:

REFERENCES

1) Reformed by Decree published in the Official Gazette of the Federation on June 24, 2002.
2) Added by Decree published in the Official Gazette of the Federation on June 24, 2002.
3) Repealed by Decree published in the Official Gazette of the Federation on June 24, 2002.
4) Reformed by Decree published in the Official Gazette of the Federation on April 9, 2012.
5) Reformed by Article Sixteen of the Decree published in the Official Gazette of the Federation on January 10, 2014.
6) Added by Article Sixteen of the Decree published in the Official Gazette of the Federation on January 10, 2014.
7) Repealed by Article Sixteen of the Decree published in the Official Gazette of the Federation on January 10, 2014.