Resolution JPRF-F-2024-0104: Reforming Interest Rate Regulations for Real Estate Credit

Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Government Financial Management Platform. Red Block, 8th floor
| Postal Code: 170507 | Quito - Ecuador |
Resolution No. JPRF-F-2024-0104
THE FINANCIAL POLICY AND REGULATION BOARD
CONSIDERING:
That, Article 132, number 6, of the Constitution of the Republic of Ecuador, grants public control and regulation bodies the authority to issue general norms in matters within their competence, without altering or innovating legal provisions; That, Article 226 of the Fundamental Charter mandates that state institutions, their bodies, dependencies, public servants, and persons acting by virtue of a state power shall exercise only the competencies and faculties attributed to them in the Constitution and the law; That, Article 284, number 7, of the Fundamental Norm determines that economic policy shall have, among others, the objective of maintaining economic stability, understood as the maximum level of sustainable production and employment over time; That, Article 302 of the Supreme Norm establishes that monetary, credit, exchange, and financial policies shall have as an objective, among others, promoting levels and relationships between passive and active interest rates that stimulate national savings and the financing of productive activities, with the purpose of maintaining price stability and monetary balances in the balance of payments; That, Article 308 of the Magna Carta determines that financial activities are a service of public order, and may be exercised with prior state authorization, in accordance with the law; they shall have the fundamental purpose of preserving deposits and meeting financing requirements for the achievement of the country's development objectives; and, that the State shall promote access to financial services and the democratization of credit; That, Article 309 ibidem precepts that the national financial system is composed of the public, private, and popular and solidary sectors, which intermediated public resources; determining that each of these sectors shall have specific and differentiated control norms and entities, which shall be responsible for preserving their safety, stability, transparency, and solidity; That, Article 5, of the Organic Code of Money and Finance, Book I, decrees that the formulation of policies and regulations in monetary, credit, exchange, financial, as well as insurance and securities matters, is the exclusive faculty of the Executive Function and has as objectives those determined in articles 284 and 302 of the Constitution of the Republic and those established in the National Development Plan; That, Article 13 of the aforementioned Code creates the Financial Policy and Regulation Board as part of the Executive Function, responsible for the formulation of credit, financial, securities, insurance, and prepaid comprehensive health care services policy and regulation; That, Article 14.1 numbers 7, literal b, of the aforementioned Code, enshrines the functions of the Financial Policy and Regulation Board, among which are issuing the prudential regulatory framework to which financial entities, securities, insurance, and prepaid comprehensive health care services must adhere, a framework that
must be coherent, and which must establish the interest rate system, for active and passive operations of the national financial system and other interest rates required by law, promoting the development of prudent credit: Minimum capital levels, equity, technical equity, and risk weightings of assets, their composition, method of calculation, and modifications;

Resolution No. JPRF-F-2024-0104

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Government Financial Management Platform. Red Block, 8th floor
| Postal Code: 170507 | Quito - Ecuador |
That, Article 130 of the cited Code ut supra, provides that The Financial Policy and Regulation Board shall establish the interest rate system for active and passive operations of the national financial system and other interest rates required by law; That, General Provision Twenty-Ninth of the aforementioned Code, establishes that in existing legislation where mention is made of the "Monetary and Financial Policy and Regulation Board" it shall be replaced by "Financial Policy and Regulation Board"; That, Transitory Provision Fiftieth-Fourth of the aforementioned Organic Code, mentions that resolutions contained in the Codification of Monetary, Financial, Securities, and Insurance Resolutions of the Monetary and Financial Policy and Regulation Board and norms issued by control bodies shall maintain their validity until the Monetary Policy and Regulation Board and the Financial Policy and Regulation Board decide what corresponds, within the scope of their competencies; That, the Technical Secretariat of the Financial Policy and Regulation Board, through Memorandum No. JPRF-ST-2024-0036-M of March 12, 2024, submits to the President of the Board the Technical Report No. JPRF-CTSF-2024-003 of March 12, 2024 and the Legal Report No. JPRF-CJF-2024-013 of March 12, 2024; That, the Financial Policy and Regulation Board, in an ordinary session held by technological means, convened on March 13, 2024 and carried out via video conference on March 15, 2024, reviewed the Memorandum No. JPRF-ST-2024-0036-M of March 12, 2024, issued by the Technical Secretariat of the Board; as well as the aforementioned reports from the Coordination of Policy and Regulation of the Financial System and from the Coordination of Legal Policy and Financial Norms, in addition to the corresponding draft resolution; That, the Financial Policy and Regulation Board, in an ordinary session held in person and by technological means, convened on March 13, 2024 and carried out on March 15, 2024, reviewed and approved the following Resolution; and, In exercise of its functions, RESOLVES:
ARTICLE FIRST.- Substitute the text of number 3 of Article 2, of Section I "Norms that regulate interest rates", Chapter XI "Interest rate system and tariffs of the Central Bank of Ecuador", Title I "Monetary System", Book I "Monetary and Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following:

"Real Estate Credit: The maximum effective active rate shall be that corresponding to the Effective Reference Active Rate of the real estate segment of the month immediately preceding its validity plus two standard deviations. The standard deviation shall be mobile and obtained from the series of the last twelve months of the reference rate of the real estate segment."

ARTICLE SECOND.- Add the following Transitory Provision in Section I "Norms that regulate interest rates", Chapter XI "Interest rate system and tariffs of the Central Bank of Ecuador", Title I "Monetary System", Book I "Monetary and Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions:

Resolution No. JPRF-F-2024-0104

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Government Financial Management Platform. Red Block, 8th floor
| Postal Code: 170507 | Quito - Ecuador |
"Transitory Provision First.- From the issuance of this Resolution and until June 30, 2024, the maximum interest rate applicable to Real Estate Credit is established at 11.50%. From the month of July 2024, the provisions relating to said credit segment shall apply, as detailed in Article 2, number 3, of Section I "Norms that Regulate Interest Rates", Chapter XI "Interest Rate System and Tariffs of the Central Bank of Ecuador", Title I "Monetary System", Book I "Monetary and Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions."

FINAL PROVISION.- This Resolution shall enter into force from the date of its issuance; without prejudice to its publication in the Official Register.
Publish this Resolution on the website of the Financial Policy and Regulation Board, within a maximum term of two days from its issuance.
COMMUNICATE.- Given in the Metropolitan District of Quito, on March 15, 2024.
THE PRESIDENT,
Mgs. María Paulina Vela Zambrano
The resolution above was processed and signed by Master María Paulina Vela Zambrano, President of the Financial Policy and Regulation Board, in the Metropolitan District of Quito, on March 15, 2024.- I CERTIFY.
TECHNICAL SECRETARY,
Mgs. Nelly Arias Zavala