Resolution modifying the general provisions applicable to Credit Institutions

DOF: 20/07/2021

RESOLUTION modifying the general provisions applicable to Credit Institutions

At the margin, a seal with the National Coat of Arms, which reads: United Mexican States.- TREASURY.- Ministry of

Treasury and Public Credit.- National Banking and Securities Commission.

The National Banking and Securities Commission, with prior agreement of its Board of Directors, and based on

the provisions of articles 50 and 98 Bis of the Credit Institutions Law, as well as 4, fractions

XXXVI and XXXVIII and 16, fractions I and VI of the National Banking and Securities Commission Law, having

the prior opinion of the Bank of Mexico, and

CONSIDERING

That, in order to maintain a capital framework for the Mexican financial system aligned with

international prudential standards in credit risk for credit institutions,

issued by the Basel Committee on Banking Supervision, of which Mexico is a member, which contributes to

improving the solidity and stability of the banking system, and

That, in order for credit institutions to continue with the flow of financing and driving

the country's economic activity in an environment with unfavorable conditions, both national and

international, it is necessary that the risk of unexpected losses incurred by these entities when granting consumer credits, credits to micro, small and medium-sized enterprises and

housing mortgage credits be adequately reflected; given the above, it is essential to adjust the regulation so that

credit institutions can classify their operations subject to credit risk considering these types

of financing; has resolved to issue the following:

RESOLUTION MODIFYING THE GENERAL PROVISIONS

APPLICABLE TO

CREDIT INSTITUTIONS

SINGLE. Articles 1, fraction CXCIII and 2 Bis 17 of the "General Provisions

applicable to credit institutions", published in the Official Gazette of the Federation on December 2,

2005 and last modified on June 18, 2021, are REFORMED, to read as follows:

" Article 1.-

. . .

I. to CXCII.

. . .

CXCIII.

Value of the Home: to the appraisal value of the home known at the time of origination

of the credit. This value may be updated by carrying out an appraisal that complies

with what is established in Title Five, Chapter IV of these provisions, in

matters of provision of banking appraisal services.

CXCIV. to CXCVII.

. . . "

" Article 2 Bis 17.- Group VI shall be composed of the following Operations:

I.

Consumer credits.

Consumer credits that meet the following criteria may be considered as

retail credits for purposes of the capital requirement for credit risk in accordance with the

present article:

a)

Product criterion.

Institutions shall consider Operations whose risk is related to

direct credits, denominated in national currency, foreign currency or in UDIs, as well as the

interests they generate, granted to individuals, individuals with business

activity or legal entities, arising from credit card operations, from

personal loans, for the acquisition of durable consumer goods and the

financial leasing operations that are entered into with the aforementioned persons,

including those credits granted for such purposes to former employees

of the Institutions.

b)

Concentration criterion.

Institutions shall consider Operations whose risk is aggregated

against the same counterparty and such Operations do not exceed 1 percent of the total

of the retail portfolio.

c)

Value of individual positions.

Institutions shall consider Operations whose aggregated risk against a

same counterparty does not exceed an amount equivalent in national currency to 4 million

UDIs, or in cases where the borrower demonstrates Net Income or Net Sales

annual less than the equivalent in national currency to 14 million UDIs.

To determine the aggregated risk referred to in this subsection c), the

value of the UDI on the date for which the capital calculation is performed shall be used,

considering for this purpose its equivalence in national currency published by the Bank of

Mexico in the Official Gazette of the Federation.

To determine if the Net Income or Net Annual Sales of the borrower are less than

the threshold indicated, Institutions shall use the value of the UDI on the date that

corresponds to the annual financial statement of the borrower whose figures shall not have an

age greater than 18 months at the time of determining the value of the UDI, or may

use the annual tax return of the borrower, whose figures shall not have an

age greater than 18 months at the time of determining the value of the UDI.

The credits included in this fraction I shall have a credit risk weight of

75 percent, including the so-called microcredits included in the

Consumer Credit Portfolio, which must be identified and presented in a separate item.

