Resolution modifying the General Provisions applicable to Popular Savings and Credit Entities, Integration Organizations, Community Financial Societies, and Rural Financial Integration Organizations under the Popular Savings and Credit Law

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DOF: 06/07/2021

RESOLUTION modifying the General Provisions applicable to Popular Savings and Credit Entities, Integration Organizations, Community Financial Societies, and Rural Financial Integration Organizations, referred to in the Popular Savings and Credit Law.

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 the prior agreement of its Board of Directors, based on

articles 46 Bis, fifth paragraph and 116, sections II, III, IV, VI and VII and second paragraph of the

Popular Savings and Credit Law; 98 Bis of the Credit Institutions Law, as well as 4, sections II, XXXVI

and XXXVIII and 16, section I of the Law of the National Banking and Securities Commission, and

CONSIDERING

That, in accordance with article 78 of the General Law for Regulatory Improvement and with the purpose of reducing the

cost of compliance of these provisions, the National Banking and Securities Commission, through

resolution published in the Official Journal of the Federation on December 26, 2017, modified the

"General Provisions applicable to credit institutions", with the purpose of flexibilizing the

term to which multiple banking institutions were subject to constitute their capital requirements

for operational risk;

That, with the purpose of achieving a sound and balanced development of popular financial societies

and community financial societies, it is deemed necessary to reinforce the legal framework they must observe

in the integration of files in order to ensure that evidence of guarantees constituted

in their favor by the credits granted is documented;

That, to mitigate the risk derived from the celebration of microcredits that are carried out in a non- presential manner and to avoid regulatory discrepancies, it is provided that popular financial societies must

observe the procedures and limits established in the General Provisions referred to in

article 124 of the Popular Savings and Credit Law, and

That, in order for popular financial societies and community financial societies to be able to take into consideration the risk mitigants they have, ensuring their stability and solvency, it is necessary to incorporate into the methodology for the classification of the credit portfolio and for the calculation of capital requirements, the recognition of schemes for real financial and non-financial guarantees, personal and first-loss guarantees; it has resolved to issue the following:

RESOLUTION MODIFYING THE GENERAL PROVISIONS APPLICABLE

TO

POPULAR SAVINGS AND CREDIT ENTITIES, INTEGRATION ORGANIZATIONS, COMMUNITY FINANCIAL

SOCIETIES AND RURAL FINANCIAL INTEGRATION ORGANIZATIONS, REFERRED TO IN THE

POPULAR SAVINGS AND CREDIT LAW

SINGLE.- Articles 1, sections XXXII, XXXIII and XXXIV; 46; 54, first paragraph and

sections I, II, subsection b), numbers 1, sub-subsection ii), 3, 6 and 10; 61; 63, sections I, II, second paragraph and III,

second paragraph; 54 Bis; 67, first paragraph and its sections I and III, third paragraph; 88, first paragraph and

sections I, subsections a), first paragraph, subsection b), first paragraph, c) and d) and second paragraph of said section, II,

second paragraph and subsection c), III, second paragraph, V, second paragraph, VI, paragraphs second, third and sixth,

subsections a), number 2, b), numbers 2 and 5, and e) to g); 91 Bis; 97, first paragraph and sections I, II, second

paragraph and III, second paragraph; 102, first paragraph and its sections I and III, third paragraph; 130, first paragraph and

its sections I, subsections a) first paragraph, b), first paragraph, c) and d) and second paragraph of this section, II,

subsection a), first paragraph and number 3, III, second paragraphs, V, second paragraph, VI, paragraphs first, second,

sixth and eighth, subsections a) number 2, b), number 4, sub-subsections i) and iii), and 5, e) and f); 133 Bis; 137; 145; 146,

first paragraph and sections I, II, second paragraph and III, second paragraph; 151, first paragraph and its sections I and

III, third paragraph; 192, first paragraph and its sections I, subsection a), first paragraph, b), c) first paragraph and

numbers 2 and 3, second paragraph, II, subsections a), first paragraph and number 3, b), numbers 1, 2 and 5, III,

second paragraph, V, second paragraph and VI, paragraphs second, fifth, sixth and ninth, subsections b), numbers 4,

sub-subsections i), iii) and v), e) and f); 196 Bis; 202; 203, and 204, first paragraph and sections I, II, second paragraph and III,

second paragraph, as well as the denominations of Title Fourth, Chapter III, First Section, Section D, Second Section, Section F, Third Section, Section F and Fourth Section, Section F; are ADDED

articles 1, sections XXXIV Bis and LVIII Bis; 54, section II, second paragraph, subsection b), number 9,

renumbering the subsequent numbers in their order and as appropriate, as well as number 12; 60 Bis; 67,

first paragraph, section III, fifth paragraph, and third; 88, section VI, sixth paragraph and its subsections d),

renumbering the subsequent subsections in their order and as appropriate and g); 95 Bis; 95 Ter; 102, paragraphs

first, section III, fifth paragraph, and third; 130, section VI, eighth paragraph, subsection d), renumbering the

subsequent subsections in their order and as appropriate and subsection g); 137 Bis; 146, sections I, II, second paragraph

and III, second paragraph; 151, paragraphs first, section III, fifth paragraph, and third; 192, section VI, ninth

paragraph, subsection d), renumbering the subsequent subsections in their order and as appropriate and subsection g); 201 Bis;

207 Bis, as well as Annex D Bis, and Annex D of the "General Provisions applicable to

popular savings and credit entities, integration organizations, community financial societies

and rural financial integration organizations, referred to in the Popular Savings and Credit Law"

published in the Official Journal of the Federation on December 18, 2006 and reformed for the last time

by resolution published in said dissemination organ on November 9, 2020, to read as follows:

" FIRST TO THIRD TITLES

...

FOURTH TITLE

...

Chapters I and II

...

Chapter III

...

First Section

...

Sections A to C

...

Section D

Provisioning of credit portfolio and adjudicated assets

Sections E and F

...

Second Section

...

Sections A to E

...

Section F

Provisioning of credit portfolio and adjudicated assets

Sections G to I

...

Third Section

...

Sections A to E

...

Section F

Provisioning of credit portfolio and adjudicated assets

Sections G to I

...

Fourth Section

...

Sections A to E

...

Section F

Provisioning of credit portfolio and adjudicated assets

Sections G to I

...

FIFTH TO NINTH TITLES

...

ANNEXES A to C

...

ANNEX D

Procedure for the classification and constitution of preventive estimates.

ANNEX D Bis

Requirements that guarantees must meet to be recognized for purposes of the determination of the capitalization requirement for credit risk and of the preventive estimates for credit risks.

ANNEXES E to Y

... "

" Article 1.-

...

I. to XXXI.

...

XXXII.

Director or General Manager, to the Director or General Manager of the Popular Financial Societies, the Community Financial Societies and the Rural Financial Integration Organizations referred to in articles 16, section V, 63 and 99, respectively, of the Popular Savings and Credit Law.

XXXIII.

Access Device, to the equipment that allows a User to access the Electronic Services.

XXXIV.

First Loss Coverage Scheme, to the contractual scheme, under the figure of guarantee or credit insurance, through which the beneficiary or grantor mitigates the loss derived from non-compliance due to non-payment by their grantee, by receiving, from the Protection Provider, a percentage of the outstanding balance of the credit in question, in order to cover with a limited amount the first losses derived from the credit or from a portfolio of credits, once the terms and conditions agreed upon for the claim of the guarantee or insurance are met.

XXXIV Bis.

Pari-Passu Coverage Scheme, to the contractual scheme, under the figure of guarantee or credit insurance, through which the beneficiary or grantor mitigates the loss derived from non-compliance due to non-payment by their grantee, by receiving, from the coverage provider, a percentage of the outstanding balance of the credit or of a portfolio of credits, with the aim of covering, in the agreed proportion, the losses derived from the credit.

XXXV. to LVIII.

...

LVIII Bis.

Protection Provider, to the persons referred to in Groups 1, 2 and 3 described in Section IV of Annex D of these provisions.

LIX. to LXXXVI.

... "

" Article 46.- Popular Financial Societies, for the determination of the capital requirement for credit risk, must adhere to the procedure described in this article.

The capital requirement for credit risk will be that obtained by applying 8 percent to the total amount of the credit portfolio granted by Popular Financial Societies, net of the corresponding estimates for credit risks.

Additionally, for the purposes of what is stated in this article, Popular Financial Societies may deduct from the total amount of each credit, up to 100 percent of the money deposits constituted by the grantee themselves or by third parties who are clients in the Popular Financial Society, that meet the conditions to be considered a guarantee in terms of what is provided by Annex D, Section IV of these provisions. The amount to be deducted cannot exceed the outstanding balance of the credit.

Likewise, Popular Financial Societies may recognize the coverage provided by the First Loss Coverage Scheme or by the Pari-Passu Coverage Scheme. In order to determine the corresponding weightings for operations covered by these schemes, Popular Financial Societies must comply with the following:

I.

To the covered portion, which may be up to 100 percent, the corresponding risk weighting of the Protection Provider will be assigned, while the rest of the position will be assigned the risk weighting of the underlying counterparty, according to what is indicated below, and subsequently, it must be multiplied by 8 percent to determine the corresponding capitalization requirement. Only the following Protection Providers are eligible, both in the case of First Loss Coverage Schemes and in Pari-Passu Coverage Schemes or proportional:

a)

Group 1 (Weighting of 0%):

Development banking institutions.

National Financial Development Institution for Agriculture, Rural, Forestry and Fisheries or the one that replaces it.

Public trusts that are part of the Mexican financial system, in accordance with article 3 of the Credit Institutions Law.

Trusts celebrated specifically for the purpose of sharing credit risk, in which development banking institutions act as settlors and trustees that have an express guarantee from the Federal Government.

National Guarantee Fund for the Agricultural, Forestry, Fisheries and Rural Sectors or the one that replaces it.

National Infrastructure Fund or the one that replaces it.

Entities of the Federal Public Administration under direct budgetary control, state-owned productive companies or programs derived from a federal law that are part of the Federal Expenditure Budget.

Funds constituted with resources contributed as guarantee by state or municipal governments that are liquid and irrevocable in favor of the Popular Financial Society.

b)

Group 2 (Weighting of 20%):

National multiple banking institutions that have a rating of at least investment grade on the national scale.

Other entities belonging to the Mexican financial system, including insurance companies that have at least investment grade on the national scale.

Other legal entities or international financial entities that have at least investment grade on the international scale.

c)

Group 3 (Weighting of 100%):

Other clients of the same Popular Financial Society.

II.

In the case of First Loss Coverage Schemes for credit portfolios, Popular Financial Societies must adhere to the following:

a)

If the amount of the said coverage is equal to or greater than the sum of the capital requirements of the credits that make up the portfolio, no capital will be required for the total of the individual credits as there is no uncovered portion. For the part covered by the First Loss Coverage Scheme, capital will be required in accordance with the credit risk with the guarantor. In this case, the covered part is equal to the sum of the capital requirements of the individual credits.

b)

If the amount of the coverage is less than the said sum of capital requirements for the individual credits, the Popular Financial Society will constitute capital for the uncovered part for an amount equal to the difference between both concepts. For the part covered by the First Loss Coverage Scheme, capital will be required in accordance with the credit risk with the guarantor. In this case, the covered part is equal to the value of the First Loss Coverage Scheme.

III.

In the case of guarantees under the Pari-Passu Coverage Scheme, where the guarantee does not cover the total exposure and, in addition, the covered and uncovered portions have the same seniority, reductions in total capitalization requirements will be allowed proportionally, that is, the covered part of the position will receive the treatment applicable to admissible guarantees and the rest will be considered as unsecured. "

" Article 54.- The operating manuals of Popular Financial Societies must adhere at a minimum to the guidelines, policies and objectives established by the Board and, specifically, to the following:

I.

Internal control manual.

It must contemplate the functioning of the internal control system of the Popular Financial Society, establishing the following:

a)

The objectives, policies and internal control procedures.

b)

The organizational structure, specifying those responsible for carrying out the various functions in the Popular Financial Society.

c)

The information systems within the Popular Financial Society, which must allow information on the status of credits and deposits to be complete and timely; such information must be available to the respective Federation and the Commission, as well as to the personnel deemed authorized to access such information.

d)

The description of the internal regulations of the Popular Financial Society, that is, the description of the manuals that exist and are in force, as well as their purpose.

II.

...

...

a)

...

b)

...

...

i) ...

ii)

In the case of natural persons, a copy of the birth certificate or supporting documents that allow the identity of the person in question to be known, or valid official identification with photograph and signature of the grantee and the guarantor and, if applicable, the joint obligor, as well as their digital fingerprint and, if applicable, a copy of the marriage certificate;

...

Regarding legal entities, internal financial statements of the grantee and, if applicable, of the guarantor or joint obligor, with the handwritten signature of the legal representative and with an age not greater than 180 days;

4 and 5.

...

The documentation that accredits having made a prior inquiry before a Credit Information Society, in terms of what is provided by Chapter IV of Title Fourth of these provisions, as well as information on the grantee's history regarding compliance with their obligations with the Popular Financial Society;

7. and 8.

...

Regarding the autonomous bodies of the federal entities and of the municipalities, decentralized bodies, majority state-owned companies and trusts of the federal entities and municipalities, as well as of any other public entity over which said federal entities and municipalities have control over their decisions or actions, the file must contain, in addition to what is provided in the previous numbers, the following:

i)

Credit application duly filled out and signed either handwritten or electronically by an authorized public servant, or the invitation to participate in Financing in accordance with the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it. In both cases, Popular Financial Societies must make constitute the evidence and criteria that originated said offer.

ii)

Credit studies where the grantee and guarantor are analyzed, when this latter is considered in the credit classification process.

iii)

Financial information of the grantee.

iv)

Credit authorizations by the Popular Financial Society.

v)

Copy of the Income Law and Expenditure Budget as defined in the Law of Financial Discipline of the Federal Entities and Municipalities, or modified budgets for governments of the federal entities and municipalities of the fiscal year in which the income and destination of the Financing is documented.

vi)

In the case of municipal governments, a copy of the council minutes and of the copy of the official dissemination medium of the federal entity that contains the decree of the local congress in which the authorization for the contracting of credits is recorded, in accordance with what is established in the Law of Financial Discipline of the Federal Entities and Municipalities and in the Regulation of the Unique Public Registry referred to in said law or the ones that replace it.

vii)

In the case of governments of the federal entities, a copy of the copy of their official dissemination medium that contains the decree of the local congress in which the authorization for the contracting of credits is recorded, in accordance with what is provided in the Law of Financial Discipline of the Federal Entities and Municipalities and in the Regulation of the Unique Public Registry referred to in the said law or the ones that replace it.

viii)

For cases where a trust is established to guarantee or be a source of payment for the obligations, a copy of the corresponding contract, as well as, if applicable, a copy of the decree in which its constitution is ordered and the authorization of the local congress that allows the affectation of participations, federal contributions or local income in the said guarantee or source of payment trust.

ix)

Document in which it is recorded that the credit is registered in the Unique Public Registry referred to in the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it. The above will also be applicable regarding refinancing and restructuring of said credits. In the case of short-term credits referred to in the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it, Popular Financial Societies will have a term no greater than 40 natural days to integrate into the credit file, the document in which the registration in the registry mentioned in the preceding paragraph is recorded. Regarding refinancing and restructuring of credits referred to in article 23 of said law, Popular Financial Societies will have a term no greater than 15 natural days to carry out the file integration established in the present paragraph. The terms indicated will be computed from the day following the day that said credits have been contracted.

As an exception to what is provided in the preceding paragraph and once the terms indicated have elapsed without having the registration in the Unique Public Registry referred to in the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it, Popular Financial Societies must have the corresponding registration request, as well as evidence that they requested the public entity within the terms and terms indicated in said law, the registration of the credit in the said Unique Public Registry, delivering to said entities the necessary information for this. Without prejudice to the above, when registration in said Unique Public Registry is obtained, Popular Financial Societies must integrate the document that demonstrates it into the respective file.

Additionally, when it comes to credits that correspond to Guaranteed State Debt in terms of the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it, evidence of the registration of the Federal Public Sector Debt must be available in the Unique Public Registry referred to in article 49 of said law.

x)

Document that substantiates that the credit is within the Net Financing Ceiling in terms of the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it, allowed to the public entity, in accordance with the publication made by the Ministry regarding the indicators that comprise the Alert System of public entities referred to in said law.

xi)

Evidence that the credits are registered in the accounting of the public account of the grantee corresponding, when applicable.

xii)

Regarding the autonomous bodies of the federal entities and of the municipalities, decentralized bodies, majority state-owned companies and trusts of the federal entities and municipalities, as well as any other public entity over which the federal entities and the municipalities have control over their decisions or actions, information that allows the financial situation of the grantee to be evaluated for purposes of credit classification and in accordance with the internal policies of the Popular Financial Society, such as internal financial statements with handwritten signature of the legal representative or proxy, as well as the audited financial statements of the corresponding grantee for the last three fiscal years.

xiii)

...

Information allowing an assessment of the borrower's behavior in fulfilling their credit obligations with the Popular Financial Society, such as provisions, payments made, renewals, restructuring, debt forgiveness, adjudications, or payments in kind, as well as any other information supporting the rating assigned to the credit in question.

xiv) Annual update of the report issued by a Credit Information Society of the credit applicant and, if applicable, of the joint obligor, guarantor, or surety.

xv) Report on the fulfillment of obligations agreed upon in the credit contract.

xvi) Quarterly update of the credit status in the Single Public Registry in accordance with the Law on Financial Discipline of the Federal Entities and Municipalities or the one that replaces it.

xvii) Document stating the borrower's last status in the Alert System in accordance with the Law on Financial Discipline of the Federal Entities and Municipalities or the one that replaces it.

xviii) In the case of credits to federal entities and municipalities that are guaranteed in accordance with Chapter IV of Title Three of the Law on Financial Discipline of the Federal Entities and Municipalities or the one that replaces it, the most recent document showing the follow-up to the evaluation carried out by the Secretariat regarding the fulfillment of agreements for the contracting of Guaranteed State Debt pursuant to article 40 of said law by the federal entity or municipality.

