Resolution modifying the General Provisions applicable to savings and credit entities, integration organisms, community financial societies and rural financial integration organisms under the Savings and Credit Popular Law

DOF: 11/07/2016

RESOLUTION modifying the General Provisions applicable to savings and credit entities, integration organisms, community financial societies and rural financial integration organisms, referred to in the Savings and Credit Popular Law.

A seal with the National Coat of Arms, which reads: United Mexican States.- Ministry of Finance and Public Credit.- National Banking and Securities Commission.

The National Banking and Securities Commission, with the agreement of its Board of Directors, based on the provisions of articles 116, fractions V, VI and IX of the Savings and Credit Popular Law, as well as articles 4, fractions II, XXXVI, XXXVIII, 6, 16, fractions I and VII and 19 of the Law of the National Banking and Securities Commission, and

CONSIDERING

That in accordance with international best practices and in order to ensure the stability, solvency and solidity of popular financial societies, it is necessary to establish the obligation for these financial entities to have a remuneration system that determines the policies and procedures to carry out ordinary and extraordinary remunerations to their employees or personnel who hold any position, mandate, commission or any other legal title that popular financial societies have granted for the conduct of their operations, in order to align the risks assumed by the said persons when acting on behalf of said societies and with the general public, with the current or potential risks that the said entities are willing to assume or are prepared to face, and

That the above will result in a reduction of incentives for employees or personnel who hold any position, mandate, commission or any other legal title that popular financial societies have granted for the conduct of their operations on their own behalf or on behalf of their clients, to assume unnecessary risks and, consequently, the risks to which popular financial societies are exposed can be better managed and monitored, has resolved to issue the following:

RESOLUTION MODIFYING THE GENERAL PROVISIONS APPLICABLE TO SAVINGS AND CREDIT ENTITIES, INTEGRATION ORGANISMS, COMMUNITY FINANCIAL SOCIETIES AND RURAL FINANCIAL INTEGRATION ORGANISMS, REFERRED TO IN THE SAVINGS AND CREDIT POPULAR LAW

FIRST.- Articles 1, fraction III; 14, first and second paragraphs, fractions II and III and last paragraph; 51; 55, first paragraph; 73; 76, fractions II, IV and V; 78; 80, first paragraph; 85; 108; 112, first paragraph; 113, fractions I, subsection c), II, III, V to VII; 116, first paragraph; 117, first paragraph and fractions I, IV and V; 119, first paragraph; 157; 165, fractions II, subsection a), IV and V; 168, fractions I, II, III, subsections a) and b), second paragraph, V and VI; 184, fractions I, subsections a) and b), V and VI are REFORMED; Articles 1, fractions XII, LX, LXI and LXX are ADDED, with the remaining fractions being renumbered in order as appropriate; 53 second, third, fourth and fifth paragraphs; 55, fractions V, VI and VII and second, third and last paragraphs; 75, third and fourth paragraphs; 76, fractions VI and VII and third paragraph; 80, fifth and sixth paragraphs; 112, third and fourth paragraphs; 113, fractions VIII and IX and a third paragraph; 116, second paragraph; 117, fraction VI and second and third paragraphs; 119, fifth and sixth paragraphs; 165, fraction VI; 168, fraction VII; 184, fraction VII; Title Four with a Chapter IV Bis titled "On the Remuneration System", which is integrated by Articles 209 Bis to 209 Bis 7; 335 with a fraction XII, with the remaining fractions being renumbered in order and as appropriate; and Articles 17 and 55, fraction IV of the "General Provisions applicable to savings and credit entities, integration organisms, community financial societies and rural financial integration organisms, referred to in the Savings and Credit Popular Law", published in the Official Gazette of the Federation on December 18, 2006, updated with the modifications published in the same gazette on January 18 and August 11, 2008, December 16, 2010, December 18, 2012, January 12, February 6, April 2, September 22 and October 29, 2015, January 7, February 2 and April 22, 2016, are REPEALED, to read as follows:

TITLES FIRST to THIRD

...

TITLE FOUR

...

Chapters I to IV

...

Chapter IV Bis

On the Remuneration System

Chapter V to Chapter IX

...

TITLES FIFTH to NINTH

...

" Article 1.- ...

I. and II.

...

III.

Internal Auditor, the person responsible for the internal audit area referred to in Article 185 of these provisions.