Notwithstanding, in the case of Operations Subject to Credit Risk with or on behalf of

legal entities, or individuals with business activity, whose amount is included in subsection c) above

and which have a Credit Rating assigned by any of the Rating

Institutions to the issuer or counterparty in question, the risk weight shall be determined in accordance with

Group VII-A referred to in Article 2 Bis 18 of these provisions.

II.

Housing mortgage credits granted by credit institutions, or those granted by

these in co-financing schemes with Housing Promotion Agencies, or under

any program of said agencies.

Housing mortgage credits that meet the product criterion established below and whose risk materializes in any of the following forms: direct credits

denominated in any currency, as well as the interest they generate, granted to

individuals and intended for the acquisition of land for the construction

of housing, for the acquisition, construction, self-production, remodeling or improvement of housing without commercial speculation purpose, as well as liquidity credits guaranteed by the borrower's housing, including those credits granted for such purposes to

employees and former employees of the Institutions.

Housing mortgage credits granted at a fixed rate, or at a variable rate that is

subject to a maximum rate, and depending on the percentage of the ratio of the outstanding balance of the

credit to the value of the home, known as the LTV Ratio (Razón CVV), shall have a credit risk weight in accordance with the following:

a)

20 percent credit risk weight, when the percentage of the LTV Ratio

is less than or equal to 50 percent.

b)

25 percent credit risk weight, when the percentage of the LTV Ratio

is greater than 50 percent, but less than or equal to 60 percent.

c)

30 percent credit risk weight, when the percentage of the LTV Ratio

is greater than 60 percent, but less than or equal to 80 percent.

d)

40 percent credit risk weight, when the percentage of the LTV Ratio

is greater than 80 percent, but less than or equal to 90 percent.

e)

50 percent credit risk weight, when the percentage of the LTV Ratio

is greater than 90 percent, but less than or equal to 100 percent.

f)

70 percent credit risk weight in the case of credits whose LTV Ratio

is greater than 100 percent, or if said ratio is less than 100 percent, the credits are not

granted at a fixed rate, or have a variable rate that is not subject to

a maximum rate.

The credits referred to in subsections a) to f) above shall amortize the principal from the

origination of the credit and shall not provide for interest capitalization.

If any of the conditions provided for in the second and third paragraphs of the

present fraction II are not met, the credit risk weight for the credits described in subsections

a) to f) above shall be 70 percent.

The credits included in subsections a) to f) of this fraction shall be subject to

recognition of admissible real and personal guarantees in accordance with Section E Credit Risk Coverage of the Second Section of Title First Bis of these provisions.

For this purpose, Institutions may recognize the effect of risk mitigation techniques when calculating the amount of their exposure; however, the LTV Ratio band and the risk weight that

applies to the amount of exposure must be determined before the application of the

corresponding credit risk mitigation technique.

When Home Credit Insurance is used as a risk mitigation technique, it must:

1.

Be provided by an insurance institution that has, on the date of the capitalization calculation,

an investment grade rating or higher issued by, at least, one

Rating Institution.

2.

Allow the beneficiary Institution to exercise said insurance unconditionally within the timeframes

marked in the coverage contract, or in the master policy.

3.

Comply with the requirements established in fraction III of Annex 25 of these

provisions.

In no case shall Home Credit Insurance be recognized as a guarantee if the Institution

that grants the insurance belongs to the same financial group as the beneficiary Institution and, nor shall it be recognized

when the credits referred to in subsections a) to f) of this present fraction II are restructured

without the express authorization of the Institution granting the Home Credit Insurance or the guarantee.

Institutions, regarding the valuation of the real estate guarantee recognized in the

LTV Ratio, shall observe, at all times, what is established in Annex 24 of these

provisions.

In their case, the percentages of the LTV Ratio mentioned in subsections a) to f) above,

must have been met on the date of the deed of the credit; however, said percentages

may be adjusted at the time of calculating the capital requirements, considering the

reduction of the credit balance amount as it is amortized.

Housing Mortgage Credits intended for the remodeling or improvement of housing

without commercial speculation purpose, granted under the authority of article 43 Bis of the Law of the

National Institute for Workers' Housing Fund and of article 176 of the Law of the

Institute for Social Security and Social Services of State Workers, in which the housing sub-account

of the borrower and its future contributions serve as guarantee and source of payment,

respectively, shall have a credit risk weight in accordance with the following:

1.