Likewise, regarding the public entities referred to in article 47 of the Law on Financial Discipline of the Federal Entities and Municipalities or the one that replaces it, Popular Financial Societies must have the latest document showing the follow-up to the evaluation carried out by the federal entity or municipality, as applicable, of the agreement referred to in said article.

Regarding credits that Popular Financial Societies grant to the City of Mexico, they must have the latest reports referred to in fraction VIII of article 33 of the Law on Financial Discipline of the Federal Entities and Municipalities or the one that replaces it.

Guarantees.

i)

Documentation to be collected to evidence the existence of guarantees in favor of the Popular Financial Society for the credit granted and information regarding the storage, custody, and follow-up given to said guarantees, such as:

Appraisals of the assets securing the debt.

Popular Financial Societies, in their credit manuals, must provide that appraisals are prepared in terms of what is established by the Law on Transparency and Promotion of Competition in Secured Credit and in accordance with what is established in Annex D Bis, Section VII d of these provisions.

Insurance policies on the guarantees in favor of the Popular Financial Society.

Certificate of freedom from encumbrance of the guarantee assets

ii)

Reports from the Popular Financial Society regarding the verification of the existence, legitimacy, value, and other characteristics of the guarantees.

iii)

Regarding guarantees granted by autonomous bodies of the federal entities and municipalities, decentralized bodies, majority state-owned companies, and trusts of the federal entities and municipalities, as well as any other public entity over which the federal entities and municipalities have control over their decisions or actions, in addition to what is previously provided, Popular Financial Societies must document the following:

If applicable, evidence of the existence of federal participations or contributions or local revenues as guarantees or source of payment for the credit.

In cases where a trust is established to guarantee and serve as a source of payment for the obligations, a copy of the corresponding contract, as well as, if applicable, copies of the decree ordering its constitution and the authorization of the local congress allowing the allocation of federal participations in the said guarantee or source of payment trust, in accordance with what is established in article 34, fraction II of the Law on Financial Discipline of the Federal Entities and Municipalities or the one that replaces it.

Documentation related to a restructuring or, if applicable, such as feasibility analyses or studies, the conditions of this, its authorization, and the periodic information of the person responsible for the judicial or extrajudicial collection of the credit, as well as the corresponding supporting documentation.

Charged-off Credits.

i)

Information accrediting that the different instances of recovery have been exhausted or, if applicable, the necessary information in accordance with institutional policies in this matter.

ii)

Information through which the corresponding instances request the application of the credit.

. . .

. . .

. . .

c) and d)

. . .

Article 54 Bis.- Popular Financial Societies that grant Microcredits may use the table of preventive estimates for credit risks contained in Annex D, Section II, subsection d) of these provisions, provided they accredit to the Federation that supervises them in an auxiliary manner that they have the necessary technology and infrastructure to carry out such operations and adhere to what is provided in this article.

Prior to granting Microcredits, Popular Financial Societies must conduct an analysis of the borrower's payment capacity, in accordance with the terms and conditions established in their credit manual, for which they must observe at minimum the following:

I.

Conduct a verification visit or perform an eye inspection at the place where the borrower carries out their commercial, industrial, or professional service activity.

In cases where the contracting for the granting of a Microcredit is concluded remotely, Popular Financial Societies must observe the procedure and limits provided in disposition 4ª Bis of the General Provisions referred to in article 124 of the Popular Savings and Credit Law or those that replace it.

II.

Conduct a consultation with a Credit Information Society, in terms of what is provided by Title Four, Chapter IV of these provisions.

In the event that the credit in question is renewed or restructured, the report issued by the Credit Information Society of the borrower must be updated.

The information contained in the previous fractions must be contained in the borrower's credit file.

" Section D

Provisioning of credit portfolio and adjudicated assets "

" Article 60 Bis.- The amount of preventive estimates for credit risks will include the additional estimates required in various regulations, as well as those ordered and recognized by the Commission, and must be recognized in the results of the exercise of the corresponding period.

The additional estimates recognized by the Commission, referred to in the previous paragraph, are those constituted to cover risks that are not foreseen in the different methodologies for rating the credit portfolio and on which, prior to their constitution, Popular Financial Societies must inform the Commission of the following:

I.

Origin of the estimates.

II.

Methodology for determining the estimates.

III.

Amount of estimates to be constituted.

IV.

Time considered necessary for the estimates.

Article 61.- Popular Financial Societies must constitute additional estimates semi-annually, in the months of June and December of each year, recognizing potential losses in value due to the passage of time of assets adjudicated judicially or extrajudicially or received in payment in kind, whether movable or immovable assets, as well as receivables, according to the following procedure:

I.

In the case of receivables and movable assets, including securities in accordance with what is established in fraction II of Article 25 of these provisions, the estimates will be constituted as follows:

ESTIMATES FOR RECEIVABLES AND MOVABLE ASSETS

TIME ELAPSED SINCE

ADJUDICATION OR PAYMENT IN KIND (MONTHS)

RESERVE PERCENTAGE

Up to 6

0 %

More than 6 and up to 12

10 %

More than 12 and up to 18

20 %

More than 18 and up to 24

45 %

More than 24 and up to 30

60 %

More than 30

100 %

The amount of estimates to be constituted will be the result of applying the corresponding percentage according to the table immediately above, to the value of the receivables or to the value of the movable assets received in payment in kind or adjudicated, obtained in accordance with the Accounting Criteria.

II.

Regarding immovable assets, estimates will be constituted as follows:

ESTIMATES FOR IMMOVABLE ASSETS

TIME ELAPSED SINCE

ADJUDICATION OR PAYMENT IN KIND (MONTHS)

RESERVE PERCENTAGE

Up to 12

0 %

More than 12 and up to 24

10 %

More than 24 and up to 30

15 %

More than 30 and up to 36

25 %

More than 36 and up to 42

30 %

More than 42 and up to 48

35 %

More than 48 and up to 54

40 %

More than 54 and up to 60

50 %

More than 60

100 %

The amount of estimates to be constituted will be the result of applying the corresponding percentage according to the table immediately above, to the adjudication value of the immovable assets obtained in accordance with the Accounting Criteria.

In the event that valuations subsequent to the adjudication or payment in kind result in the accounting registration of a decrease in the value of the receivables, as well as of the movable or immovable assets, the percentages of preventive estimates referred to in this article may be applied to said adjusted value. "

" Article 63.- Popular Financial Societies, for the purposes of risk diversification in their operations, must adhere to the following:

I.

Asset Diversification.

The maximum credit limit that may be granted to a person, whether natural or legal, as well as to Popular Financial Societies affiliated with their Federation, will be 7 percent of the net capital of the Popular Financial Society.

For the purposes of this Section, credits granted to a natural person that represent a "Common Risk" will be considered within the calculation of credits granted to a person, understanding such as those credits that the Popular Financial Society has granted to relatives by blood in the first degree in the ascending or descending line and, if applicable, to the spouse, concubine, or concubine of the borrower, when any of these persons depends economically on the person requesting the credit.

These limits will not be applicable in cases where a Popular Financial Society grants liquidity loans to Popular Financial Societies affiliated with its Federation, as well as to those Popular Financial Societies not affiliated that are supervised in an auxiliary manner by the Federation itself, provided that such credits have been discounted from their capital, in accordance with what is provided by fraction III of article 36 of the Law.

Financing that has unconditional and irrevocable guarantees, covering the principal and accessories thereof, constituted with any of the means referred to in Annex D Bis, Section I, subsections a) to d) of these provisions, as well as those granted by any of the guarantors referred to in Group I of Section IV of Annex D of these provisions, will not count for the purposes of the maximum financing limit referred to in this fraction, and multiple guarantees from these guarantors may be accumulated. Likewise, guarantees granted by guarantors from Groups II and III of Section IV of Annex D will not count for the purposes of the maximum financing limit referred to in this fraction, up to the equivalent of 75 percent of the value of said guarantees, and multiple guarantees from these guarantors may also be accumulated.

In any case, Financing that a Popular Financial Society grants to a person, whether natural or legal, as well as to Popular Financial Societies affiliated with its Federation, may not exceed 14 percent of its net capital.

II.

. . .

Resources captured by the Popular Financial Society originating from deposits or loans granted by a single person or company may not represent more than once the net capital of the Popular Financial Society. This criterion will not apply to liabilities contracted with public trusts and national and international development funds, with multiple banking institutions established in the country, nor with national or international development banking institutions.

III.

. . .

The Commission, at the request of the interested Popular Financial Society, accompanied by the opinion of the Federation exercising auxiliary supervision powers over it, may authorize in exceptional cases, specific operations for amounts higher than the limits indicated in the previous fractions I and II. "

" Article 67.- Popular Financial Societies, for the determination of capital requirements for credit risk, must adhere to the following procedure:

I.

Classification of Operations.

Popular Financial Societies must classify their assets and operations that originate contingent liabilities, according to the counterparty of the operation, regardless of the issuer of the underlying asset, into any of the following groups:

a)

Group 1. Cash; credits to the Federal Government or with express guarantee of the Federal Government itself and contingent operations carried out with the persons indicated in this subsection, as well as other operations where the counterparty of the Popular Financial Societies is any of the persons mentioned in this group.

b)

Group 2. Deposits, securities, and credits issued by, guaranteed, backed, or negotiated by credit institutions and stock brokerage houses; credits issued by or guaranteed or backed by public trusts constituted by the Federal Government for economic promotion; credits issued by decentralized bodies of the Federal Government, as well as other operations where the counterparty of the Popular Financial Societies is any of the persons mentioned in this group.

Without prejudice to what is established in the previous paragraph, operations subject to credit risk with or issued by development banking institutions in which, in accordance with their respective organic laws, the Federal Government responds at all times for said operations, will have a credit risk weighting of zero percent.

c)

Group 3. Credits and other assets that generate credit risk, where the counterparty of the Popular Financial Societies is different from the persons mentioned in the groups provided in subsections a) and b) above.

. . .

II.

. . .

III.

. . .

. . .

In the case of loans for the acquisition or construction of personal housing that have a guarantee of at least 50 percent of the outstanding balance of the loan granted by any public promotion entity, for the purposes of capitalization requirements, Popular Financial Societies will consider the guaranteed portion of the credit within group 2 and the remaining non-guaranteed portion within group 3.

. . .

Regarding repo operations, Popular Financial Societies must determine prior to the credit risk weighting, the result of subtracting from the repo debtor's balance, the corresponding fair value of the collateral received in each operation, referred to in the Accounting Criteria contained in Annex E of these Provisions. In the event that the obtained result is positive, said difference will be multiplied by the weighting corresponding to the risk group of the counterparty.

Additionally, for the purposes of what is stated in this article, Popular Financial Societies may deduct from the total amount of each credit, up to 100 percent of money deposits constituted by the borrower themselves or by third parties who are clients in the Popular Financial Society, that meet the conditions to be considered a guarantee in terms of what is provided by Annex D, Section IV of these provisions. The amount to be deducted may not be higher than the outstanding balance of the credit.

Likewise, Popular Financial Societies may recognize the coverage provided by First Loss Coverage Schemes or Step and Measure Coverage Schemes. In order to determine the corresponding weightings for operations covered by said schemes, Popular Financial Societies must comply with the following:

I.

To the covered portion, which may be up to 100 percent, the risk weighting corresponding to that of the Protection Provider will be assigned, while the rest of the position will be assigned the risk weighting of the underlying counterparty, as indicated below. Only the following Protection Providers are eligible, both in the case of First Loss Coverage Schemes and in Step and Measure Coverage Schemes or proportional:

a)

Group 1 (Weighting of 0 %):

Development banking institutions.

National Financial Entity for Agricultural, Rural, Forestry, and Fisheries Development or the one that replaces it.

Public trusts that are part of the Mexican financial system in accordance with article 3 of the Law of Credit Institutions.

Trusts celebrated specifically for the purpose of sharing credit risk, in which development banking institutions with express guarantee of the Federal Government act as settlors and trustees.

National Guarantee Fund for the Agricultural, Forestry, Fisheries, and Rural Sectors or the one that replaces it.

National Infrastructure Fund or the one that replaces it.

Entities of the Federal Public Administration under direct budgetary control, state productive companies, or programs derived from a federal law that are part of the Federal Expenditure Budget.

Funds constituted with resources contributed as guarantee by state or municipal governments that are liquid and irrevocable in favor of the Popular Financial Society.

b)

Group 2 (Weighting of 20 %):

National multiple banking institutions that have a rating of at least investment grade on the national scale.

Other entities comprising the Mexican financial system, including insurers that have at least investment grade on the national scale.

Other legal persons or international financial entities that have at least investment grade on the international scale.

c)

Group 3 (Weighting of 100 %):

Other clients of the same Popular Financial Society.

II.

In the case of First Loss Coverage Schemes for credit portfolios, they must be subject to the following:

a)

If the amount of said coverage is equal to or greater than the sum of the capital requirements of the credits comprising the portfolio, no capital will be required for the total of the individual credits as there is no uncovered portion. For the portion covered by the First Loss Coverage Scheme, capital will be required in accordance with the credit risk before the guarantor. In this case, the covered portion is equal to the sum of the capital requirements of the individual credits.

b)

If the amount of the coverage is less than the said sum of capital requirements for the individual credits, the Popular Financial Society will constitute capital for the uncovered portion for an amount equal to the difference between both concepts. For the portion covered by the First Loss Coverage Scheme, capital will be required in accordance with the credit risk before the guarantor. In this case, the covered portion is equal to the value of the First Loss Coverage Scheme.

III.

In the case of guarantees under the Step and Measure Coverage Scheme, where the guarantee does not cover the total exposure and, in addition, the covered and non-guaranteed portions have the same precedence, reductions in total capitalization requirements will be allowed proportionally, that is, the covered portion of the position will receive the treatment applicable to admissible guarantees and the rest will be considered as non-guaranteed. "

" Article 88.-

Popular Financial Societies must have a credit manual approved by the Board of Directors, to which the Credit Committee or its equivalent must adhere. The Board of Directors may hear the opinion of the technical committee referred to in Article 80 of these provisions, for the purposes of approving said manual, as well as its modifications. The manual must contain credit policies and procedures, with minimum guidelines in the stages of the credit process as follows:

I.

. . .

a)

Popular Financial Societies may establish in credit manuals, automatic credit authorization processes that allow granting the corresponding credit to any applicant, provided that the conditions indicated below are met:

1. to 4.

. . .

b)

Additionally, Popular Financial Societies may establish methodologies for the approval and granting of credits whose amount is considerable, according to the characteristics of the operations carried out by the Popular Financial Society, for which at least the following must be taken into account:

1. to 4.

. . .

c)

The Credit Committee or its equivalent will be the instance responsible for the approval of credits requested from the Popular Financial Society, although it may delegate its functions to subcommittees, either regional or by branches, provided that the existence of said subcommittees is provided for in the credit manual of the Popular Financial Society, which must be integrated by officials of the Popular Financial Society itself.

For such approval, they must follow the guidelines established for this purpose in the manual.

d)

The Popular Financial Society that meets the capitalization requirements for credit risks and, in general, with what is established in this Section, will be relieved of the obligation to have the approval of the Credit Committee or its equivalent, when the total amount of credits granted by said Popular Financial Society

Popular to the applicant, including their economic dependents, is not greater than

5,000 UDIS, and provided that their credit manual provides for automatic authorization processes, in accordance with what is established in the preceding subsection a).

Regarding credits for which Popular Financial Societies have 100 percent cash-backed guarantees in terms of what is provided in Annex D, Section IV of these provisions, Popular Financial Societies shall be relieved of the obligation to have approval from the Credit Committee or its equivalent. This is based on the limits established for this purpose by their Board of Directors.

II.

. . .

Popular Financial Societies must maintain control of credit activity, through the Comisario or Supervisory Board or, if applicable, delegate it to a third party that has no conflict of interest with the areas involved in the credit granting process. The objective of this control function will be to verify:

a) and b)

. . .

c)

That the officials and employees of the Popular Financial Society are complying with the responsibilities assigned to them, without exceeding the powers delegated to them.

III.

. . .

Popular Financial Societies must evaluate and provide permanent follow-up to each of the credits in their portfolio, including the guarantees and guarantors.

. . .

IV.

. . .

V.

. . .

Popular Financial Societies must have automated systems that allow generating complete and timely information on the status of credits, so that timely and reliable follow-up can be given to them, as well as having concrete measures for information recovery in contingency cases.

VI.

. . .

Popular Financial Societies must establish policies and procedures for the integration of a single file for each borrower, which shall contain, at least, the documentation and information detailed in the sixth paragraph of this subsection.

Popular Financial Societies must implement a control and verification mechanism that allows detecting missing documentation and information in credit files. Likewise, they must designate the personnel responsible for integrating and updating the files, as well as for controlling the consultation service of said files.

. . .

. . .

The documentation and information that must be established in the manuals, for the integration of credit files, is the following:

a)

. . .

. . .