IV. to XI.

...

XII.

Remuneration Committee, the committee constituted by the Board of Directors of the Popular Financial Societies in accordance with Article 209 Bis 5 of these provisions, in order to support the said governing body in its functions related to the Remuneration System, and whose object will be the implementation, maintenance and evaluation of the Remuneration System, with the attributes described in Article 209 Bis 6 of these provisions.

XIII. to LIX.

...

LX.

Extraordinary remuneration, the set of salaries, benefits or variable counter-performance that Popular Financial Societies grant to their employees or personnel who hold any position, mandate or commission or any other legal title that the said Popular Financial Societies have granted for the conduct of their operations, which are paid in cash or through other types of compensation and which is determined based on the results obtained, among others, by said employees or personnel, in the performance of their own activities.

LXI.

Ordinary remuneration, the set of salaries, benefits or fixed counter-performance that Popular Financial Societies grant to their employees or personnel who hold any position, mandate or commission or any other legal title that the said Popular Financial Societies have granted for the conduct of their operations, which are paid in cash or through other types of compensation and which does not vary in attention to the results obtained by said employees or personnel, in the performance of their own activities.

LXII. to LXIX.

...

LXX.

Remuneration System: the set of functions, policies and procedures that Popular Financial Societies must establish in order for the ordinary and extraordinary remunerations of their employees, of the different administrative, control and business units, or personnel who hold any position, mandate, commission or any other legal title that the Popular Financial Societies have granted for the conduct of their operations on their own behalf or with the public, to be determined in attention to the current and potential risks that represent the activities performed by said employees or personnel individually.

LXXI. to LXXXVI.

... "

" Article 14.- Popular Financial Societies with Operation Level I and II must designate at least one Independent Director to participate in the work of the Board of Directors. Popular Financial Societies with Operation Level III and IV must comply with the minimum percentage of Independent Directors referred to in the second paragraph of Article 18 of the Law.

In all cases, the Independent Directors of the Popular Financial Societies and the Federations referred to in the Law must meet the following requirements:

I.

...

II.

Not have any of the impediments indicated in Articles 15 and 16 of these provisions, as applicable, and

III.

Those others that the assemblies or the statutes of the Popular Financial Societies and the Federations determine.

For each Independent Director, a substitute must be designated, who must meet the requirements established in this Article and not have the impediments referred to in Articles 15 and 16 of these provisions, as applicable. "

" Article 17.- Repealed. "

" Article 51.- The Commission, directly or upon proposal of the corresponding Federation, may require any Popular Financial Society additional capitalization requirements to those indicated in this regulation, when in its judgment this is justified, taking into account, among other aspects,

the

integration of its capital, the composition of its assets, the efficiency of its internal control systems, compliance with its Remuneration System and, in general, the exposure and administration of risks. "

" Article 53.- ...

...

The Board of Directors may constitute a risk committee whose object is the administration of the risks to which the Popular Financial Society is exposed, as well as to monitor that the conduct of operations complies with the internal control guidelines in matters of credit and operational risk, for the prudent management of the Society approved by the said council. For such purposes, the risk committee must be subject to what is established by Article 164 of these provisions.

Likewise, the Board of Directors may integrate an audit committee, whose object is to support the said council in the definition of the general guidelines of the internal control system, as well as in the verification and evaluation of said system, acting as a communication channel between the Board of Directors and the supervisory authorities. Said committee must adjust to what is established by Article 183 of these provisions.

The risk committee and the audit committee that, if any, are constituted, may perform any of the functions referred to in Articles 165 and 184 of these provisions, as applicable, as well as the other activities that are related to the function in question and that in terms of these provisions are in charge of the said committees.

Popular Financial Societies must present a notice to the Commission regarding the constitution of the committees referred to in this Article, in which they indicate the functions that said committees will carry out, within five business days following their constitution. "

" Article 55.- The Comisario shall have the following attributes and obligations:

I. to III.

...

IV.

Repealed.

V.

Prepare and present to the Board of Directors an annual report on the performance of the Remuneration System, considering for this purpose the balance relationship between the risks assumed by the Popular Financial Society and its business units, or in its case, by a particular employee or person subject to the Remuneration System, and the remunerations applicable during the exercise. In its case, the report will include a description of the events that have resulted in adjustments to the Remuneration System and the result of the analyses on the estimated performance that the said Comisario has prepared.