20 percent, when the outstanding balance of the credit represents 50 percent or less of

the sum of the resources of the borrower's housing sub-account.

2.

30 percent, when the outstanding balance of the credit represents more than 50 percent and

less than 80 percent of the sum of the resources of the borrower's housing sub-account.

For the application of these weights, the contributions to the borrower's housing sub-account

and its future contributions must be available without any legal restriction for the

Institution in the event of default by the borrower, as well as be free of any other

encumbrance; in addition, no other person may dispose of the resources while the credit obligation subsists. If these conditions are not met, the credit risk weight for these credits shall be 70 percent.

III.

Portfolios of Housing Mortgage Credits intended for the remodeling or improvement

of housing that maintain similar characteristics among themselves, that can be located in the

subsections a) to f) of the previous fraction II and that have the guarantee granted by any institution

of development banking that has an express guarantee of the Federal Government or of a public

trust constituted for economic promotion under First Loss Coverage Schemes,

provided that such guarantee complies with what is stated in Article 2 Bis 39 of these provisions,

shall calculate their capital requirement for credit risk in accordance with the procedure

indicated in subsections a) to c) below:

a)

They shall calculate the capital requirements for each credit in the portfolio in accordance with what

is established in subsections a) to f) of the previous fraction II. Once the capital requirement

for each of the credits is obtained, these must be summed to obtain a total amount

of the portfolio's capital requirements before the recognition of the First Loss Coverage Scheme (RK_Portafolio ARC).

b)

They shall calculate the amount of reserves for credit risks for each credit in the portfolio, in

accordance with what is established in Articles 99 Bis to 99 Bis 3 of these provisions without recognizing the First Loss Coverage Scheme. Once the

reserve requirement for each of the credits is obtained, they must be summed to calculate

the total amount of required reserves of the portfolio (Rvas_Portafolio).

c)

To recognize the effect of the First Loss Coverage Scheme in terms of capital, the excess of the First Loss Coverage Scheme that can be considered for purposes of reducing the capital requirement must be determined. That is,

the amount of the First Loss Scheme coverage (Mto_Cob pp) shall be reduced by the

amount of reserves obtained in accordance with subsection b) above.

1.

When the variable Gar_RK pp results in zero or negative, the Institutions

beneficiaries of the First Loss Coverage Scheme must constitute the

total amount of the capital requirements obtained in accordance with what is stated in

subsection a) above (RK_Portafolio ARC).

2.

When Gar_RK pp obtained in accordance with the previous paragraph results in positive, the

Institutions beneficiaries of the First Loss Coverage Scheme must

compare this amount with the capital requirements obtained in accordance with

subsection a) above, applying the following decision rule:

i.

If Gar_RK pp >

RK_Portafolio ARC

then:

Institutions shall not constitute

any capital requirement for the

portfolio beneficiary of the First Loss

Coverage Scheme.

ii.

If Gar_RK pp <

RK_Portafolio ARC

then:

The capital requirement for said

portfolio shall be the amount that

when added to the value of Gar_RK pp equals the

total amount of capital requirements of the credits of the portfolio

obtained in accordance with item 1

above.

IV.

Credits to micro, small and medium-sized enterprises.

In the case of Operations Subject to Credit Risk with or on behalf of legal entities or

individuals with business activity and provided that the borrower demonstrates Net Income or

Net Sales annual less than the equivalent in national currency to 14 million UDIs, such

Operations shall have:

a)

A credit risk weight of 85 percent.

b)

A credit risk weight of 75 percent when they meet the three criteria

following:

i)

Product criterion.

Institutions shall consider Operations whose risk is related to

direct credits, denominated in national currency, foreign currency or in UDIs,

as well as the interest they generate, granted to individuals with business

activity or legal entities.

ii)

Concentration criterion.

Institutions shall consider Operations whose risk is

aggregated against the same counterparty and such Operations do not exceed 1 percent

of the total of the credit portfolio considered in this fraction IV, as well as

the amounts of the Consumer Credit Portfolio.

iii)

Value of individual positions.