In the case of natural persons, a copy of the birth certificate or documents that allow knowing the identity of the person in question, or valid official identification with photograph and signature of the borrower and guarantor, and, if applicable, of the joint obligor, as well as their digital fingerprint, and, if applicable, a copy of the marriage certificate.

b)

. . .

. . .

Regarding legal entities, internal financial statements of the borrower and, if applicable, of the guarantor or joint obligor, with the autograph signature of the legal representative and with an age not greater than 180 days;

3. and 4.

. . .

The documentation that accredits having made a prior consultation to a Credit Information Society, in terms of what is provided in Chapter IV of Title Fourth of these provisions, as well as information on the borrower's history regarding compliance with their obligations with the Popular Financial Society , and

. . .

c)

. . .

d)

Regarding the autonomous bodies of the federal entities and municipalities, decentralized bodies, majority state-owned companies and trusts of the federal entities and municipalities, as well as any other public entity over which said federal entities and municipalities have control over their decisions or actions, the file must contain, in addition to what is provided in the preceding subsections, the following:

Credit application duly filled out and signed, either autographically or electronically by an authorized public servant, or the invitation to participate in Financing in accordance with the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it. In both cases, Popular Financial Societies must record the evidence and criteria that originated said offer.

Credit studies where the borrower and guarantor are analyzed, when the latter is considered in the credit qualification process.

Financial information of the borrower.

Credit authorizations by the Popular Financial Society.

Copy of the Income Law and Expenditure Budget as defined in the Law of Financial Discipline of the Federal Entities and Municipalities- or modified budgets for governments of the federal entities and municipalities of the fiscal year in which the income and destination of Financing are documented.

In the case of municipal governments, a copy of the council minutes and the copy of the official dissemination medium of the federal entity containing the decree of the local congress in which the authorization for the contracting of credits is recorded, in accordance with what is established in the Law of Financial Discipline of the Federal Entities and Municipalities and in the Regulation of the Unique Public Registry referred to in said law or the ones that replace it.

In the case of governments of the federal entities, a copy of the issue of their official dissemination medium containing the decree of the local congress in which the authorization for the contracting of credits is recorded, in accordance with what is provided in the Law of Financial Discipline of the Federal Entities and Municipalities and in the Regulation of the Unique Public Registry referred to in said law or the ones that replace it.

For cases where a trust is established to guarantee or be a source of payment of the obligations, a copy of the corresponding contract, as well as, if applicable, a copy of the decree ordering its constitution, and of the authorization of the local congress that allows the affectation of participations, federal contributions or local income in said guarantee or source of payment trust.

Document in which it is recorded that the credit is registered in the Unique Public Registry referred to in the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it. The foregoing shall also apply to refinancing and restructuring of said credits.

In the case of short-term credits referred to in the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it, Popular Financial Societies will have a period not greater than 40 natural days to integrate into the credit file, the document in which the inscription in the registry mentioned in the preceding paragraph is recorded. Regarding refinancing and restructuring of credits referred to in article 23 of said law, Popular Financial Societies will have a period not greater than 15 natural days to carry out the file integration established in this paragraph. The periods indicated shall be counted from the day following the day on which said credits have been contracted.

As an exception to what is provided in the preceding paragraph and once the periods indicated have elapsed without having the inscription in the Unique Public Registry referred to in the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it, Popular Financial Societies must have the corresponding inscription request, as well as evidence that they required the public entity within the periods and terms indicated in said law, the inscription of the credit in said Unique Public Registry, delivering to said entities the necessary information for this purpose. Without prejudice to the foregoing, when the inscription in said Unique Public Registry is available, Popular Financial Societies must integrate the document that demonstrates it in the respective file.

Additionally, when it comes to credits corresponding to Guaranteed State Debt in terms of the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it, evidence of the inscription of the Federal Public Sector Debt in the Unique Public Registry referred to in article 49 of said law must be available.

Document that substantiates that the credit is within the Net Financing Ceiling in terms of the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it, allowed to the public entity, in accordance with the publication made by the Secretariat on the indicators that comprise the Alert System of public entities referred to in said law.

Evidence that the credits are registered in the accounting of the public account of the borrower corresponding, when applicable.

Regarding the autonomous bodies of the federal entities and municipalities, decentralized bodies, majority state-owned companies and trusts of the federal entities and municipalities, as well as any other public entity over which the federal entities and municipalities have control over their decisions or actions, information that allows evaluating the financial situation of the borrower for credit qualification purposes and in accordance with the internal policies of the Popular Financial Society, such as internal financial statements with the autograph signature of the legal representative or proxy, as well as the audited financial statements of the corresponding borrower for the last three fiscal years.

Information that allows appreciating the behavior of the borrower in complying with their credit obligations with the Popular Financial Society, such as disbursements, payments made, renewals, restructurings, debt forgiveness, adjudications or dations in payment, as well as any other that supports the qualification granted to the credit in question.

Annual update of the report issued by a Credit Information Society of the credit applicant and, if applicable, of the joint obligor, guarantor or surety.

Report on the compliance with the obligations stipulated in the credit contract.

Quarterly update of the credit status in the Unique Public Registry in accordance with the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it.

Document in which the last situation of the borrower is recorded in the Alert System in accordance with the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it.

Regarding credits to federal entities and municipalities that are guaranteed in accordance with Chapter IV of Title Third of the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it, the most recent document in which the follow-up to the evaluation carried out by the Secretariat on the compliance with the agreements for the contracting of Guaranteed State Debt in accordance with article 40 of said law by the federal entity or municipality is recorded.

Likewise, regarding the public entities referred to in article 47 of the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it, Popular Financial Societies must have the last document in which the follow-up to the evaluation carried out by the federal entity or municipality, as applicable, of the agreement referred to in said article is recorded.

Regarding credits that Popular Financial Societies grant to Mexico City, they must have the latest reports referred to in subsection VIII of article 33 of the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it.

e)

Guarantees.

Documentation to be collected in order to evidence the existence of guarantees in favor of the Popular Financial Society for the credit granted and information related to the custody, safekeeping and follow-up given to said guarantees, such as:

i)

Appraisals of the assets that guarantee the debt.

Popular Financial Societies, in their credit manuals, must provide that appraisals are prepared in terms of what is provided in the Law of Transparency and Promotion of Competition in Secured Credit and in accordance with what is established in Annex D Bis, Section VII of these provisions.

ii)

Insurance policies on the guarantees in favor of the Popular Financial Society.

iii)

Certificate of freedom from encumbrance of the guarantee assets.

Reports from the Popular Financial Society on the verification of the existence, legitimacy, value and other characteristics of the guarantees.

Regarding guarantees granted by autonomous bodies of the federal entities and municipalities, decentralized bodies, majority state-owned companies and trusts of the states and municipalities, as well as any other public entity over which the federal entities and municipalities have control over their decisions or actions, in addition to what is provided above, Popular Financial Societies must document the following:

i)

If applicable, evidence of the existence of federal participations or contributions or local income as guarantees or source of payment of the credit.

ii)

For cases where a trust is established to guarantee and be a source of payment of the obligations, a copy of the corresponding contract, as well as, if applicable, copies of the decree ordering its constitution, and of the authorization of the local congress that allows the affectation of federal participations in said guarantee or source of payment trust, in accordance with what is established in article 34, subsection II of the Law of Financial Discipline of the Federal Entities and Municipalities or the one that replaces it.

f)

Restructuring.

The documentation related to the restructuring of the credit, including:

The conditions and authorization of restructuring or, if applicable, of the judicial agreement or both.

Periodic information from the person responsible for the judicial or extrajudicial collection of the credit, as well as the corresponding supporting documentation.

g)

Charged-off credits.

Information that accredits that the different recovery instances have been exhausted or, if applicable, the necessary information in accordance with the institutional policies in this matter.

Information through which the corresponding instances request the application of the credit.

. . .

. . . "

Article 91 Bis.- Popular Financial Societies that grant Microcredits may use the table of provisional estimates for credit risks contained in Annex D, Section II, subsection d) of these provisions, provided that they accredit to the Federation that supervises them in an auxiliary manner, that they have the necessary technology and infrastructure to carry out such operations and comply with what is provided in this article.

Prior to granting Microcredits, Popular Financial Societies must perform an analysis of the borrower's payment capacity, in accordance with the terms and conditions established in their credit manual, for which they must observe at least the following:

I.

Conduct a verification visit or perform an on-site inspection at the place where the borrower carries out their commercial, industrial or professional services activity.

In cases where the contracting for the granting of Microcredit is concluded remotely, Popular Financial Societies must observe the procedure and limits provided in disposition 4th Bis of the General Provisions referred to in article 124 of the Popular Savings and Credit Law or the ones that replace it.

II.

Conduct a consultation with a Credit Information Society, in terms of what is provided in Title Fourth, Chapter IV of these provisions.

In the event that the credit in question is renewed or restructured, the report issued by the Credit Information Society of the borrower must be updated.

The information contained in the preceding subsections must be contained in the borrower's credit file. "

" Section F

Provisioning of credit portfolio and adjudicated assets "

" Article 95 Bis.- The amount of provisional estimates for credit risks will include the additional estimates required in various regulations and those ordered and recognized by the Commission, and must be recognized in the results of the exercise of the period that corresponds.

The additional estimates recognized by the Commission referred to in the preceding paragraph are those that are constituted to cover risks that are not provided for in the different portfolio qualification methodologies and on which, prior to their constitution, Popular Financial Societies must inform the Commission of the following:

I.

Origin of the estimates.

II.

Methodology for determining the estimates.

III.

Amount of estimates to be constituted.

IV.

Time considered necessary for the estimates.

Article 95 Ter.- Popular Financial Societies must constitute additional estimates semi-annually, in the months of June and December of each year, that recognize the potential loss of value due to the passage of time of assets adjudicated judicially or extrajudicially or received in dation in payment, whether movable or immovable assets, as well as receivables, according to the following procedure:

I.

In the case of receivables and movable assets, including securities in accordance with what is established in subsection II of Article 25 of these provisions, the estimates will be constituted as follows:

ESTIMATES FOR RECEIVABLES AND MOVABLE ASSETS

TIME ELAPSED SINCE

ADJUDICATION OR DATIO IN PAGAM (MONTHS)

RESERVE PERCENTAGE

Up to 6

0 %

More than 6 and up to 12

10 %

More than 12 and up to 18

20 %

More than 18 and up to 24

45 %

More than 24 and up to 30

60 %

More than 30

100 %

The amount of estimates to be constituted will be the result of applying the corresponding percentage according to the table above, to the value of the receivables or to the value of the movable assets received in dation in payment or adjudicated, obtained in accordance with the Accounting Criteria.

II.

Regarding immovable assets, estimates will be constituted in accordance with the following:

ESTIMATES FOR IMMOVABLE ASSETS

TIME ELAPSED SINCE ADJUDICATION

OR DATIO IN PAGAM (MONTHS)

RESERVE PERCENTAGE

Up to 12

0 %

More than 12 and up to 24

10 %

More than 24 and up to 30

15 %

More than 30 and up to 36

25 %

More than 36 and up to 42

30 %

More than 42 and up to 48

35 %

More than 48 and up to 54

40 %

More than 54 and up to 60

50 %

More than 60

100 %

The amount of estimates to be constituted will be the result of applying the corresponding percentage according to the immediate preceding table, to the adjudication value of the immovable assets obtained in accordance with the Accounting Criteria.

In the event that valuations subsequent to the adjudication or dation in payment result in the accounting registration of a decrease in the value of the receivables, as well as of the movable or immovable assets, the percentages of provisional estimates referred to in this article may be applied to said adjusted value. "

" Article 97.- Popular Financial Societies, for the purposes of risk diversification in their operations, must observe the following:

I.

Asset diversification.

The Financing and, if applicable, the guarantees granted by a Popular Financial Society to a natural person will not exceed 5 percent of its net capital.

The Financing that a Popular Financial Society grants to a legal entity, as well as to Popular Financial Societies affiliated to its Federation, will not exceed 7 percent of its net capital.

For the purposes of this Section, credits granted to a natural person that represent a " Common Risk " will be considered within the calculation of credits granted, understanding as such the credits that the Popular Financial Society has granted to relatives by consanguinity in the first degree in the ascending or descending straight line and, if applicable, to the spouse, concubine or concubine of the borrower, when any of these persons depends economically on the person requesting the credit.

Likewise, credits granted to a single legal entity that represent a " Common Risk " will be considered within the calculation of credits granted, understanding as such the credits that the Popular Financial Society has granted to the councilors, as well as to the director or general manager of the legal entity requesting the credit. Also, for the purposes of this calculation, credits that the Popular Financial Society has granted to owners of more than 10 percent of the voting shares of the Popular Financial Society requesting the credit will be considered, as well as those credits that the Popular Financial Society has granted to companies where the requesting society owns more than 50 percent of the voting shares.

Credits granted to natural persons who own more than 50 percent of the voting shares of companies that in turn have credits contracted with the Popular Financial Society will also be subject to the 7 percent limit, in which case credits granted to said companies, as well as credits granted to relatives by consanguinity in the first degree in the ascending or descending straight line and, if applicable, to the spouse, concubine or concubine who are economic dependents of the credit applicant, will also be considered for the purposes of said limit.

These limits will not be applicable in cases where a Popular Financial Society grants liquidity loans to Popular Financial Societies affiliated to its Federation, as well as to those Popular Financial Societies not affiliated that are supervised in an auxiliary manner by the Federation itself, provided that said credits have been discounted from its capital, in accordance with what is provided in subsection III of article 36 of the Law.

Financing that has unconditional and irrevocable guarantees, that cover the

principal and their accessories, constituted with any of the means referred to in Annex D

Bis, Section I, subsections a) to d) of these provisions, as well as those granted by any of the guarantors referred to in Group I of Section IV of Annex D of these provisions, shall not count for the purposes of the maximum financing limit to which this subsection refers, allowing multiple guarantees from these guarantors to be accumulated. Likewise, guarantees granted by guarantors from groups II and III shall not count for the purposes of the maximum financing limit referred to in this subsection, up to the equivalent of 75 percent of the value of said guarantees, and multiple guarantees from these guarantors may also be accumulated.

In all cases, Financings that a Popular Financial Society grants to a natural or legal person, as well as to Popular Financial Societies affiliated with its Federation, shall not exceed 14 percent of its net capital.

II.

. . .

The resources captured by the Popular Financial Society, arising from deposits or loans granted by a single person or company, shall not represent more than once the net capital of the Popular Financial Society. This criterion shall not apply to liabilities contracted with national and international public trusts and development funds, with multiple banking institutions established in the country, nor with national and international development banking institutions.

III.

. . .

The Commission, at the request of the interested Popular Financial Society, accompanied by the opinion of the Federation that exercises auxiliary supervision powers over it, may authorize in exceptional cases specific operations for amounts exceeding the limits set in the preceding subsections I and II. "

" Article 102.- Popular Financial Societies, for the determination of capital requirements for credit risk, shall adhere to the following procedure:

I.

Classification of operations.

Popular Financial Societies shall classify their assets and operations that generate contingent liabilities, based on the counterparty of the operation, regardless of the issuer of the underlying asset, into any of the following groups:

a)

Group 1. Cash; credits to the Federal Government or with express guarantee of the Federal Government itself and contingent operations carried out with the persons indicated in this subsection, as well as other operations where the counterparty of the Popular Financial Societies is any of the persons mentioned in this group.

b)

Group 2. Deposits, securities and credits held by, guaranteed, endorsed or negotiated by credit institutions and brokerage houses; credits held by or guaranteed or endorsed by public trusts constituted by the Federal Government for economic promotion; credits held by decentralized bodies of the Federal Government, as well as other operations where the counterparty of the Popular Financial Societies is any of the persons mentioned in this group.

Without prejudice to what is established in the preceding paragraph, operations subject to credit risk with or held by development banking institutions in which, in accordance with their respective organic laws, the Federal Government responds at all times for said operations, shall have a credit risk weighting of zero percent.

c)

Group 3. Credits and other assets that generate credit risk, where the counterparty of the Popular Financial Societies is different from the persons mentioned in the groups provided for in subsections a) and b) above.

. . .

II.

. . .

III.

. . .

. . .

In the case of loans for the acquisition or construction of personal housing that have a guarantee of at least 50 percent of the outstanding balance of the loan granted by a public development entity, for the purposes of capitalization requirements, Popular Financial Societies shall consider the guaranteed portion of the credit within group 2 and the remaining unguaranteed portion within group 3.

. . .

Regarding repo operations, Popular Financial Societies shall determine, prior to the credit risk weighting, the result of subtracting from the repo debtor's balance, the corresponding fair value of the collateral received in each operation, as referred to in the Accounting Criteria contained in Annex E of these Provisions. In the event that the obtained result is positive, such difference shall be multiplied by the weighting corresponding to the risk group of the counterparty.

Additionally, for the purposes of what is stated in this article, Popular Financial Societies may deduct from the total amount of each credit, up to 100 percent of money deposits constituted by the borrower themselves or by third parties who are clients in the Popular Financial Society, which meet the conditions to be considered a guarantee in terms of what is provided by Annex D, Section IV of these provisions. The amount to be deducted shall not exceed the outstanding balance of the credit.

Likewise, Popular Financial Societies may recognize the coverage provided by First Loss Coverage Schemes or Step-by-Step Coverage Schemes. In order to determine the corresponding weightings for operations covered by said schemes, Popular Financial Societies must comply with the following:

I.

To the covered portion, which may be up to 100 percent, the risk weighting corresponding to that of the Protection Provider shall be assigned, while the remainder of the position shall be assigned the risk weighting of the underlying counterparty, as indicated below. Only the following Protection Providers are eligible, both in the case of First Loss Coverage Schemes and in Step-by-Step or Proportional Coverage Schemes:

a)

Group 1 (Weighting of 0%):

Development banking institutions.