VI.

Inform the Board of Directors at least once a year about the consistency in the application of the Remuneration System of the Popular Financial Society in question, informing for such purposes, at least, the following:

a)

An evaluation of compliance with remuneration policies and procedures and, if applicable, the exceptions, justifying the reasons that gave rise to them.

b)

The adjustments that have been made to the Remuneration System as a result of the occurrence of losses when these have not been foreseen in the Remuneration System.

c)

The significant aspects of the Remuneration System that could affect the liquidity, solvency and stability of the Popular Financial Society.

VII.

Identify, measure, monitor and inform the Remuneration Committee of the risks originating from the performance of the activities of the personnel subject to the Remuneration System and business units of the Popular Financial Society. Additionally, it must prepare and submit to the consideration of said committee, scenario analyses and projections on the effects of the materialization of the risks inherent to the activities of the persons subject to the Remuneration System and of the application of remuneration schemes on the stability and solidity of

the Popular Financial Society, as well as evaluate if the remuneration policies and procedures promote the reduction of incentives for taking unnecessary risks.

In the event that Popular Financial Societies have a risk committee integrated in accordance with what is provided for in Article 164, second paragraph of these provisions, they may assign to said committee the attributes and obligations indicated in fractions V and VII of this Article.

In the event that the Societies have an audit committee constituted in accordance with Article 183 of these provisions, the attribute indicated in fraction VI of this Article may be entrusted to said committee. In the case referred to in Article 209 Bis 7, first paragraph of this instrument, and in the event that Popular Financial Societies have an audit committee in the terms indicated above, said committee will be responsible for presenting the report referred to in fraction V

of this

Article.

In the event that the comptroller functions are performed by persons different from the Comisario, these must be distinct from those who perform activities related to the credit operations of the Popular Financial Society. "

" Article 73.- The Commission, directly or upon proposal of the corresponding Federation, may require any Popular Financial Society additional capitalization requirements to those indicated in this regulation, when in its judgment this is justified, taking into account, among other aspects,

the

integration of its capital, the composition of its assets, the efficiency of its internal control systems, compliance with its Remuneration System and, in general, the exposure and administration of risks. "

" Article 75.- ...

...

The Board of Directors may constitute a risk committee whose object is the administration of the risks to which the Popular Financial Society is exposed, as well as to monitor that the conduct of operations complies with the policies and procedures for risk administration approved by the said council. For such purposes, the risk committee must be subject to what is established by Article 164

of these provisions and may perform any of the functions indicated in Article 165 of this instrument, as well as the other activities that are related to the function in question and that in terms of these provisions are in charge of the said committee.

Popular Financial Societies must present a notice to the Commission regarding the constitution of the risk committee, in which the functions that said committee will carry out are indicated, within five business days following its constitution.

Article 76.- ...

I.

...

II.

Monitor, limit, control, inform and disclose the risks to which the Popular Financial Society is exposed;

III.

...

IV.

Inform the Board of Directors quarterly and at least monthly to the General Director, about the exposure to credit risk, as well as about the non-compliance with the exposure limits to risks established both internally in the Popular Financial Society, as well as in the applicable regulation;

V.

Inform the General Director, as well as the Board of Directors, about the corrective measures implemented;

VI.

Prepare and present to the Board of Directors an annual report on the performance of the Remuneration System, considering for this purpose the balance relationship between the risks assumed by the Popular Financial Society and its business units, or in its case, by a particular employee or person subject to the Remuneration System, and the remunerations applicable during the exercise. In its case, the report will include a description of the events that have resulted in adjustments to the Remuneration System and the result of the analyses on the estimated performance that the personnel responsible for risk administration has prepared, and

VII.

Identify, measure, monitor and inform the Remuneration Committee of the risks originating from the performance of the activities of the personnel subject to the Remuneration System and business units of the Popular Financial Society. Additionally, it must prepare and submit to the consideration of said committee, scenario analyses and projections on the effects of the materialization of the risks inherent to the activities of the persons subject to the Remuneration System and of the application of remuneration schemes on the stability and solidity of

the Popular Financial Society, as well as evaluate if the remuneration policies and procedures promote the reduction of incentives for taking unnecessary risks.

...