Institutions shall consider Operations whose aggregated risk against a

same counterparty does not exceed an amount equivalent in national currency

to 4

million UDIs.

To determine if the Net Income or Net Annual Sales of the borrower are less than the

threshold indicated in this fraction IV of this article, Institutions shall use the value of the

UDI on the date that corresponds to the annual financial statement of the borrower, whose figures shall not

have an age greater than 18 months at the time of determining the value of the

UDI, or may use the annual tax return of the borrower whose figures shall not have

an age greater than 18 months at the time of determining the value of the UDI.

The weights indicated in fraction IV of this article shall not be applicable when the

Operations have a Credit Rating assigned by any of the Rating

Institutions to the issuer or counterparty in question, for which the risk weight shall be

determined in accordance with Group VII-A referred to in Article 2 Bis 18 of these provisions. "

TRANSITORY PROVISIONS

FIRST. This Resolution shall enter into force on September 1, 2021.

SECOND. Credit institutions may implement the credit risk weights that are

modified by this Resolution before September 1, 2021, provided they have the

formats, processes and systems necessary to perform the capitalization calculation in accordance with the new

weights that are made known with this instrument.

Likewise, the modifications contained in this instrument may be applied to the

restructurings that credit institutions formalize from the entry into force of this Resolution

on credits granted prior to this date to clients who are up to date in their payments,

present a good credit history at the judgment of the lending institution and in which an agreement is reached on a reduction

in the interest rate of the original credit as a result of the restructuring.

For credits that are restructured under conditions different from those indicated in the previous paragraph, they

shall apply the weights provided for in Article 2 Bis 17 of the "General Provisions

applicable to credit institutions" in force before the entry into force of this Resolution,

provided that the restructurings are agreed upon on credits granted prior to the entry into force

of this.

THIRD. Credits that credit institutions have granted and classified in accordance with the

assumptions provided for in fractions I and II of Article 2 Bis 17 of the "General Provisions

applicable to credit institutions" in force before the entry into force of this Resolution,

shall continue to comply with what is stated in said fractions for the remaining term of the credit.

Regarding housing mortgage credits, the percentages mentioned in fraction II of

Article 2 Bis 17 of the "General Provisions applicable to credit institutions" in force

before the entry into force of this Resolution, must be met on the date of the calculation of the

capital requirements, considering, if applicable, the reduction of the credit balance amount as

it is amortized.

FOURTH. Portfolios of housing mortgage credits intended for the remodeling or

improvement of housing that maintain similar characteristics among themselves, that can be located in the

assumptions of article THIRD TRANSITORY above, composed of credits granted prior to the entry into force

of this Resolution and that have the guarantee granted by any institution

of development banking that has an express guarantee of the Federal Government or of a

public trust constituted for economic promotion under the First Loss Coverage Schemes,

provided that such guarantee complies with what is stated in Article 2 Bis 39 of the "General Provisions

applicable to credit institutions" in force before the entry into force of this Resolution, shall calculate their capital requirement for credit risk in accordance with the procedure

indicated in Article 2 Bis 17, fraction III, subsections a) to c) that are reformed with this instrument.

FIFTH. Credit institutions, regarding credits that they have granted and on which they had

applied the measures in terms of weights to determine the capital requirements for credit risk

that were issued and made known to credit institutions by the National Banking and Securities Commission

through letters number P418/2020 and P430/2020 of September 24 and October 8,

2020, respectively, or that have been granted under said measures, shall continue to determine the

weights in accordance with the terms indicated in said letters for the remaining term of the

credit. Upon the entry into force of this Resolution, credit institutions shall cease to grant

credits under the terms indicated in the aforementioned letters, subject in all cases, to what is established in this

instrument.

Respectfully

Mexico City, July 7, 2021.- President of the National Banking and Securities Commission,

Juan

Pablo Graf Noriega.- Signature.

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INDICATORS

Exchange Rate and Rates as of 28/08/2026

DOLLAR

16.9712 UDIs

8.808812 TIIE 28 DAYS

6.7559% TIIE 91 DAYS

6.7931% TIIE 182 DAYS

6.8474% TIIE INTERBANK

6.50%

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