National Financial Institution for the Development of Agriculture, Rural, Forestry and Fisheries, or the one that replaces it.

Public trusts that are part of the Mexican financial system in accordance with article 3 of the Credit Institutions Law.

Trusts celebrated specifically for the purpose of sharing credit risk, in which development banking institutions with express guarantee of the Federal Government act as settlors and trustees.

National Guarantee Fund for the Agricultural, Forestry, Fisheries and Rural Sectors or the one that replaces it.

National Infrastructure Fund or the one that replaces it.

Entities of the Federal Public Administration under direct budgetary control, state productive companies or programs derived from a federal law that are part of the Federal Expenditure Budget.

Funds constituted with resources contributed as guarantee by state or municipal governments that are liquid and irrevocable in favor of the Popular Financial Society.

b)

Group 2 (Weighting of 20%):

National multiple banking institutions that have a rating of at least investment grade on the national scale.

Other entities belonging to the Mexican financial system, including insurance companies that have at least investment grade on the national scale.

Other legal persons or international financial entities that have at least investment grade on the international scale.

c)

Group 3 (Weighting of 100%):

Other clients of the same Popular Financial Society.

II.

In the case of First Loss Coverage Schemes for credit portfolios, they must be subject to the following:

a)

If the amount of said coverage is equal to or greater than the sum of the capital requirements of the credits that make up the portfolio, no capital will be required for the total of the individual credits as there is no uncovered portion. For the part covered by the First Loss Coverage Scheme, capital will be required in accordance with the credit risk with the guarantor. In this case, the covered part is equal to the sum of the capital requirements of the individual credits.

b)

If the amount of the coverage is less than the aforementioned sum of capital requirements for the individual credits, the Popular Financial Society will constitute capital for the uncovered part for an amount equal to the difference between both concepts. For the part covered by the First Loss Coverage Scheme, capital will be required in accordance with the credit risk with the guarantor. In this case, the covered part is equal to the value of the First Loss Coverage Scheme.

III.

In the case of guarantees under the Step-by-Step Coverage Scheme, where the guarantee does not cover the total exposure and, in addition, the covered and unguaranteed portions have the same seniority, reductions in total capitalization requirements will be allowed proportionally, that is, the covered part of the position will receive the treatment applicable to admissible guarantees and the remainder will be considered unguaranteed. "

" Article 130.-

Popular Financial Societies must have a credit manual approved by the Board of Directors, to which the Credit Committee or its equivalent must adhere. The Board of Directors may hear the opinion of the technical committee referred to in Article 119 of these provisions, for the purposes of approving said manual, as well as its modifications. The manual must contain credit policies and procedures, with the minimum guidelines in the stages of the credit process as follows:

I.

. . .

a)

Popular Financial Societies may establish in credit manuals, automatic credit authorization processes that allow granting the corresponding credit to any applicant, provided that the conditions indicated below are met:

1. to 4.

. . .

b)

Additionally, Popular Financial Societies may establish methodologies for the approval and granting of credits whose amount is considerable, according to the characteristics of the operations carried out by the Popular Financial Society, for which at least the following must be taken into account:

1. to 4.

. . .

c)

The Credit Committee or its equivalent shall be the body responsible for the approval of credits requested from the Popular Financial Society, although it may delegate its functions to subcommittees, either regional or by branch, provided that the existence of said subcommittees is provided for in the credit manual of the Popular Financial Society, which must be integrated by officials of the Popular Financial Society itself.

For such approval, they must follow the guidelines established for this purpose in the manual.

d)

The Popular Financial Society that complies with the capitalization requirements for credit risks corresponding and, in general, with what is established in this Section, shall be relieved of the obligation to have the approval of the Credit Committee or its equivalent, when the total amount of credits granted by said Popular Financial Society to the applicant person, including their economic dependents, is not greater than 5,000 UDIS, and provided that its credit manual provides for automatic authorization processes, in accordance with what is established in subsection a) above.

Regarding credits for which Popular Financial Societies have 100 percent guarantees constituted with cash in terms of what is provided by Annex D, Section IV of these provisions, Popular Financial Societies shall be relieved of the obligation to have the approval of the Credit Committee or its equivalent. This is based on the limits established for this purpose by their Board of Directors.

II.

. . .

a)

Popular Financial Societies must keep control of credit activity, through the Supervisory Board or Commissioner or, if applicable, delegate it to a third party that does not have a conflict of interest with the areas involved in the credit granting process. The objective of this control function will be to verify:

1. and 2.

. . .

That the officials and employees of the Popular Financial Society are fulfilling the responsibilities entrusted to them, without exceeding the powers delegated to them.

b)

. . .

III.

. . .

Popular Financial Societies must evaluate and give permanent follow-up to each of the credits in their portfolio, including the guarantees and the guarantors.

. . .

IV.

. . .

. . .

. . .

. . .

V.

. . .

Popular Financial Societies must have automated credit information systems, which as a minimum must:

a) to d)

. . .

VI.

. . .

Popular Financial Societies must establish the policies and procedures for the integration of a single file for each borrower, which shall contain at least the documentation and information detailed below.

Popular Financial Societies must implement a control and verification mechanism that allows detecting missing documentation and information in credit files. Likewise, they must designate responsible personnel to integrate and update the files, as well as to control the consultation service of said files.

. . .

. . .

Of the information that borrowers provide periodically to Popular Financial Societies, the corresponding information for the last two fiscal years must be kept in the respective file.

. . .

. . .

a)

. . .

. . .

In the case of natural persons, a copy of the birth certificate or documents that allow knowing the identity of the person in question, or valid official identification with photograph and signature of the borrower and the guarantor, and, if applicable, the joint obligor, as well as their digital fingerprint, and, if applicable, a copy of the marriage certificate.

b)

. . .

1. to 3.

. . .

. . .

i)

Regarding legal persons, internal financial statements (they must also include audited financial statements if so indicated by the policies of the Popular Financial Society) of the borrower and, if applicable, the guarantor or joint obligor, with the autograph signature of the legal representative, with an age not greater than 180 days;

ii)

. . .

iii)

Document that supports the analysis carried out on the payment capacity of the debtor and, if applicable, the guarantor or joint obligor, and

iv)

. . .

The documentation that accredits having made a prior inquiry to a Credit Information Society, in terms of what is provided in Chapter IV of Title Fourth of these provisions, as well as the information on the borrower's history regarding compliance with their obligations with the Popular Financial Society, and

. . .

c)

. . .

d)

Regarding the autonomous bodies of the federal entities and municipalities, decentralized bodies, majority state-owned companies and trusts of the federal entities and municipalities, as well as any other public entity over which said federal entities and municipalities have control over their decisions or actions, the file must contain, in addition to what is provided in the preceding subsections, the following:

Credit application duly filled out and signed either autographically or electronically by an authorized public servant, or the invitation to participate in the Financing in accordance with the Financial Discipline Law of Federal Entities and Municipalities or the one that replaces it. In both cases, Popular Financial Societies must record the evidence and criteria that originated said offer.

Credit studies where the borrower and guarantor are analyzed, when the latter is considered in the credit qualification process.

Financial information of the borrower.

Credit authorizations by the Popular Financial Society.

Copy of the Revenue Law and Expenditure Budget as defined in the Financial Discipline Law of Federal Entities and Municipalities- or modified budgets for federal entity and municipal governments for the fiscal year in which the income and destination of the Financing is documented.

In the case of municipal governments, a copy of the council minutes and the copy of the official dissemination medium of the federal entity containing the decree of the local congress in which the authorization for the contracting of credits is recorded, in accordance with what is established in the Financial Discipline Law of Federal Entities and Municipalities and in the Regulation of the Unique Public Registry referred to in said law or the ones that replace it.

In the case of federal entity governments, a copy of the copy of its official dissemination medium containing the decree of the local congress in which the authorization for the contracting of credits is recorded, in accordance with what is provided in the Financial Discipline Law of Federal Entities and Municipalities and in the Regulation of the Unique Public Registry referred to in said Law or the ones that replace it.

For cases where a trust is established to guarantee or be a source of payment for the obligations, a copy of the corresponding contract, as well as, if applicable, a copy of the decree ordering its constitution, and the authorization of the local congress that allows the affectation of participations, federal contributions or local revenues in said guarantee or source of payment trust.

Document stating that the credit is registered in the Unique Public Registry referred to in the Financial Discipline Law of Federal Entities and Municipalities or the one that replaces it. The above shall also apply to refinancings and restructurings of said credits.

In the case of short-term credits referred to in the Financial Discipline Law of Federal Entities and Municipalities or the one that replaces it, Popular Financial Societies will have a period not greater than 40 calendar days to integrate into the credit file the document stating the registration in the registry mentioned in the preceding paragraph. Regarding refinancings and restructurings of credits referred to in article 23 of said law, Popular Financial Societies will have a period not greater than 15 calendar days to carry out the file integration established in this paragraph. The stated periods shall be counted from the day following the day on which said credits were contracted.

As an exception to what is provided in the preceding paragraph and once the stated periods have passed without having the registration in the Unique Public Registry referred to in the Financial Discipline Law of Federal Entities and Municipalities or the one that replaces it, Popular Financial Societies must have the corresponding registration request, as well as evidence that they required the public entity within the periods and terms established in said law, the registration of the credit in said Unique Public Registry delivering to said entities the necessary information for this purpose. Without prejudice to the above, when registration in said Unique Public Registry is obtained, Popular Financial Societies must integrate the document demonstrating it into the respective file.

Additionally, when it comes to credits corresponding to Guaranteed State Debt in terms of the Financial Discipline Law of Federal Entities and Municipalities or the one that replaces it, evidence of the registration of the Federal Public Sector Debt in the Unique Public Registry referred to in article 49 of said law must be available.

Document that substantiates that the credit is within the Net Financing Ceiling in terms of the Financial Discipline Law of Federal Entities and Municipalities or the one that replaces it, allowed to the public entity, in accordance with the publication made by the Secretariat on the indicators that comprise the Alert System of public entities referred to in said law.

Evidence that the credits are registered in the accounting of the public account of the borrower corresponding, when applicable.

Regarding the autonomous bodies of the federal entities and municipalities, decentralized bodies, majority state-owned companies and trusts of the federal entities and municipalities, as well as any other public entity over which the federal entities and municipalities have control over their decisions or actions, information that allows evaluating the financial situation of the borrower for credit qualification purposes and in accordance with the internal policies of the Popular Financial Society, such as internal financial statements with the autograph signature of the legal representative or attorney, as well as the audited financial statements of the borrower corresponding to the last three fiscal years.

Information that allows appreciating the borrower's behavior in complying with their credit obligations with the Popular Financial Society, such as disbursements, payments made, renewals, restructurings, debt forgiveness, adjudications or dations in payment, as well as any other that supports the qualification granted to the credit in question.

Annual update of the report issued by a Credit Information Society of the credit applicant and, if applicable, the joint obligor, guarantor or surety.

Report on the compliance with the obligations stipulated in the credit contract.

Quarterly update of the credit status in the Unique Public Registry in accordance with the Financial Discipline Law of Federal Entities and Municipalities or the one that replaces it.

Document stating the last status of the borrower in the Alert System, in accordance with the Financial Discipline Law of Federal Entities and Municipalities or the one that replaces it.

Regarding credits to federal entities and municipalities that are guaranteed in accordance with Chapter IV of Title Third of the Financial Discipline Law of Federal Entities and Municipalities or the one that replaces it, the

most recent document showing the follow-up to the evaluation carried out by the Compliance Secretariat for the contracting of Guaranteed State Debt pursuant to Article 40 of the aforementioned law by the federal entity or municipality.

Likewise, regarding the public entities referred to in Article 47 of the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it, Popular Financial Societies must have the last document showing the follow-up to the evaluation carried out by the federal entity or municipality, as applicable, of the agreement referred to in said article.

Regarding credits that Popular Financial Societies grant to Mexico City, these must have the latest reports referred to in fraction VIII of Article 33 of the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it.

e) Guarantees.

Documentation to be collected to evidence the existence of guarantees in favor of the Popular Financial Society for the granted credit and information regarding the storage, custody, and follow-up given to said guarantees, such as:

i) Appraisals of the assets securing the debt.

Popular Financial Societies, in their credit manuals, must provide that appraisals are prepared in terms of what is provided by the Transparency and Competition Promotion Law in Secured Credit and in accordance with what is established in Annex D Bis, Section VII of these provisions.

ii) Insurance policies on the guarantees in favor of the Popular Financial Society.

iii) Certificates of freedom from encumbrance of the guarantee assets.

Reports from the Popular Financial Society regarding the verification of the existence, legitimacy, value, and other characteristics of the guarantees.

Regarding guarantees granted by autonomous bodies of the federal entities and municipalities, decentralized bodies, majority state-owned companies, and trusts of the federal entities and municipalities, as well as any other public entity over which the federal entities and municipalities have control over their decisions or actions, in addition to what is previously provided, Popular Financial Societies must document the following:

i) If applicable, evidence of the existence of federal participations or contributions or local revenues as guarantees or source of payment for the credit.

ii) For cases where a trust is established to guarantee and be a source of payment for obligations, a copy of the corresponding contract as well as, if applicable, copies of the decree ordering its constitution and the authorization of the local congress allowing the affectation of federal participations in the said guarantee or source of payment trust, in accordance with what is established in Article 34, fraction II of the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it.

f) Restructuring.

Documentation related to the restructuring of the credit, including:

The conditions and authorization for restructuring or, if applicable, the judicial agreement or both.

Periodic information from the person responsible for judicial or extrajudicial collection of the credit, as well as the corresponding supporting documentation.

g) Charged-off credits.

Information accrediting that the different recovery instances were exhausted or, if applicable, the necessary information according to institutional policies in this matter.

Information through which the corresponding instances request the application of the credit.

. . . "

Article 133 Bis.- Popular Financial Societies that grant Microcredits may use the table of preventive estimates for credit risks contained in Annex D, Section II, subsection d) of these provisions, provided they accredit to the Federation that supervises them in an auxiliary manner that they have the necessary technology and infrastructure to carry out such operations and adhere to what is provided in this article.

Prior to granting Microcredits, Popular Financial Societies must conduct an analysis of the borrower's payment capacity, in accordance with the terms and conditions established in their credit manual, for which they must observe at least the following:

I. Conduct a verification visit or perform an on-site inspection at the place where the borrower carries out their commercial, industrial, or professional services activity.

In cases where the contracting for the granting of a Microcredit is concluded non-presentially, Popular Financial Societies must observe the procedure and limits provided in Provision 4th Bis of the General Provisions referred to in Article 124 of the Popular Savings and Credit Law or those that replace them.

II. Conduct a consultation with a Credit Information Society, in terms of what is provided by Title Four, Chapter Four of these provisions.

In the event that the credit in question is renewed or restructured, the report issued by the Credit Information Society of the borrower must be updated.

The information contained in the previous fractions must be contained in the borrower's credit file. "

" Section F

Provisioning of credit portfolio and assets adjudicated "

" Article 137.- The amount of preventive estimates for credit risks will include the additional estimates required in various regulations, those ordered and recognized by the Commission, and must be recognized in the results of the exercise of the corresponding period.

The additional estimates recognized by the Commission referred to in the previous paragraph are those constituted to cover risks not foreseen in the different methodologies for classifying the credit portfolio and on which, prior to their constitution, Popular Financial Societies must inform the Commission of the following:

I. Origin of the estimates.

II. Methodology for determining the estimates.

III. Amount of estimates to be constituted.

IV. Time considered necessary for the estimates.

Article 137 Bis.- Popular Financial Societies must constitute additional estimates semi-annually, in the months of June and December of each year, recognizing potential value losses due to the passage of time of assets adjudicated judicially or extrajudicially or received in payment in kind, whether movable or immovable assets, as well as collection rights, according to the following procedure:

I. In the case of collection rights and movable assets, including securities in accordance with what is established in fraction II of Article 25 of these provisions, estimates will be constituted as follows:

ESTIMATES FOR COLLECTION RIGHTS AND MOVABLE ASSETS

TIME ELAPSED SINCE ADJUDICATION OR PAYMENT IN KIND (MONTHS)

RESERVE PERCENTAGE

Up to 6

0 %

More than 6 and up to 12

10 %

More than 12 and up to 18

20 %

More than 18 and up to 24

45 %

More than 24 and up to 30

60 %

More than 30

100 %

The amount of estimates to be constituted will be the result of applying the corresponding percentage according to the immediate previous table, to the value of the collection rights or to the value of the movable assets received in payment in kind or adjudicated, obtained in accordance with the Accounting Criteria.

II. Regarding immovable assets, estimates will be constituted according to the following:

ESTIMATES FOR IMMOVABLE ASSETS

TIME ELAPSED SINCE ADJUDICATION OR PAYMENT IN KIND (MONTHS)

RESERVE PERCENTAGE

Up to 12

0 %

More than 12 and up to 24

10 %

More than 24 and up to 30

15 %

More than 30 and up to 36

25 %

More than 36 and up to 42

30 %

More than 42 and up to 48

35 %

More than 48 and up to 54

40 %

More than 54 and up to 60

50 %

More than 60

100 %

The amount of estimates to be constituted will be the result of applying the corresponding percentage according to the immediate previous table, to the adjudication value of the immovable assets obtained in accordance with the Accounting Criteria.