In the event that Popular Financial Societies have a risk committee integrated in accordance with what is provided for in Article 164 of these provisions, they may assign to said committee the function indicated in fraction VI of this Article. In the case referred to in Article 209 Bis 7, first paragraph of this instrument, and in the event that Popular Financial Societies have an audit committee constituted in terms of Article 183 of these provisions, said committee will be responsible for presenting the report referred to in fraction VI of this Article. "

" Article 78.- The Comisario of the Popular Financial Societies must establish and give permanent follow-up to the control measures that govern the daily operation process in risk administration, relative to:

I.

The registration, documentation and settlement of operations, which imply risks in accordance with the policies and procedures established in the risk administration manuals of the Popular Financial Society;

II.

The observance of the limits of exposure to credit risk and others;

III.

Carry out, at least annually, a credit risk administration audit that contemplates, among others, the development of credit risk administration in accordance with what is established in this section and in the own manual of policies and procedures for the administration of risks of the Popular Financial Society, and

IV.

Inform the Board of Directors, at least once a year, about the consistency in the application of the Remuneration System of the Popular Financial Society in question.

The

report must contain as a minimum, the following:

a)

An evaluation of compliance with remuneration policies and procedures and in its case, the exceptions, justifying the reasons that gave rise to them.

b)

The adjustments that have been made to the Remuneration System as a result of the occurrence of losses when these have not been foreseen in the Remuneration System.

c)

The significant aspects of the Remuneration System that could affect the liquidity, solvency and stability of the Popular Financial Society.

Popular Financial Societies may assign the functions of fractions I to III of this Article to an internal audit or comptroller area, independent of the business, administrative and comptroller areas that, if any, they maintain, or entrust them to an independent specialized third party.

In the event that Popular Financial Societies have an audit committee constituted in terms of Article 183 of these provisions, they may assign to said committee the function referred to in fraction IV of this Article. "

" Article 80.- In matters of the internal control system, it will be the responsibility of the Board of Directors of each Popular Financial Society to define and design the guidelines for the prudent management of the Society. Likewise, the Council must supervise the establishment and monitor the adequate functioning of the internal control system, for which it must apply among others, the following measures:

I. to V.

...

...

...

...

The Board of Directors may constitute an audit committee whose object is to support the said council in the definition of the general guidelines of the internal control system, as well as in the verification and evaluation of said system, acting as a communication channel between the Board of Directors and the external auditor or the supervisory authorities. For such purposes the audit committee must be subject to what is established by Article 183 of these provisions and may perform any of the functions indicated in Article 184 of this instrument, as well as the other activities that are related to the function in question and that in terms of these provisions are in charge of the said committee.

Popular Financial Societies must present a notice to the Commission regarding the constitution of the audit committee, in which the functions that said committee will carry out are indicated, within five business days following its constitution. "

" Article 85.- In order to contribute to the functioning of the internal control system, Popular Financial Societies must ensure that comptroller functions are carried out. These functions will imply the establishment and daily follow-up of measures to monitor that the activities regarding the operation of the Popular Financial Society are consistent with the objectives of this and are carried out in strict compliance with the laws and other applicable provisions.

The Comisario will be responsible for performing the comptroller functions referred to in this Article, which may be delegated to the personnel that the Comisario considers appropriate and must contemplate, at least, the following aspects:

I.

Verify the correct compliance of the different processes, operations and transactions with the regulation applicable to the Popular Financial Society;

II.

Establish norms, procedures and measures to monitor that the processes of documentation and daily settlement of operations and transactions are carried out adequately and in accordance with the objectives and guidelines of the Popular Financial Society;

III.

Control that the preparation of financial information is carried out in a precise, complete, reliable and timely manner, and

IV.

Control that the information generated and provided to the Federations and authorities is trustworthy, precise, complete and timely. "

" Article 108.- The Commission, directly or upon proposal of the corresponding Federation, may require any Popular Financial Society additional capitalization requirements to those indicated in this regulation, when in its judgment this is justified, taking into account, among other aspects,

the

integration of its capital, the composition of its assets, the efficiency of its internal control systems, compliance with its Remuneration System and, in general, the exposure and administration of risks. "

any Popular Financial Society additional capitalization requirements set forth in the

this regulation, when in its judgment so justified, taking into account, among other aspects,

the

integration of its capital, the composition of its assets, the efficiency of its internal control systems, the

compliance with its Remuneration System, and, in general, the exposure and management of risks. "

" Article 112.- In matters of risk management, the Board of Directors of each Popular Financial

Society shall have the following responsibilities:

I. and II.

. . .