In the event that valuations subsequent to the adjudication or payment in kind result in the accounting registration of a decrease in the value of the collection rights, as well as of the movable or immovable assets, the percentages of preventive estimates referred to in this article may be applied to said adjusted value. "

" Article 145.-

Popular Financial Societies must maintain minimum liquidity levels in relation to their short-term liability operations.

For the purposes of this regulation, "short-term liabilities" shall be understood as liabilities whose maturity term is less than or equal to 30 days and demand deposits.

Popular Financial Societies must maintain a position of at least equivalent to 10 percent of their short-term liabilities, invested in bank demand deposits, as well as in bank securities, government securities, other investments in debt securities, and in cash availability, whose maturity term is equal to or less than 30 days.

The Commission or the corresponding Federation, provided that the latter informs the Commission itself, may increase the liquidity coefficient when, in their judgment and taking into account the risks assumed by the Popular Financial Society in question, such measure is justified. "

Section H

Risk diversification in operations

Article 146.-

Popular Financial Societies, for the purposes of risk diversification in their operations, must observe the following:

I. Asset diversification.

Financing and, if applicable, the guarantees granted by a Popular Financial Society to a natural person shall not exceed 3 percent of its net capital.

Financing that a Popular Financial Society grants to a legal entity, as well as to Popular Financial Societies affiliated with its Federation, shall not exceed 7 percent of its net capital.

For the purposes of this Section, those granted to a natural person that represent a "Common Risk" shall be considered within the calculation of credits granted to a natural person, understanding as such the credits that the Popular Financial Society has granted to relatives by consanguinity in the first degree in the ascending or descending straight line and, if applicable, to the spouse, concubine, or concubinary of the borrower, when any of these persons depends economically on the person requesting the credit.

Likewise, those granted to a single legal entity that represent a "Common Risk" shall be considered within the calculation of credits granted to a single legal entity, understanding as such the credits that the Popular Financial Society has granted to the person or group of natural and legal persons who act in a concerted manner and exercise, directly or indirectly, the administration as owner, or the control of the credited legal entity; legal entities that are controlled, directly or indirectly, by the debtor themselves, regardless of whether they belong or not to the same Business Group; legal entities that belong to the same Business Group; and credits granted to the directors as well as to the Director or General Manager of the legal entity requesting the credit. Also considered for the purposes of this calculation are the credits that the Popular Financial Society has granted to owners of more than 10 percent of the shares with voting rights of the Popular Financial Society requesting the credit, as well as those credits that the Popular Financial Society has granted to companies where the requesting society is the owner of more than 50 percent of the shares with voting rights.

Credits granted to natural persons who are owners of more than 50 percent of the shares with voting rights of companies that in turn have credits contracted with the Popular Financial Society are also subject to the 7 percent limit, in which case credits granted to said companies, as well as credits granted to relatives by consanguinity in the first degree in the ascending or descending straight line and, if applicable, to the spouse, concubine, or concubinary who are economic dependents of the credit applicant, will also be considered for the purposes of the cited limit.

These limits will not be applicable in cases where a Popular Financial Society grants liquidity loans to Popular Financial Societies affiliated with its Federation, as well as to those Popular Financial Societies not affiliated that are supervised in an auxiliary manner by the Federation itself, provided that said credits have been discounted from their capital, in accordance with what is provided by fraction III of Article 36 of the Law.

Financing that has unconditional and irrevocable guarantees, covering the principal and accessories thereof, constituted with any of the means referred to in subsections a) to d) of Section I of Annex D Bis of these provisions, as well as those granted by any of the guarantors referred to in Group I of Section IV of Annex D of these provisions, will not count for the purposes of the maximum financing limit to which this fraction refers, allowing multiple guarantees from these guarantors to be accumulated. Likewise, guarantees granted by guarantors from groups II and III will not count for the purposes of the maximum financing limit referred to in this fraction, up to the equivalent of 75 percent of the value of said guarantees, and multiple guarantees from these guarantors may also be accumulated.

In all cases, the Financing that Popular Financial Societies grant to a natural or legal person, as well as to Popular Financial Societies affiliated with their Federation, shall not exceed 10 percent of their net capital.

II.

. . .

The resources captured by the Popular Financial Society, coming from deposits or loans granted by a single person or company, shall not represent more than once the net capital of the Popular Financial Society. This criterion shall not apply to liabilities contracted with public trusts and national and international development funds, with multiple banking institutions established in the country, nor with national and international development banking institutions.

III.

. . .

The Commission, at the request of the interested Popular Financial Society, accompanied by the opinion of the Federation that exercises auxiliary supervision powers over it, may authorize in exceptional cases, specific operations for amounts higher than the limits indicated in the previous fractions I and II. "

" Article 151.-

Popular Financial Societies, for the determination of capital requirements for credit risk, must adhere to the following procedure:

I. Classification of operations.

Popular Financial Societies must classify their assets and operations that originate contingent liabilities, according to the counterparty of the operation, regardless of the issuer of the underlying asset, into any of the following groups:

a) Group 1. Cash; credits to the Federal Government or with express guarantee of the Federal Government itself and contingent operations carried out with the persons indicated in this subsection; as well as other operations where the counterparty of the Popular Financial Societies is any of the persons mentioned in this group.

b) Group 2. Deposits, securities, and credits issued by, guaranteed, endorsed, or negotiated by credit institutions and brokerage houses; credits issued by or guaranteed or endorsed by public trusts constituted by the Federal Government for economic promotion; credits issued by decentralized bodies of the Federal Government, as well as other operations where the counterparty of the Popular Financial Societies is any of the persons mentioned in this group.

Without prejudice to what is established in the previous paragraph, operations subject to credit risk with or issued by development banking institutions in which, in accordance with their respective organic laws, the Federal Government responds at all times for said operations, will have a credit risk weighting of zero percent.

c) Group 3. Credits and other assets that generate credit risk, where the counterparty of the Popular Financial Societies is different from the persons mentioned in the groups provided in subsections a) and b) above.

. . .

II.

. . .

III.

. . .

. . .

In the case of loans for the acquisition or construction of personal housing that have a guarantee of at least 50 percent of the outstanding balance of the loan granted by any public promotion entity, for the purposes of capitalization requirements, Popular Financial Societies will consider the guaranteed portion of the credit within group 2 and the remaining non-guaranteed portion within group 3.

. . .

Regarding repo operations, Popular Financial Societies must determine prior to the credit risk weighting, the result of subtracting from the repo debtor's balance, the corresponding fair value of the collateral received in each operation, referred to in the Accounting Criteria contained in Annex E of these Provisions. In the event that the obtained result is positive, said difference will be multiplied by the weighting corresponding to the risk group of the counterparty.

Additionally, for the purposes of what is stated in this article, Popular Financial Societies may deduct from the total amount of each credit, up to 100 percent of money deposits constituted by the borrower themselves or by third parties who are clients in the Popular Financial Society, that meet the conditions to be considered a guarantee in terms of what is provided by Annex D, Section IV of these provisions. The amount to be deducted shall not be higher than the outstanding balance of the credit.

Likewise, Popular Financial Societies may recognize the coverage provided by First-Loss Coverage Schemes or Step-and-Measure Coverage Schemes. In order to determine the corresponding weightings for operations covered by said schemes, Popular Financial Societies must comply with the following:

I. To the covered portion, which may be up to 100 percent, the risk weighting corresponding to that of the Protection Provider will be assigned, while to the rest of the position, the risk weighting of the underlying counterparty will be assigned, according to what is indicated below. Only the following Protection Providers are eligible, both in the case of First-Loss Coverage Schemes and in Step-and-Measure or proportional Coverage Schemes:

a) Group 1 (Weighting of 0 %):

Development banking institutions.

National Financial Institution for Agricultural, Rural, Forestry, and Fisheries Development or the one that replaces it.

Public trusts that are part of the Mexican financial system in accordance with Article 3 of the Credit Institutions Law.

Trusts celebrated specifically with the purpose of sharing credit risk, in which development banking institutions with express guarantee of the Federal Government act as settlors and trustees.

The National Guarantee Fund for the Agricultural, Forestry, Fisheries, and Rural Sectors.

National Infrastructure Fund.

Entities of the Federal Public Administration under direct budgetary control, state productive companies, or programs derived from a federal law that are part of the Federation Expenditure Budget.

Funds constituted with resources contributed as guarantee by state or municipal governments that are liquid and irrevocable in favor of the Popular Financial Society.

b) Group 2 (Weighting of 20 %):

National multiple banking institutions that have a rating of at least investment grade on the national scale.

Other entities belonging to the Mexican financial system, including insurance companies that have at least investment grade on the national scale.

Other legal persons or international financial entities that have at least investment grade on the international scale.

c) Group 3 (Weighting of 100 %):

Other clients of the same Popular Financial Society.

II. In the case of First-Loss Coverage Schemes for credit portfolios, they must be subject to the following:

a) If the amount of said coverage is equal to or higher than the sum of the capital requirements of the credits constituting the portfolio, no capital will be required for the total of the individual credits as there is no uncovered portion. For the part covered by the First-Loss Coverage Scheme, capital will be required in accordance with the credit risk before the guarantor. In this case, the covered part is equal to the sum of the capital requirements of the individual credits.

b) If the amount of the coverage is lower than said sum of capital requirements for the individual credits, the Popular Financial Society will constitute capital for the uncovered part for an amount equal to the difference between both concepts. For the part covered by the First-Loss Coverage Scheme, capital will be required in accordance with the credit risk before the guarantor. In this case, the covered part is equal to the value of the First-Loss Coverage Scheme.

III. In the case of guarantees under the Step-and-Measure Coverage Scheme, where the guarantee does not cover the total exposure and, in addition, the covered and non-guaranteed portions have the same precedence, reductions in total capitalization requirements will be allowed proportionally, that is, the covered part of the position will receive the treatment applicable to admissible guarantees and the rest will be considered as unguaranteed. "

" Article 192.-

Popular Financial Societies must have a credit manual approved by the Board of Directors upon proposal of the audit committee referred to in Article 183 of these provisions, to which the Credit Committee or its equivalent must adhere. The manual must contain the credit strategies, policies, and procedures, with the minimum guidelines in the stages of the process"

crediticio siguientes:

I.

. . .

a)

Popular Financial Societies must establish within the credit manual, methodologies for the evaluation, approval, and granting of the different types of credit, and must observe, as applicable, the following:

1. to 6.

. . .

b)

The Credit Committee or its equivalent shall be the body responsible for approving credits requested from the Popular Financial Society, although it may delegate its functions to subcommittees, either regional or by branch, provided that the existence of such subcommittees is provided for in the credit manual of the Popular Financial Society, which must be composed of officials from the Popular Financial Society itself.

For such approval, they must follow the guidelines established for this purpose in the manual.

c)

Popular Financial Societies may establish in the credit manuals automatic credit authorization processes that allow granting the corresponding credit to any applicant, provided that the conditions indicated below are met:

. . .

Identification of the applicant, as well as the purpose for which the credit is requested or, if applicable, characteristics of the deposits that the applicant maintains in the Popular Financial Society;

. . .

Regarding credits for which Popular Financial Societies have 100 percent guarantees constituted with cash funds, as provided in Annex D, Section IV of these provisions, Popular Financial Societies shall be relieved of the obligation to have the approval of the Credit Committee or its equivalent. This is based on the limits established by their Board of Directors regarding this matter.

. . .

II.

. . .

a)

Popular Financial Societies must maintain control of credit activity through the Supervisory Board or Comptroller or, if applicable, delegate it to a third party that has no conflict of interest with the areas involved in the credit granting process. The objective of this control function will be to verify:

1. and 2.

. . .

That the officials and employees of the Popular Financial Society are fulfilling the responsibilities assigned to them, without exceeding the powers delegated to them.

b)

. . .

To corroborate the timely and proper delivery of the various files, reports, and information among the different officials, areas, and corporate bodies involved in the credit activity of the Popular Financial Society, as well as the delivery of said documents to the competent authorities. This includes verifying that there is adequate control of credit files;

To review that the classification of the credit portfolio is carried out in accordance with current regulations and the manual of Popular Financial Societies. This review may be carried out through a representative sample of the credit portfolio of the Popular Financial Society;

. . .

. . .

To ensure that the corresponding areas give individual and permanent follow-up to each of the credits of the Popular Financial Society and, if applicable, that the different stages established by the credit manual during the validity of said credits are fulfilled, and

. . .

c)

. . .

III.

. . .

Popular Financial Societies must evaluate and give permanent follow-up to each of the credits in their portfolio, including the guarantees and guarantors, treating the latter in the same manner as the borrowers.

. . .

IV.

. . .

. . .

. . .

. . .

V.

. . .

Popular Financial Societies must have automated credit information systems, which as a minimum must:

a) to d)

. . .

VI.

. . .

Popular Financial Societies must establish policies and procedures for the integration of a single file for each borrower, which will contain at least the documentation and information detailed below.

. . .

. . .

Of the information that borrowers provide periodically to Popular Financial Societies, the corresponding information for the last two fiscal years must be kept in the respective file.

Popular Financial Societies must designate personnel responsible for integrating and updating the files, as well as for controlling the consultation service of said files.

. . .

. . .

. . .

a)

. . .

b)

. . .

1. to 3.

. . .

. . .

i)

In the case of legal entities, internal financial statements (they must also include audited financial statements if so indicated by the policies of the Popular Financial Society) of the borrower and, if applicable, of the guarantor or joint obligor, with the autograph signature of the legal representative, with an age not greater than 180 days;

ii)

. . .

iii)

Document supporting the analysis carried out on the payment capacity of the debtor and, if applicable, of the guarantor or joint obligor;

iv)

. . .

v)

The documentation accrediting that a prior consultation was made before a Credit Information Society, as provided in Chapter IV of Title Four of these provisions, as well as information on the borrower's history regarding compliance with their obligations with the Popular Financial Society, and

vi)

. . .

c)

. . .

d)

In the case of autonomous bodies of the federal entities and municipalities, decentralized bodies, majority state-owned companies, and trusts of the federal entities and municipalities, as well as any other public entity over which these federal entities and municipalities have control over their decisions or actions, the file must contain, in addition to what is provided in the previous subsections, the following:

Credit application duly filled out and signed, either autographically or electronically by an authorized public servant, or the invitation to participate in Financing in accordance with the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it. In both cases, Popular Financial Societies must record the evidence and criteria that originated said offer.

Credit studies where the borrower and guarantor are analyzed, when the latter is considered in the credit rating process.

Financial information of the borrower.

Credit authorizations by the Popular Financial Society.

Copy of the Revenue Law and Expenditure Budget or modified budgets for governments of the federal entities and municipalities of the fiscal year in which the income and destination of the Financing are documented.

In the case of municipal governments, copy of the council minutes and the copy of the official dissemination medium of the federal entity containing the decree of the local congress in which the authorization for the contracting of credits is recorded, in accordance with what is established in the Financial Discipline Law of the Federal Entities and Municipalities and in the Regulation of the Unique Public Registry referred to in said Law or the ones that replace it.

In the case of governments of the federal entities, copy of the copy of its official dissemination medium containing the decree of the local congress in which the authorization for the contracting of credits is recorded, in accordance with what is provided in the Financial Discipline Law of the Federal Entities and Municipalities and in the Regulation of the Unique Public Registry referred to in said Law or the ones that replace it.

For cases where a trust is established to guarantee or be a source of payment for the obligations, copy of the corresponding contract, as well as, if applicable, copy of the decree ordering its constitution, and of the authorization of the local congress that allows the affectation of participations, federal contributions, or local revenues in said guarantee or source of payment trust.

Document stating that the credit is registered in the Unique Public Registry referred to in the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it. This shall also apply to refinancings and restructurings of said credits.

In the case of short-term credits referred to in the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it, Popular Financial Societies will have a period not greater than 40 natural days to integrate into the credit file the document stating the registration in the registry mentioned in the preceding paragraph. Regarding refinancings and restructurings of credits referred to in article 23 of said law, Popular Financial Societies will have a period not greater than 15 natural days to carry out the integration of the file established in this paragraph. The stated periods will be calculated from the day following the day on which said credits were contracted.

As an exception to what is provided in the preceding paragraph and once the stated periods have passed without having the registration in the Unique Public Registry referred to in the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it, Popular Financial Societies must have the corresponding registration request, as well as evidence that they requested the public entity within the periods and terms established in said law, the registration of the credit in said Unique Public Registry, delivering to said entities the necessary information for this purpose. Without prejudice to the foregoing, when registration in said Unique Public Registry is obtained, Popular Financial Societies must integrate the document demonstrating it into the respective file.

Additionally, when it comes to credits corresponding to Guaranteed State Debt in terms of the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it, evidence of the registration of the Federal Public Sector Debt in the Unique Public Registry referred to in article 49 of said law must be available.

Document substantiating that the credit is within the Net Financing Ceiling in terms of the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it, allowed to the public entity, in accordance with the publication made by the Secretariat on the indicators comprising the Alerts System of public entities referred to in said law.

Evidence that the credits are registered in the accounting of the public account of the borrower corresponding, when applicable.

In the case of autonomous bodies of the federal entities and municipalities, decentralized bodies, majority state-owned companies, and trusts of the federal entities and municipalities, as well as any other public entity over which the federal entities and municipalities have control over their decisions or actions, information allowing the evaluation of the financial situation of the borrower for credit rating purposes and in accordance with the internal policies of the Popular Financial Society, such as internal financial statements with the autograph signature of the legal representative or attorney-in-fact, as well as the audited financial statements of the corresponding borrower for the last three fiscal years.

Information allowing the appreciation of the borrower's behavior in the fulfillment of their credit obligations with the Popular Financial Society, such as disbursements, payments made, renewals, restructurings, haircuts, adjudications, or dations in payment, as well as any other that supports the rating granted to the credit in question.

Annual update of the report issued by a Credit Information Society of the credit applicant and, if applicable, of the joint obligor, guarantor, or surety.

Report on the fulfillment of the obligations agreed upon in the credit contract.

Quarterly update of the credit status in the Unique Public Registry in accordance with the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it.

Document stating the last status of the borrower in the Alerts System, in accordance with the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it.

In the case of credits to federal entities and municipalities that are guaranteed in accordance with Chapter IV of Title Three of the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it, the most recent document stating the follow-up to the evaluation carried out by the Secretariat on the compliance of the agreements for the contracting of Guaranteed State Debt in accordance with article 40 of said law by the federal entity or municipality.

Likewise, regarding the public entities referred to in article 47 of the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it, Popular Financial Societies must have the last document stating the follow-up to the evaluation carried out by the federal entity or municipality, as applicable, of the agreement referred to in said article.

Regarding credits that Popular Financial Societies grant to the City of Mexico, they must have the latest reports referred to in fraction VIII of article 33 of the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it.

e)

Guarantees.

Documentation to be collected in order to evidence the existence of guarantees in favor of the Popular Financial Society for the credit granted and information related to the custody, safekeeping, and follow-up given to said guarantees, such as:

i)

Appraisals of the goods that guarantee the debt.

Popular Financial Societies, in their credit manuals, must provide that appraisals are prepared in terms of what is provided in the Transparency and Competition Promotion Law in Guaranteed Credit and in accordance with what is established in Annex D Bis, Section VII of these provisions.

ii)

Insurance policies on the guarantees in favor of the Popular Financial Society.

iii)

Certificate of freedom of encumbrance of the guarantee goods.

Reports from the Popular Financial Society on the verification of the existence, legitimacy, value, and other characteristics of the guarantees.

Regarding guarantees granted by autonomous bodies of the federal entities and municipalities, decentralized bodies, majority state-owned companies, and trusts of the federal entities and municipalities, as well as any other public entity over which the federal entities and municipalities have control over their decisions or actions, in addition to what is provided previously, Popular Financial Societies must document the following:

i)

If applicable, evidence of the existence of participations or federal contributions or local revenues as guarantees or source of payment of the credit.

ii)

For cases where a trust is established to guarantee and be a source of payment for the obligations, copy of the corresponding contract as well as, if applicable, copies of the decree ordering its constitution, and of the authorization of the local congress that allows the affectation of federal participations in said guarantee or source of payment trust, in accordance with what is established in article 34, fraction II of the Financial Discipline Law of the Federal Entities and Municipalities or the one that replaces it.

f)

Restructuring.

The documentation related to the restructuring of the credit, including:

The conditions and authorization of restructuring or, if applicable, the judicial agreement or both.

Periodic information from the person responsible for the judicial or extrajudicial collection of the credit, as well as the corresponding supporting documentation.

g)

Charged-off credits.

Information accrediting that the different recovery instances were exhausted or, if applicable, the necessary information in accordance with institutional policies in this matter.

Information through which the corresponding instances request the application of the credit.

. . . "

" Article 196 Bis.- Popular Financial Societies that grant Microcredits may use the table of preliminary estimates for credit risks contained in Annex D, Section II, subsection d) of these provisions, provided that they accredit to the Federation that supervises them in an auxiliary manner, that they have the necessary technology and infrastructure to carry out such operations and comply with what is provided in this article.

Prior to granting Microcredits, Popular Financial Societies must carry out an analysis of the borrower's payment capacity, in accordance with the terms and conditions established in their credit manual, for which they must observe as a minimum the following:

I.

Carry out a verification visit or perform an eye inspection at the place where the borrower carries out their commercial, industrial, or professional services activity.

In cases where the contracting for the granting of Microcredit is concluded remotely, Popular Financial Societies must observe the procedure and limits provided in provision 4th Bis of the General Provisions referred to in article 124 of the Popular Savings and Credit Law or the ones that replace it.

II.

Carry out a consultation with a Credit Information Society, in terms of what is provided in Title Four, Chapter IV of these provisions.

In the event that the credit in question is renewed or restructured, the report issued by the Credit Information Society of the borrower must be updated.

The information contained in the previous fractions must be contained in the credit file of the borrower. "

" Section F

Provisioning of credit portfolio and adjudicated assets "

" Article 201 Bis.- The amount of preliminary estimates for credit risks will include the additional estimates required in various regulations and those ordered and recognized by the Commission, and must be recognized in the results of the exercise of the period corresponding.

The additional estimates recognized by the Commission referred to in the preceding paragraph are those constituted to cover risks that are not provided for in the different portfolio rating methodologies and on which, prior to their constitution, Popular Financial Societies must inform the Commission of the following:

I.

Origin of the estimates.

II.

Methodology for determining the estimates.

III.

Amount of estimates to be constituted.

IV.

Time considered necessary for the estimates.

Article 202.- Popular Financial Societies must constitute additional estimates semi-annually, in the months of June and December of each year, recognizing potential losses of value due to the passage of time of assets adjudicated judicially or extrajudicially or received in dation in payment, whether movable or immovable goods, as well as receivables, according to the following procedure:

I.

In the case of receivables and movable goods, including securities in accordance with what is established in fraction II of Article 25 of these Provisions, the estimates will be constituted as follows:

ESTIMATES FOR RECEIVABLES AND MOVABLE GOODS

TIME ELAPSED SINCE

ADJUDICATION OR DATION IN PAYMENT (MONTHS)

RESERVE PERCENTAGE

Up to 6

0 %

More than 6 and up to 12

10 %

More than 12 and up to 18

20 %

More than 18 and up to 24

45 %

More than 24 and up to 30

60 %

More than 30

100 %

The amount of estimates to be constituted will be the result of applying the corresponding percentage according to the table immediately above, to the value of the receivables or to the value of the movable goods received in dation in payment or adjudicated, obtained in accordance with the Accounting Criteria.

II.

Regarding immovable goods, estimates will be constituted according to the following:

ESTIMATES FOR IMMOVABLE GOODS

TIME ELAPSED SINCE ADJUDICATION

OR DATION IN PAYMENT (MONTHS)

RESERVE PERCENTAGE

Up to 12

0 %

More than 12 and up to 24

10 %

More than 24 and up to 30

15 %

More than 30 and up to 36

25 %

More than 36 and up to 42

30 %

More than 42 and up to 48

35 %

More than 48 and up to 54

40 %

More than 54 and up to 60

50 %

More than 60

100 %

The amount of estimates to be constituted will be the result of applying the corresponding percentage according to the table immediately above, to the adjudication value of the immovable goods obtained in accordance with the Accounting Criteria.

In the event that valuations subsequent to the adjudication or dation in payment result in the accounting registration of a decrease in the value of the receivables, as well as movable or immovable goods, the percentages of preliminary estimates referred to in this article may be applied to said adjusted value.

Section G

Guidelines on liquidity coefficient

Article 203.-

Popular Financial Societies must maintain minimum liquidity levels in relation to their short-term liability operations.

For the purposes of this regulation, "short-term liabilities" shall be understood as liabilities whose maturity term is less than or equal to 30 days and demand deposits.

Popular Financial Societies must maintain a position of at least the equivalent to 10 percent of their short-term liabilities, invested in demand bank deposits, as well as in bank securities, government securities, other investments in debt securities, and liquid funds, whose maturity term is equal to or less than 30 days.

The Commission or the corresponding Federation, provided that it informs the Commission thereof, may increase the liquidity coefficient when, in their judgment and taking into account the risks assumed by the Popular Financial Society in question, such measure is justified. "

Section H

Risk diversification in operations

Article 204.-

Popular Financial Societies, for the purposes of risk diversification in their

operations, they must observe the following:

I.

Asset Diversification.

The Financings and, where applicable, the guarantees granted by Popular Financial Societies to a natural person shall not exceed 3 percent of their net capital.

The Financings that a Popular Financial Society grants to a legal entity, as well as to the Popular Financial Societies affiliated with its Federation, shall not exceed 7 percent of their net capital.

For the purposes of this Section, those credits representing a "Common Risk" shall be considered within the calculation of credits granted to a natural person, understood as such those credits that the Popular Financial Society has granted to relatives by consanguinity in the first degree in the ascending or descending straight line and, where applicable, to the spouse, concubine, or concubine of the borrower, when any of these persons depends economically on the person requesting the credit.

Likewise, those credits representing a "Common Risk" shall be considered within the calculation of credits granted to a single legal entity, understood as such those credits that the Popular Financial Society has granted to the person or group of natural and legal persons who act in a concerted manner and exercise, directly or indirectly, the administration on title of owner, or the control of the credited legal entity; the legal entities that are controlled, directly or indirectly, by the debtor themselves, regardless of whether they belong to the same Business Group; the legal entities that belong to the same Business Group; and the credits granted to the directors as well as to the Director or General Manager of the legal entity requesting the credit. Also considered for the purposes of this calculation are the credits that the Popular Financial Society has granted to the owners of more than 10 percent of the shares with voting rights of the Popular Financial Society requesting the credit, as well as those credits that the Popular Financial Society has granted to companies where the requesting society owns more than 50 percent of the shares with voting rights.

Credits granted to natural persons who own more than 50 percent of the shares with voting rights of companies that in turn have credits contracted with the Popular Financial Society are also subject to the 7 percent limit, in which case the credits granted to said companies, as well as the credits granted to relatives by consanguinity in the first degree in the ascending or descending straight line and, where applicable, to the spouse, concubine, or concubine who are economic dependents of the credit applicant, will also be considered for the purposes of the aforementioned limit.

These limits shall not apply in cases where a Popular Financial Society grants liquidity loans to the Popular Financial Societies affiliated with its Federation, as well as to those Popular Financial Societies not affiliated that are supervised in an auxiliary manner by the Federation itself, provided that such credits have been discounted from their capital, in accordance with what is provided in fraction III of article 36 of the Law.

Financings that have unconditional and irrevocable guarantees, which cover the principal and the accessories thereof, constituted with any of the means referred to in Annex D Bis, Section I, items a) to d) of these provisions, as well as those granted by any of the guarantors referred to in Group I of Section IV of Annex D of these provisions, shall not count for the purposes of the maximum financing limit to which this fraction refers, allowing multiple guarantees from these guarantors to be accumulated. Likewise, guarantees granted by guarantors from groups II and III shall not count for the purposes of the maximum financing limit referred to in this fraction, up to the equivalent of 75 percent of the value of said guarantees, and multiple guarantees from these guarantors may also be accumulated.

In all cases, the Financings that a Popular Financial Society grants to a legal entity, as well as to the Popular Financial Societies affiliated with its Federation, shall not exceed 10 percent of their net capital.

II.

. . .

The resources captured by the Popular Financial Society, coming from deposits or loans granted to the Popular Financial Society by a single person or company, shall not represent more than once the net capital of the Popular Financial Society. This criterion shall not apply to liabilities contracted with public trusts and national and international development funds, with multiple banking institutions established in the country, nor with national and international development banking institutions.

III.

. . .

The Commission, at the request of the interested Popular Financial Society, accompanied by the opinion of the Federation that exercises auxiliary supervision powers over it, may authorize in exceptional cases, specific operations for amounts higher than the limits indicated in fractions I and II of this article.

" Article 207 Bis.- The Commission, in the case of credits granted to public entities referred to in the Law on Financial Discipline of the Federal Entities and Municipalities or the one that replaces it, may order the constitution and maintenance of additional preventive estimates derived from the qualification process, for 100 percent of the credit debt balance, when the following is not contained in the corresponding files or cannot be proven by the Popular Financial Societies:

I.

Document stating that the credit is registered in the Unique Public Registry referred to in the Law on Financial Discipline of the Federal Entities and Municipalities or the one that replaces it. The foregoing shall also apply to refinancing and restructuring of said credits.

II.

Document justifying that the credit is within the Net Financing Ceiling in terms of the Law on Financial Discipline of the Federal Entities and Municipalities or the one that replaces it, allowed to the public entity, in accordance with the publication made by the Secretariat on the indicators comprising the Alert System for public entities referred to in said law. "

TRANSITORY CLAUSES

FIRST.- This Resolution shall enter into force the day following its publication in the Official Journal of the Federation, except as referred to in the SECOND and THIRD Transitory Articles below.

SECOND.- For the purposes of constituting additional estimates for assets adjudicated and received in payment in kind, financial information disclosure, and comparison of financial statements, in accordance with what is provided in this Resolution, Popular Financial Societies and Community Financial Societies must observe the following:

I.

By no later than June 30, 2022, recognize in the accounting capital registered in the balance sheet, within the result of prior years, the initial accumulated financial effect derived from the use of the methodologies referred to in Section D of First Section, Section F of Second Section, Section F of Third Section, and Section F of Fourth Section, all of them in Chapter III of Title IV that are reformed with this instrument.

The foregoing, in order to constitute the total amount of estimates for assets adjudicated and received in payment in kind.

II.

Within the year following the entry into force of this Resolution, disclose in the corresponding quarterly and annual financial statements, as well as in any public financial information communication, at minimum, the following:

a)

That they performed the recognition of the initial accumulated financial effect derived from the first application of the methodology referred to in these provisions, in accordance with this Transitory Article;

b)

A detailed explanation of the accounting record made for the recognition of the initial accumulated financial effect;

c)

The amounts that have been recorded and presented, both in the balance sheet and in the income statement, had the recognition of the initial accumulated financial effect been made in the results of the period;

d)

A detailed explanation on the items and amounts for which the accounting impact was made, and

e)

A comparison between the amounts of estimates for assets adjudicated and received in payment in kind, calculated with the methodologies referred to in this instrument, against the estimates for assets adjudicated and received in payment in kind used prior to the entry into force of this Resolution.

For the purposes of the aforementioned fractions I and II, "initial accumulated financial effect" shall be understood as the difference resulting from comparing, on the same date and value of the adjudicated asset and received in payment in kind, the estimates constituted in the financial statements with the previous methodology, against the previously referred methodologies.

THIRD.- Popular Financial Societies and Community Financial Societies, in order to constitute the total amount of preventive estimates for credit risks derived from the use of the methodologies referred to in Annex D that is replaced with this instrument, must observe the following:

I.

Recognize in the accounting capital, within the result of prior years, the initial financial effect derived from the application of the methodologies cited in the first paragraph of this Transitory Article. For the purposes of this fraction, "initial financial effect" shall be understood as the difference resulting from subtracting, on the same date, the estimates that must be constituted for the portfolio balance applying the aforementioned methodology as of July 1, 2022, minus the estimates that would be had for the balance of said portfolio, with the methodology in force as of June 30, 2022.

II.

Recognize in the results of the 2022 period, the difference that results when the amount of estimates to be constituted by the application of the methodology in force from July 1, 2022, is greater than the balance of the prior years results item.

III.

Release the excess when the preventive estimates for credit risks that they had constituted prior to July 1, 2022, were greater than 100 percent of the amount required in accordance with the methodology in force from July 1, 2022, carrying out any of the following actions:

a)

Adhere to what is provided in the Accounting Criteria referred to in Article 211 of the "General Provisions applicable to popular savings and credit entities, integration bodies, community financial societies, and rural financial integration organizations, referred to in the Popular Savings and Credit Law" in force prior to the entry into force of this Resolution.

b)

Retain the excess indicated in the first paragraph of this fraction, until such time as the credits that gave rise to them are settled, defaulted, renewed, or restructured. Once said credits are settled, defaulted, renewed, or restructured, Popular Financial Societies and Community Financial Societies must release the excess in accordance with the Accounting Criteria.

IV.

Disclose in the quarterly and annual financial statements, as well as in any public financial information communication, at minimum, the following:

a)

That they performed the recognition of the accumulated financial effect derived from the application of the methodologies referred to in this resolution in accordance with fractions I to III of this Transitory Article;

b)

A detailed explanation of the accounting record made for the recognition of said effect;

c)

The amounts that have been recorded and presented, both in the balance sheet and in the income statement, had the recognition of the aforementioned effect been made in the results of the period;

d)

A detailed explanation on the items and amounts for which the accounting impact was made, and

e)

The comparison between the amounts of preventive estimates for credit risks, calculated with the methodologies referred to in this instrument, against the preventive estimates determined in accordance with the methodology in force prior to the entry into force of this Resolution.

Respectfully,

Mexico City, June 24, 2021. - National Banking and Securities Commission: President, Juan Pablo Graf Noriega.- Signature.

ANNEX D

PROCEDURE FOR THE QUALIFICATION AND CONSTITUTION OF PREVENTIVE ESTIMATES

I.

Consumer Credit Portfolio

Popular Financial Societies must qualify and constitute the corresponding preventive estimates for their consumer credit portfolio, with figures as of the last day of each calendar month, adjusting to the following procedure:

a)

They must classify the entirety of their consumer credit portfolio, based on the number of days of delay or delinquency elapsed from the day of the first amortization of the credit, which has not been covered by the borrower as of the qualification date.

b)

For each stratum, they must maintain and, where applicable, constitute the preventive estimates resulting from applying to the total amount of their consumer credit portfolio, including the interest they generate, the provisioning percentages indicated below:

Days of delinquency

Type I

Type II

(Marginalized Zone)

Percentage (%) of

preventive estimates

Percentage (%) of

preventive estimates

0

1

1

1 to 7

4

1

8 to 30

15

4

31 to 60

30

30

61 to 90

50

60

91 to 120

75

80

121 to 180

90

90

181 or more

100

100

Type II consumer credit portfolio shall be understood as credits granted to persons residing in a marginalized zone.