. . .

The Board of Directors may establish a risk committee whose purpose shall be the management of

the risks to which the Popular Financial Society is exposed, as well as to oversee that the execution of

operations complies with the policies and procedures for risk management approved by the

cited board. The risk committee must observe what is provided in Article 164 of these

provisions and may perform the functions set forth in Article 165 of this instrument, as well as the

other activities that are related to the function in question and that, in terms of the

present provisions, are under the responsibility of said committee.

Popular Financial Societies must submit a notice to the Commission regarding the establishment of the

risk committee, in which the functions that said committee will carry out are specified, within five business days following its establishment. "

" Article 113.- . . .

I.

. . .

a) and b)

. . .

c)

The methodologies, models, and parameters to identify, measure, monitor, limit, control,

report, and disclose the risks to which the Popular Financial Society is exposed.

II.

Monitor, limit, control, report, and disclose the risks to which the Popular

Financial Society is exposed;

III.

Report quarterly to the Board of Directors and at least monthly to the General Director,

regarding credit risk exposure, as well as regarding non-compliance with exposure limits

established both internally within the Popular Financial Society, and by the

applicable regulation;

IV.

. . .

V.

Recommend to the General Director and the heads of business units, to reduce the

risk exposure to the limits previously approved by the Board of Directors;

VI.

Validate the calculation of capitalization requirements for risks and the limits with which they must

comply, in order to verify that it complies with the applicable provisions;

VII.

According to the complexity of their operations, Popular Financial Societies must

perform, with the frequency determined by their Board of Directors, the analysis of maturity gaps

of their assets and liabilities, which allow them to manage their liquidity, and in cases where it is

identified that sensitivity to movements in market interest rate levels is affecting the

income and costs associated with said assets or liabilities, they must additionally evaluate the

convenience of adding to the gap analysis the repricing dates, which allow them to manage

market risk better;

VIII.

Prepare and present to the Board of Directors an annual report on the performance of the

Remuneration System, considering for this purpose the balance relationship between the risks assumed by the

Popular Financial Society and its business units, or in its case, by a specific employee or

person subject to the Remuneration System, and the remuneration applicable during the

fiscal year. In its case, the report will include a description of events that have resulted in

adjustments to the Remuneration System and the result of the analyses on estimated performance

prepared by the personnel responsible for risk management, and

IX.

Identify, measure, monitor, and report to the Remuneration Committee the risks arising from the

performance of the activities of personnel subject to the Remuneration System and business units of the

Popular Financial Society. Additionally, it must prepare and submit

to

consideration of said committee, scenario analyses and projections on the effects of the

materialization of risks inherent to the activities of persons subject to the System

of Remuneration and of the application of remuneration schemes on the stability and solidity of

the Popular Financial Society, as well as evaluate whether remuneration policies and procedures

promote the reduction of incentives for taking unnecessary risks.

. . .

In the event that Popular Financial Societies have a risk committee integrated in accordance with what is provided by

Article 164 of these provisions, they may assign to said committee

the function set forth in fraction VIII of this Article. In the case referred to in Article 209 Bis 7, first

paragraph of this instrument, and in the event that Popular Financial Societies have an

audit committee constituted in terms of Article 183 of these provisions, said committee shall be

responsible for presenting the report referred to in fraction VIII of this Article. "

" Article 116.- The Comisario (Auditor) of Popular Financial Societies must establish and give

permanent follow-up to the control measures that govern the daily operation process in the administration

of risks, relating to:

I. and II.

. . .

Popular Financial Societies may assign the functions referred to in this Article to an

internal audit or internal comptroller area, independent of the business, administrative, and

comptroller areas that, if applicable, they maintain, or entrust them to an independent specialized third party.

Article 117.- The Comisario (Auditor) of the Popular Financial Societies in question, in addition to what is

stated in the previous Article, must carry out, at least annually, a risk management audit that contemplates, among others, the following aspects:

I.

The implementation of risk management mechanisms in accordance with what is established

in this Section and in the own policies and procedures manual for risk management of the

Popular Financial Society;

II. and III.

. . .

IV.