In any case, the amount subject to qualification shall not include accrued but uncollected interest, registered in the balance sheet, of credits that are in the non-performing portfolio.

II.

Commercial Credit Portfolio

Popular Financial Societies must qualify and constitute the corresponding preventive estimates for their commercial credit portfolio, with figures as of the last day of each calendar month, adjusting to the following procedure:

a)

They must classify the entirety of their commercial credit portfolio, based on the number of days of delay or delinquency elapsed from the day of the first amortization of the credit that has not been covered by the borrower as of the qualification date.

b)

For each stratum, they must maintain and, where applicable, constitute the preventive estimates resulting from applying to the total amount of their commercial credit portfolio the percentage of estimates corresponding in accordance with the Table referred to in item c) of this section.

c)

They must classify their credit portfolio as follows:

Portfolio 1, that credit portfolio whose credits have not been subject to restructuring as a result of their distress.

Portfolio 2, that credit portfolio whose credits have been restructured due to their distress, shall be provisioned using the percentages in the column identified as "Portfolio 2".

For the purposes of the aforementioned items 1 and 2, distressed credits shall be understood as those commercial credits regarding which it is determined that, based on current information and facts, as well as in the credit review process, there is a considerable probability that their total amount of principal and interest cannot be recovered in full, in accordance with what is established in the contract. Both the performing and non-performing portfolio are susceptible to being identified as distressed portfolio.

Days of delinquency

Percentage (%) of preventive estimates

Portfolio 1

Percentage (%) of

preventive estimates

Portfolio 2

0

0.50

10

1 to 30

2.5

10

31 to 60

15

30

61 to 90

30

40

91 to 120

40

50

121 to 150

60

70

151 to 180

75

95

181 to 210

85

100

211 to 240

95

100

More than 240

100

100

In any case, the amount subject to qualification shall not include accrued but uncollected interest, registered in the balance sheet, of credits that are in the non-performing portfolio.

d)

Regarding Microcredits, Popular Financial Societies shall apply to the amounts resulting from the procedure described in item a) of this fraction, the provisioning percentages indicated in the following table, maintaining and, where applicable, constituting the corresponding preventive estimates for each stratum:

Days of delinquency

Type I

Type II

(Marginalized Zone)

Percentage (%) of

preventive estimates

Percentage (%) of

preventive estimates

0 to 7

1

1

8 to 30

5

2.5

31 to 60

20

20

61 to 90

40

50

91 to 120

70

80

more than 120

100

100

Type II commercial credit portfolio shall be understood as credits granted to persons residing in a marginalized zone.

III.

Housing Credit Portfolio

Popular Financial Societies must qualify and constitute the corresponding preventive estimates for their housing credit portfolio, with figures as of the last day of each calendar month, adjusting to the following procedure:

a)

They must classify the entirety of their housing credit portfolio, based on the number of days of delay or delinquency elapsed from the day of the first amortization of the credit, which has not been covered by the borrower as of the qualification date.

b)

For each stratum, they must maintain and, where applicable, constitute the preventive estimates resulting from applying to the total amount of their housing credit portfolio, including the interest they generate, the provisioning percentages indicated below:

Days of delinquency

Percentage (%) of

preventive estimates

0

0.35

1 to 30

1.05

31 to 60

2.45

61 to 90

8.75

91 to 120

17.50

121 to 150

33.25

151 to 180

34.30

181 to 1460

70

More than 1460

100

In any case, the amount subject to qualification shall not include accrued but uncollected interest, registered in the balance sheet, of credits that are in the non-performing portfolio.

Popular Financial Societies may constitute the preventive estimates referred to in this Section III, for the part of the amount of their credits that is covered with duly registered mortgage guarantees in their name, being applicable to them the percentage corresponding in accordance with the previous table, while to the uncovered part shall correspond a percentage of 100 percent, without the recognition of real estate guarantees provided for in Section IV of this Annex being applicable.

In those credits intended for remodeling or improvement of housing that do not have a duly registered mortgage guarantee in the name of the Popular Financial Society, to qualify and constitute the corresponding preventive estimates, they must apply the table referred to in Section I of this Annex.

IV.

Adjustments to Preventive Estimates and Recognition of Guarantees

Popular Financial Societies may only recognize reductions in the days of delinquency of credits that have been subject to restructuring or renewal, once there is sustained payment, in accordance with what is established in the Accounting Criteria. When making such modifications, they shall adhere to the policies that the Popular Financial Society itself has approved for such effect.

When Popular Financial Societies have guarantees that comply with what is provided in Annex D Bis, Section I of these provisions, they may reduce the percentage of preventive estimates of the credit or credits in question, taking the necessary measures so that the guarantee can be adjudicated and executed at the moment that defaults occur on the part of the borrower, placing them in the non-performing portfolio, in accordance with what is established in the Accounting Criteria. The uncovered part shall maintain the percentage of preventive estimates corresponding to it.

Popular Financial Societies may only recognize reductions in the days of delinquency derived from the application of personal and non-financial real guarantees of credits that have been subject to restructuring or renewal when there is sustained payment, and they must take the necessary measures so that the guarantee can be adjudicated and executed at the moment that defaults occur on the part of the borrower, placing them in the non-performing portfolio, in accordance with what is established in the Accounting Criteria. In the event that the management for the adjudication and execution of the guarantee does not begin at the moment the credit is classified as non-performing portfolio, Popular Financial Societies must cease to recognize the coverage provided by said guarantee and assign the preventive estimates corresponding to the days of delinquency recorded.

The guarantees constituted in terms of the previous paragraph, may cover the total or a determined percentage of the outstanding balance of one or more credits and, provided that, in the deposit contracts or in the modifications to these, it is foreseen that there is no possibility of making withdrawals or disposing of the referred guarantees during the validity of the credits and that these can be covered from such deposits or values.

Popular Financial Societies, when qualifying credits that have 2 or more guarantees, may recognize the coverage of said guarantees considering the following:

a)

They will determine the part of the balance that is covered by 2 or more guarantees, whether they are means of payment with immediate liquidity, non-financial guarantees, or Step-by-Step Coverage Schemes or First Loss Coverage Schemes, as well as the exposed or uncovered portion in the terms described.

b)

The covered part of the credit balance can be divided into 2 or more segments, based on the type of guarantees that have been granted, provided that they adjust to the following:

If there are 2 or more Step-by-Step Coverage Schemes or First Loss Coverage Schemes, each guarantor must respond for the guaranteed part of the credit balance, provided that there are no exceptions or defenses of priority order in collection among the guarantors themselves.

If there are 2 or more guarantees constituted with means of payment with immediate liquidity or non-financial guarantees, each of them must cover the guaranteed part of the credit balance, provided that it has been expressly agreed

in the contracts that give rise to the guarantee, the portion of the credit that will remain guaranteed with each encumbered asset.

In the case of combinations of Step and Measure Coverage Schemes or First-Loss Coverage Schemes and payment instruments with immediate liquidity or non-financial guarantees, each of them may be considered, provided that they are enforceable at the time of classification and meet the requirements established in subsections a) and b) of this Section.

Upon receiving guarantees whose validity is subject to the fulfillment of terms and conditions by the Popular Financial Society, the creditor of the guarantee, and if the latter fails to comply with such terms and conditions, the guarantee shall not be considered for the purposes of this Section.

Popular Financial Societies may not simultaneously take Step and Measure Coverage Schemes or First-Loss Coverage Schemes and payment instruments with immediate liquidity or non-financial guarantees from the same guarantor.

Popular Financial Societies may choose not to recognize guarantees if doing so results in higher preventive provisions.

The credit balance for the purposes of portfolio classification shall not include accrued but uncollected interest on credits in the delinquent portfolio, as these shall be reserved separately applying a 100% provision.

Regarding guarantees constituted with payment instruments with immediate liquidity provided for in Annex D Bis, Section I, subsections a), b), c), and d) of these provisions, with respect to which the application of said resources to the entire outstanding balance or to a certain percentage of the outstanding balance of the credit can be ensured, Popular Financial Societies may exempt the covered portion of the credit with such guarantees from the constitution of preventive provisions.

Regarding guarantees constituted with payment instruments with immediate liquidity provided for in Annex D Bis, Section I, subsections e) and f) of these provisions, with respect to which the application of said resources to the entire outstanding balance or, if applicable, to a certain percentage of the outstanding balance of the credit can be ensured, Popular Financial Societies shall constitute provisions for the covered portion corresponding to a percentage of 0.5 percent.

In the event that Popular Financial Societies are beneficiaries under the First-Loss Coverage Scheme for a credit or for a portfolio of identified credits with similar characteristics, they shall apply the following procedure:

a)

If applicable, ensure that the credits comprising the portfolio covered by the received guarantee are clearly identified and have similar characteristics.

b)

Calculate the provision requirement for the credit, or for each of the credits in the covered portfolio according to the methodologies described in fractions I to IV of this Annex, as applicable, and in the case of credit portfolios, sum the results of each credit to determine the total provision requirement for said portfolio.

c)

The total provisions calculated according to the previous subsection b) shall be compared with the value of the corresponding First-Loss Coverage Schemes, in order to adjust as follows:

If the value of the First-Loss Coverage Schemes is greater than or equal to the total provision requirement for the credit or for the credit portfolio before the recognition of the own guarantees, the Popular Financial Society shall only constitute the provisions resulting from multiplying the percentage of provisions corresponding to the coverage provider, in accordance with this Annex, by the amount of the provisions required for the credit or credit portfolio.

If the value of the First-Loss Coverage Schemes is less than the total provision requirement of the credit or credit portfolio before the recognition of the own guarantees, the Popular Financial Society shall constitute provisions for the uncovered portion up to the amount necessary to reach the total of the required provisions, while for the covered portion, it shall constitute the provisions resulting from multiplying the percentage of provisions corresponding to the coverage provider, in accordance with this Annex, by the amount of the guarantee.

For Popular Financial Societies to recognize guarantees and assign the corresponding reserve to the covered tranches of the credit or portfolio, there must be evidence of compliance with the terms and conditions established by the guarantors regarding the information they require, as well as compliance with the processes established in the corresponding contracts.

Regarding Step and Measure Coverage Schemes, the Popular Financial Society shall separate the covered portion of the credit or covered portfolio from the uncovered portion, assigning to the former the percentage of provisions corresponding to the coverage provider and to the latter the percentage of provisions corresponding to the original borrower, in accordance with this Annex.

In both First-Loss Coverage Schemes and Step and Measure or proportional Coverage Schemes, only the following groups of admissible coverage providers shall be recognized for the purposes of portfolio classification:

Group 1.

a)

Development banking institutions.

b)

National Financial Institution for Agricultural, Rural, Forestry and Fisheries Development or its successor.

c)

Public trusts that are part of the Mexican financial system in accordance with Article 3 of the Credit Institutions Law.

d)

Trusts celebrated specifically for the purpose of sharing credit risk, in which development banking institutions act as settlors and trustees, which have an express guarantee from the Federal Government.

e)

National Guarantee Fund for the Agricultural, Forestry, Fisheries and Rural Sectors or its successor.

f)

National Infrastructure Fund or its successor.

g)

Entities of the Federal Public Administration under direct budgetary control, state-owned productive companies, or programs derived from a federal law that are part of the Federal Expenditure Budget.

h)

Funds constituted with resources contributed as guarantee by state or municipal governments that are liquid and irrevocable in favor of the Popular Financial Society.

Group 2.

a)

National multiple banking institutions that have a rating of at least investment grade on the national scale.

b)

Other entities belonging to the Mexican financial system, including insurers that have at least investment grade on the national scale.

c)

Other legal persons or international financial entities that have at least investment grade on the international scale.

Group 3.

a)

Other clients of the same Popular Financial Society.

When coverage providers listed in Group 1 are available, the percentage of provisions corresponding to the covered portion shall be 0.5 percent. Regarding coverage providers listed in Group 2, a provision percentage of 1 percent shall be assigned to the covered portion. In the case of guarantees granted by the persons referred to in Group 3, the percentage of provisions corresponding to the maximum days of default that said client registers in other operations, applied to the provision table of the covered operation, shall be assigned to the covered portion.

In the event that the uncovered portion corresponds to a lower provision percentage than that corresponding to the covered portion, as indicated in the previous paragraph, Popular Financial Societies may use the former for the entire operation.

In the case of credits intended to finance the primary activity of the agricultural sector that have crop and animal damage insurance, which meet the characteristics referred to in Annex D Bis, Section IX, subsection d) of these provisions, Popular Financial Societies may multiply the provisions corresponding to the direct borrower by a factor of 95 percent, provided that no insurance claim has occurred.

For the purposes of the previous paragraph, credits to the agricultural and rural sector shall be understood as those directed to the primary production of the agricultural, livestock, forestry, and fishing sectors, as well as to the industrial, commerce, and services sectors, provided that they are integrated into the primary activity of the initially mentioned sectors whose branches and sub-branches of economic activity correspond to those designated as sector 11 of the North American Industry Classification System 2018 (NAICS) of the National Institute of Statistics and Geography (INEGI).

In the event that a claim is made to the entity granting the insurance by the lending Popular Financial Society and said entity accepts it without the covered amount having been executed or paid, and therefore the credit has not been written off from the balance sheet of the Popular Financial Societies, these may calculate the provisions by multiplying the balance of the covered credit by 1.0 percent, when the aforementioned insurance-granting entity has a rating assigned by a credit rating institution of at least investment grade on the national scale.

Popular Financial Societies that have non-financial real guarantees covering at least 50 percent of the outstanding balance of the credit at the date of calculation of preventive reserves may recognize such guarantees for the purposes of provisioning their credit portfolio, up to the amount resulting from multiplying the recognition percentage provided in the following table by their last appraised value, updated for depreciation in the case of movable goods:

Type of non-financial guarantee or assimilable instrument

Recognition Percentage (%)

Commercial and residential real estate

75

Movable goods and others

50

To determine the provisions corresponding to the covered portion of each credit or portfolio covered with financial and non-financial real guarantees, a provisioning percentage of 0.5 percent shall be assigned.

ANNEX D Bis

REQUIREMENTS THAT GUARANTEES MUST MEET TO BE RECOGNIZED FOR THE PURPOSES OF DETERMINING THE CAPITALIZATION REQUIREMENT FOR CREDIT RISK AND PREVENTIVE PROVISIONS FOR CREDIT RISKS

When Popular Financial Societies have guarantees constituted with payment instruments with immediate liquidity, Step and Measure or First-Loss Coverage Schemes, non-financial guarantees or assimilable instruments that comply with what is provided in this Annex, they may reduce the percentage of preventive provisions of the credit or credits in question in accordance with what is established in Annex D, Section IV of these provisions.

The guarantees eligible for such effects are those indicated below:

I.

Guarantees constituted with payment instruments with immediate liquidity, with respect to which Popular Financial Societies must comply with the following:

It shall be understood that a guarantee is constituted with payment instruments with immediate liquidity when it concerns:

a)

Cash or securities and payment instruments with maturity equal to or greater than the term of the credit granted to the client in favor of the Popular Financial Society in question, taking the necessary measures so that the guarantee can be adjudicated and executed at the moment that defaults occur on the part of the borrower that place it in the delinquent portfolio, in accordance with what is established in the Accounting Criteria, when the debtor or a third party constitutes a deposit in the society itself and grants it an irrevocable mandate to apply the respective resources to the payment of credits, or when it concerns negotiable credit titles of immediate realization and wide circulation, and which in case of default, are available without any legal restriction for the Popular Financial Society and from which the debtor or any other person distinct from the society itself cannot dispose while the obligation subsists.

b)

Securities issued by the Bank of Mexico.

c)

Securities issued or guaranteed by the Federal Government.

d)

Securities, titles, and documents issued by the Institute for the Protection of Bank Savings, as well as obligations guaranteed by said institute.

e)

Bank titles that have a credit rating issued by a securities rating institution, equal to or better than risk grade A- on the national scale granted, by at least one rating agency.

f)

Regarding Popular Financial Societies with operation levels III and IV, securities in accordance with what is provided in Article 25, fraction II, subsection c) of these provisions, which have a credit rating issued by a securities rating institution, equal to or better than risk grade A- on the national scale granted, by at least one rating agency.

g)

Investments in shares representing the social capital of daily liquidity investment funds, in accordance with what is provided in Articles 23 and 25 of these provisions.

II.

Non-financial guarantees and assimilable instruments, with respect to which the following must be considered:

Popular Financial Societies, in order to use non-financial guarantees and assimilable instruments for the purposes of provisioning their credit portfolio, must have available to the Commission evidence that accredits the following:

a)

The signing of contracts or other instruments documenting the constitution of the guarantees, in which the causes of default that generate the right of the Popular Financial Society to execute said guarantees are stated.

b)

In the case of movable guarantees provided for in Article 32 bis 1 of the Commercial Code, the consultation or certification obtained from the Unique Registry of Movable Guarantees, and in the case of deposit certificates and warehouse receipts, the consultation or, if applicable, the certification obtained from the Unique Registry of Certificates, Warehouses, and Goods known by its acronym "RUCAM", referred to in Article 22 Bis 6 of the General Law of Organizations and Auxiliary Activities of Credit.

Regarding warehouse receipts negotiated for the first time separately from the deposit certificate, Popular Financial Societies must have evidence that they complied with what is provided in Article 236 of the General Law of Titles and Credit Operations. In the event that Popular Financial Societies take deposit certificates as guarantee, they must notify the general warehouses of deposit of such situation and have evidence thereof.

c)

The adoption of necessary measures to ensure the conservation of the goods subject to the guarantees, which include their registration in the Public Property Registry corresponding; in the case of movable guarantees provided for in Article 32 bis 1 of the Commercial Code, registration in the Unique Registry of Movable Guarantees, and in the case of participations in federal revenues, federal contributions, and other own revenues of states and municipalities, in the registry of loans and obligations of the corresponding federal entity, and in the Unique Registry referred to in the Law of Financial Discipline of Federal Entities and Municipalities or its successor, as well as those necessary to exercise the right to compensation based on the transfer of ownership of non-financial guarantees.

Popular Financial Societies that take deposit certificates and warehouse receipts must exercise the right consigned in the second paragraph of Article 22 Bis 6 of the General Law of Organizations and Auxiliary Activities of Credit and have the certification of the electronic file of the deposit certificate obtained in RUCAM, in which it is indicated that the corresponding annotations of the taking of said certificates and warehouse receipts were made.

d)

The existence of risk management processes that, in addition to what is provided by Title Four, Chapter III of these provisions, explicitly consider the legal, operational, liquidity, and market risks deriving from the use of non-financial guarantees. Such processes must meet the requirements indicated in Section VI of this Annex.

e)

The incorporation into credit policies and manuals derived from them, of guidelines and procedures for the administration of non-financial guarantees, in general, and of elements to reduce provision requirements, in specific. Regarding this, Popular Financial Societies must have policies to ensure that:

A frequent valuation of non-financial guarantees is carried out, in accordance with what is indicated in Section VII of this Annex, including tests and scenario analyses under unusual or extreme market conditions.

Updated information is available regarding the situation, location, and state of the received non-financial guarantees, as well as potential liquidation problems.

There is adequate risk diversification with respect to non-financial guarantees.

Proper administration of guarantees is carried out, so that differences in maturity dates and the consequent exposure periods are contemplated, once the non-financial guarantees expire.

Vigilance and attention to risks deriving from external factors, which could affect the capacity of non-financial guarantees to face credit risk (for example, liquidity behavior in the non-financial guarantee market).

The governing bodies of the Popular Financial Society and the public know the policies related to the management and administration of risks deriving from the use of non-financial guarantees as coverage for credit risk.

f)

The establishment of methods and internal controls that ensure:

That the non-financial guarantees granted are not securities issued by the same risk group to which the borrower belongs.

Compliance with the conditions and terms established in the contracts, as well as the identification of any default by the counterparty, and consequently, the ability to request the execution of non-financial guarantees.

For the purposes of the above, the default event defined in the contracts must consider situations where the debtor is in a delinquent portfolio situation with respect to the Popular Financial Society, or when it determines that any of the credits owed by the debtor constitutes a troubled portfolio, has demanded the commercial bankruptcy of the debtor, or the latter has requested it.

The taking of necessary measures to ensure the separation of non-financial guarantees from other assets when the real guarantee is under the custody of a third party or the borrower itself.

III.

Non-financial guarantees and assimilable instruments to be admissible must correspond to one of the following types:

a)

Commercial or residential real estate for an amount that does not exceed the current fair value at which the property could be sold through a private contract between a seller and a buyer.

b)

Movable goods or other guarantees provided for in Article 32 bis 1 of the Commercial Code, registered in the Unique Registry of Movable Guarantees referred to in the Commercial Code or deposited in general warehouses, including those goods granted in lease, regarding which there is no purchase option at the end of the contract term. The guarantee must be considered in an amount that does not exceed the current fair value at which the good could be sold through a private contract between a seller and a buyer.

The guarantees provided for in Article 32 bis 1 of the Commercial Code cannot be previously registered in the Unique Registry of Movable Guarantees or covered by deposit certificates and warehouse receipts issued by general warehouses and registered in RUCAM.

c)

Receivables and fiduciary rights, understood as such to be value titles whose liquidation must be carried out through the flows derived from the underlying assets, regarding which the Popular Financial Society must have ownership and disposal of the cash flows derived from the receivables, in any foreseeable circumstance.

Included within the concept referred to in the previous paragraph are self-liquidating debts arising from the sale of goods or services linked to commercial operations, as well as amounts of any nature owed by buyers, suppliers, the Federal or State Public Administration, state-owned productive companies, as well as other independent third parties not related to the sale of goods or services linked to a commercial operation. Admissible receivables and fiduciary rights do not include those related to securitizations or sub-participations.

When the debtor makes payments directly to the assignor of the receivables, trust, or collection administrator, the Popular Financial Society must periodically verify that these payments are forwarded to it within the terms included in the contract.

d)

Participations in federal revenues or federal contributions, or both, corresponding to federal entities or municipalities, which may be granted through:

Guarantee or administration trust, or both.

Irrevocable instructions or guarantee mandate contracts, or both.

e)

Own revenues corresponding to federal entities or municipalities, which may be granted through:

Guarantee or administration trust, or both.

Irrevocable instructions or guarantee mandate contracts, or both.

f)

Deposit certificates and warehouse receipts registered in RUCAM, provided that the Popular Financial Society notifies the issuing general warehouse of said

titles, which were taken by said Popular Financial Society as collateral and

have the certification of the electronic file of the deposit certificate obtained in

the RUCAM in which it is indicated that the corresponding annotations were made for the

taking as collateral of the referred certificates and pledge bonds by the Popular

Financial Society.

For the purposes of the provisions of this Annex, "other assimilated instruments"

shall be understood as those provided for in items d) and e) of this Section.

IV.

The guarantees and instruments referred to in Section III, items d) and e) of this Annex, to

guarantee their legal certainty, shall at least:

a)

Be duly constituted in favor of the Popular Financial Society in question:

In the case of participations in federal revenues, federal contributions and

other own revenues of the federal entities and municipalities, they shall:

i)

Have authorization from the local legislatures, in accordance with what is established

in the corresponding local debt laws.

ii)

Be registered in the registry of loans and obligations of the federal entity

corresponding.

iii)

Be registered in the Single Registry referred to in the Law on Financial Discipline

of the Federal Entities and Municipalities or the one that replaces it.

iv)

Have clear mechanisms for channeling resources in favor of the

Popular Financial Societies for the payment of Financing, such as

a valid irrevocable instruction letter to the Treasury of the Federation

or through trusts or other structured products.

v)

Have the opinion of an independent specialized legal firm, or

that of the legal area of the Popular Financial Society, regarding the

validity of the backing of the participations and contributions in federal revenues based on the documents that back the obligations of the

federal entity or municipality with the Popular Financial Society.

vi)

Have the opinion of an independent specialized legal firm, or

that of the legal area of the Popular Financial Society, in the case of

credits guaranteed with own revenues, regarding the validity of the

backing of said revenues.

In the case of real estate, they shall:

i)

Be legally enforceable in the jurisdiction and be duly

constituted.

ii)

Be registered in the Public Property Registry in question.

iii)

Have agreements or clauses that document the guarantees and that

allow the Popular Financial Society in question to execute them.

In the case of receivables and fiduciary rights, the documents or instruments

in which they are recorded shall:

i)

Ensure the enforceability of their yields.

ii)

Be binding on all parties and legally enforceable in the

corresponding jurisdiction. Popular Financial Societies shall

monitor compliance with their terms, for which they will have the

necessary mechanisms to allow such verification.

iii)

Establish certain and clearly defined procedures that allow the

rapid collection of cash flows generated by the rights of

receivables. In all cases, the procedures available to the Popular Financial

Societies must guarantee compliance with all relevant

conditions in the legal field for the declaration of

client default and the rapid adjudication of the collateral. Likewise,

the documents or legal instruments in which the guarantees

are recorded must provide for the possibility of selling or assigning the rights of receivables to

third parties without the prior consent of the debtors in cases where

there are financial difficulties or default by the borrower.

b)

Be free of encumbrances with third parties or, otherwise, that the Popular Financial Society

in question appears first in the order of payment, considering for such

effect the coverage of the guarantee.

c)

Be easy to realize.

V.

In the administration of movable and immovable property, Popular Financial Societies

must clearly document the characteristics that must be met to be accepted as

non-financial guarantees and the policies for their administration, as well as ensure that the

goods accepted as collateral are insured in favor of the Popular Financial Society

in question in case of damage or defects, and carry out continuous monitoring of the

existence and degree of any preferential right over the property.

VI.

In the risk management of the guarantees referred to in Section III of this Annex, the

Popular Financial Societies shall:

a)

In the case of real estate, including residential use, related to

credits that have been restructured and are considered troubled portfolio, in the

terms established in Annex D of these provisions, have an appraisal at least

every three years, in accordance with what is established in item a) of Section VII of

this Annex, where their real existence and current physical state are evidenced, as well as the

monitoring of the existence and degree of any preferential right over the property.

b)

In the case of receivables:

Have a clear process to determine the credit risk of the rights of

receivables. This process shall, among other aspects, include the analysis of the business of the

borrower and the economic sector in which it operates, considering the effects of the cycle

economic, as well as the type of clients with which it negotiates. In case they use

information provided by the borrower to evaluate the credit risk of the

clients, Popular Financial Societies must examine the credit history

of the borrower to corroborate its strength and credibility.

Ensure that the margin or coverage between the amount of the credit and the value of the

rights of receivables reflects all timely factors including the cost of

adjudication, the degree of concentration of rights of receivables from a

single borrower and the concentration risk with respect to the total positions of the

Popular Financial Society in question.

Carry out a continuous and adequate monitoring process for each type of

risk, whether direct or contingent, attributable to the guarantee used as coverage.

This process shall include reports on aging, control of

commercial documents, certificates of the debt base, frequent audits

of the guarantee, account confirmation, control of income of

credited accounts, dilution analysis and periodic financial analysis of both the

borrower and the issuers of the rights of receivables, especially in the

case that the guarantee is formed by a small number of rights of receivables

of high value. Likewise, they must observe the concentration limits that the

Popular Financial Society in question establishes for its guarantees in

rights of receivables, as well as the agreements related to the loan in question.

Ensure that the rights of receivables pledged by a borrower are

diversified. In case such rights depend predominantly on the

credit quality of the guarantor, the corresponding risks shall be taken into

consideration when establishing margins for the set of guarantees. The rights

of receivables from persons related to the borrower, including

subsidiary companies and employees, shall not be recognized as risk coverages.

Have a documented process for collecting rights of receivables in

difficulty situations including the necessary services to carry it out,

even if the collection work is usually carried out by the borrower.

VII.

Appraisals must be carried out by professional appraisers, in accordance with what is established in the Law

on Transparency and Promotion of Competition in Secured Credit in relation to the

authorization as a professional appraiser of real estate subject to secured credits for housing,

and must be updated according to the policies of the Popular Financial Society in question.

Regarding commercial real estate:

a)

An appraisal must be obtained observing what is provided for in Section VI, item a)

of this Annex.

If as a result of the application of value estimates of the assets some are identified

whose value has decreased and require new valuations, the appraisal must be updated.

b)

When available information suggests that its value may have decreased significantly

compared to general market prices or when any default occurs, the real estate in question shall not be considered as a mitigant of credit risk.

VIII.

Goods granted under financial leasing may be recognized receiving the same

treatment as admissible non-financial guarantees when the Popular Financial Societies

are not subject to residual value risk, which consists of the exposure of said

Popular Financial Societies to a potential loss derived from the fall of the fair value

of the asset below its estimated residual value at the beginning of the lease. Popular Financial Societies must comply with the minimum requirements for the type of real guarantee

admissible in question and, in addition, must observe the following criteria:

a)

The lessor must carry out adequate risk management in accordance with the

location of the asset, its use, its age and its expected life cycle.

b)

The lessor must have ownership of the asset, as well as the capacity to exercise

timely its rights as owner.

c)

The difference between the depreciation rate of the fixed asset and the amortization rate included

of the payments for the lease shall not be significant, in order to avoid that the

credit risk coverage attributed to the leased assets is overestimated.

IX.

Regarding Step-in and Measure Coverage Schemes or First Loss Coverage Schemes, the following shall be attended.

a)

When Popular Financial Societies use Step-in and Measure Coverage Schemes or First Loss Coverage Schemes, they must comply with the following

requirements:

Have policies, procedures and internal controls to carry out the analysis of the

coverage that consider, at least, the following:

i)

The periodic evaluation of the credit quality of the entity providing the

Step-in and Measure Coverage Scheme or First Loss Coverage

Schemes. For these purposes, it must consider, at minimum, the

monitoring and analysis of the ratings assigned by rating agencies.

ii)

Regarding the Step-in and Measure Coverage Scheme or First Loss Coverage

Schemes, they must evaluate the way in which

such operations were structured and the ease of their execution considering, when

corresponding, other direct and contingent obligations on the part of the

Popular Financial Society or entity providing these.

Have contracts or other instruments documenting the constitution of the

guarantees in which the assumptions and the procedure to exercise the

guarantee are recorded. Regarding this, the contracts, documents or instruments in which the

guarantees are recorded shall:

i)

Ensure that the Popular Financial Society in question maintains the

right to execute the guarantees legally in case of default,

insolvency, bankruptcy or any other similar event, and that the

contract or instrument in which they are documented does not contain any clause

that allows the provider of protection to unilaterally cancel the

coverage or increase the cost of the guarantee in case of deterioration of the credit quality of the covered position.

ii)

Be irrevocable and unconditional, so the contracts or instruments in

which they are recorded cannot contain any clause that allows the Provider

of Protection to exempt itself from paying promptly in case that the

original counterparty presents any default. In all cases, the

contracts or other documents can only be modified with the

agreement of the Popular Financial Society.

iii)

Be mandatory for the parties involved and legally enforceable in the

corresponding jurisdictions.

iv)

Provide that, upon default or non-payment by the debtor, the

Popular Financial Society can immediately initiate actions against the

guarantor regarding the pending payment obligations. Likewise, the

contracts, documents or instruments in which the guarantees

are recorded must stipulate that the guarantor can make a single payment covering the

total amount of the pending obligations of the debtor, or

that it can assume the future payment of the obligations of the debtor. In

all cases, the obligation of the guarantor must be established in the

documentation that formalizes the operation.

Comply with the legal requirements applicable to obtain and maintain the right

to exercise the Step-in and Measure Coverage Schemes or First Loss Coverage

Schemes, as well as carry out the monitoring that is necessary with the

objective of ensuring compliance with said requirements.

Not recognize the Step-in and Measure Coverage Schemes or First Loss

Coverage Schemes that are granted reciprocally between who

provides any of these risk mitigation techniques and the Popular

Financial Society beneficiary itself.

Disclose in notes to the financial statements the way in which they use the Step-in and Measure Coverage Schemes or First Loss Coverage Schemes to

cover credit risk. Such disclosure of information must be published

generally and aggregated, highlighting the amount covered by the Step-in and Measure Coverage Scheme or First Loss Coverage Scheme.

b)

Regarding Step-in and Measure Coverage Schemes or First Loss Coverage

Schemes, Popular Financial Societies must ensure, at least,

of the following:

That it is an explicitly documented obligation assumed by the guarantor.

That the obligation cannot be unilaterally cancelled by the guarantor.

That the guarantor will cover any type of payment that the debtor is obliged to make

by virtue of the legal instrument regulating the operation.

c)

Popular Financial Societies, regarding credit insurance, must, at least, comply with the following:

The insurance provider must be a specialized institution authorized by the

Secretariat to grant insurance and have a credit rating

higher or equal to investment grade issued, by at least, one rating agency

of those referred to in the Securities Market Law.

The contracts or policies of the coverage schemes shall:

i)

Consider the conditions of partial or total default of a borrower.

ii)

Be legally enforceable in the corresponding jurisdiction. For this effect,

they must allow the beneficiary Popular Financial Society to execute

the coverage scheme under the conditions and deadlines agreed,

unless:

The Popular Financial Society in question defaults on the payment

of the insurance premium or the consideration corresponding to the

granting of the guarantee.

It modifies without authorization of the granting entity the scheme of

coverage or the agreed conditions of the covered credits.

It cancels or transfers the insured credits under conditions different from

those agreed, or commits any fraud linked to the credit

secured.

iii)

Not include clauses that allow the entity granting the scheme of

coverage:

Cancel or revoke unilaterally, except for what is provided in the

sub-item ii) of this item.

Increase the cost of the coverage scheme in case of deterioration of the

credit quality of the covered position.

Object to or omit payment upon any default of the borrower,

except for what is provided in sub-item ii), sub-number 2) of this

item.

iv)

Cover, in addition to the principal, the ordinary interest corresponding in

virtue of the credit contract.

d)

In the case of coverage with agricultural insurance, the following shall be considered.

Regarding credits intended to finance the primary activity of the agricultural sector,

crop and animal damage insurance may be recognized as mitigants of the

credit risk, when they meet the following requirements:

The contracts or policies include as beneficiary of the insurance directly the

Popular Financial Society granting the credit, or there is any legal instrument in

which such circumstance is provided.

The insured sum covers, at least, the outstanding balance of the credit and its interest.

The corresponding insurance covers, at least, the following agricultural risks:

i)

Frost.

ii)

Flood.

iii)

Clogging.

iv)

Heat wave.

v)

Low temperatures.

vi)

Lack of floor to harvest.

vii)

Hail.

viii)

Fire.

ix)

Excess humidity (rain).

x)

Impossibility to sow.

xi)

Drought.

xii)

Earthquake.

xiii)

Hurricane.

xiv)

Cyclone.

xv)

Tornado.

xvi)

Tromba.

xvii)

Strong winds.

Be granted by specialized entities authorized by the National Commission

of Insurance and Sureties that have a credit rating, higher or equal, to the

investment grade, issued by, at least, one securities rating institution.

The payment of the premium is up to date in accordance with what is established

contractually.

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