Review modifications in risk measurement models and their corresponding approval

by the person responsible for risk management;

V.

The approval process of the risk measurement models used by the personnel of the

business units and operational control, and

VI.

Report to the Board of Directors, at least once a year, on the consistency in the

application of the Remuneration System of the Popular Financial Society in question.

The

report must contain as a minimum, the following:

a)

An evaluation of compliance with remuneration policies and procedures and, if applicable, the

exceptions, justifying the reasons that gave rise to them.

b)

The adjustments made to the Remuneration System as a result of the

occurrence of losses when these were not anticipated in the System

of Remuneration.

c)

The significant aspects of the Remuneration System that could affect liquidity,

solvency, and stability of the Popular Financial Society.

Popular Financial Societies may opt to assign the functions provided for in fractions

I

to V of this Article to an internal audit or internal comptroller area, independent of the areas of

business, administrative, and comptroller that, if applicable, they maintain, or entrust them to an independent

specialized third party.

In the event that Popular Financial Societies have an audit committee

constituted in terms of Article 183 of these provisions, they may assign to said committee the function to

which fraction VI of this Article refers. "

" Article 119.- In matters of the internal control system, it shall be the responsibility of the Board of

Directors of each Popular Financial Society to define and design the guidelines for the prudent

management of the Society. Likewise, the Board must supervise the establishment and monitor the adequate

functioning of the internal control system, for which it must apply, among others, the following measures:

I. to V.

. . .

. . .

. . .

. . .

The Board of Directors may establish an audit committee whose purpose shall be to support the own

board in the definition of the general guidelines of the internal control system, as well as in the

verification and evaluation of said system, acting as a communication channel between the Board of

Directors and the external auditor or supervisory authorities. For such purposes, the audit committee

must be subject to what is established in Article 183 of these provisions and may perform any

of the functions set forth in Article 184 of this instrument, as well as the other activities that are

related to the function in question and that, in terms of the present provisions,

are under the responsibility of the audit committee.

Popular Financial Societies must submit a notice to the Commission regarding the establishment of the

audit committee, in which the functions that said committee will carry out are specified, within five

business days following its establishment. "

" Article 157.- The Commission, directly or upon proposal of the corresponding Federation, may demand from

any Popular Financial Society additional capitalization requirements to those indicated in the

present regulation, when in its judgment so justified, taking into account, among other aspects,

the

integration of its capital, the composition of its assets, the efficiency of its internal control systems, the

compliance with its Remuneration System, and, in general, the exposure and management of risks. "

" Article 165.- . . .

I.

. . .

II.

. . .

a)

The methodology to identify, measure, monitor, limit, control, report, and disclose the risks to

which the Popular Financial Society is exposed;

b) and c)

. . .

III.

. . .

IV.

Report to the Board of Directors at least quarterly, on the risk exposure assumed by the

Popular Financial Society and the negative effects that could be produced in the

operation thereof, as well as on the non-compliance with the established risk exposure limits;

V.

Report to the Board of Directors on the corrective measures implemented;

VI.

Prepare and present to the Board of Directors an annual report on the performance of the System

of Remuneration, considering for this purpose the balance relationship between the risks assumed by the

Popular Financial Society and its business units, or in its case, by a specific employee or

person subject to the Remuneration System, and the remuneration applicable during the

fiscal year. In its case, the report will include a description of events that have resulted in

adjustments to the Remuneration System and the result of the analyses on estimated performance

prepared by the risk committee itself.

This, without prejudice to what is provided in Article 184, fraction VII, second paragraph, of these

provisions. "

" Article 168.- . . .

I.

Monitor that risk management is integral and considers the risks incurred by the

Popular Financial Society within its various lines and business units;

II.

Propose the methodology and apply it once approved by the risk committee to identify, measure

and monitor the different types of risks to which the Popular Financial Society is exposed,

as well as the limits, using for such purpose the models, parameters, and scenarios for the measurement

and risk control established by the cited committee;

III.

. . .

a)

The global exposure and by type of risk of the Popular Financial Society, as well as the

specific exposure of each business unit, which shall be additionally reported to the heads

of the business units, and

b)

. . .

The reports referred to in this fraction must be presented monthly, or with the

frequency required in attention to the dynamism of the risks. Likewise, it will be delivered

daily to the General Director and to the heads of the business units, a report on the

behavior of the market risks of the Popular Financial Society.

IV.

. . .

V.

Recommend to the General Director and to the heads of the business units, to reduce the

risk exposure to the limits previously approved by the Board of Directors;

VI.

Validate based on the information that will be provided by the corresponding administrative units

of the Popular Financial Society, the capitalization requirements for risks

of credit and market with which the latter must comply, in order to verify that they comply

with the applicable provisions, and

VII.

Identify, measure, monitor, and report to the Remuneration Committee the risks arising from the

performance of the activities of personnel subject to the Remuneration System and business units of the

Popular Financial Society.

Additionally, it must prepare and submit to consideration of said committee, scenario analyses

and projections on the effects of the materialization of risks inherent to the

activities of persons subject to the System

of Remuneration and of the application of remuneration schemes on the stability and solidity of

the Popular Financial Society, as well as evaluate

whether remuneration policies and procedures promote the reduction of incentives for the

taking of unnecessary risks. "

" Article 184.- . . .

I.

. . .

a)

The policies and procedures manuals necessary for the adequate functioning of the

internal control system of the Popular Financial Society;

b)

The designation of the external auditor of the Popular Financial Society, as well as the scope

of their work;

c) and d)

. . .

II. to IV.

. . .

V.

Report to the Board of Directors, at least once a year, on the situation of the

internal control system of the Popular Financial Society;

VI.

Report periodically to the Board of Directors on the progress of the external audit, and

VII.

Report to the Board of Directors, at least once a year, on the consistency in the

application of the Remuneration System of the Popular Financial Society in question. The

report must contain as a minimum, the following:

a)

An evaluation of compliance with remuneration policies and procedures and, if applicable, the

exceptions, justifying the reasons that gave rise to them.

b)

The adjustments made to the Remuneration System as a result of the

occurrence of losses when these were not anticipated in the System

of

Remuneration.

c)

The significant aspects of the Remuneration System that could affect liquidity,

solvency, and stability of the Popular Financial Society.

In addition to the foregoing, in the event that Popular Financial Societies assign to the

risk committee the functions that correspond to the Remuneration Committee, in terms of

Article 209 Bis 7 of these provisions, the audit committee must prepare and present

to the Board of Directors the annual report on the performance of the Remuneration System to

which Article 165, fraction VI of these provisions refers.

. . .

. . . "

" Chapter IV Bis

On the Remuneration System

Article 209 Bis.- Popular Financial Societies must implement, maintain, and review

permanently a Remuneration System that promotes and is consistent with effective

risk management.

The Remuneration System must consider all remunerations, whether these are granted

in cash or through other compensation mechanisms, and must at least comply with the following:

I.

Delimit the responsibilities of the corporate bodies in charge of the implementation of the

remuneration schemes.

II.

Establish policies and procedures that govern Ordinary and Extraordinary

Remunerations of persons subject to the Remuneration System, in congruence with a reasonable taking

of

risks.

III.

Permanently review payment policies and procedures and make the necessary adjustments

when the risks assumed by the Popular Financial Society, or their materialization, are greater than

expected, and represent a threat to the liquidity, solvency, stability, and reputation of the

own financial entity.

Article 209 Bis 1.- The Remuneration System, as a minimum, must:

I.

Consider the risks to which the Popular Financial Society, its administrative,

control, and business units, and, if applicable, the risks assumed by persons

subject to the Remuneration System are exposed. When there is difficulty in obtaining reliable measures for

certain types of risk, Popular Financial Societies must rely on reasoned judgments

to incorporate them into the Remuneration System.

II.

Establish specific remuneration schemes for each job profile of employees or

persons subject to the Remuneration System, in consideration of the risks inherent to their

activities, taking into account for such purposes, the following:

a)

Regarding Extraordinary Remunerations that are determined by results

individual or collective of an administrative, control, or business unit, Popular Financial

Societies must ensure that performance evaluation does not take

into account exclusively the results observed during the financial year in which the

operation was carried out, but also considers risks and results over a

reasonable period of time. For this purpose, performance evaluations must be

consistent and based on results adjusted for present and future risks, liquidity,

cost of capital, and variables that are considered relevant.

Likewise, for the determination of Extraordinary Remuneration, the Popular Financial

Society must use methods to sensitize results, among which

are the adjustment of remuneration through the application of factors related to the

risks that the activities of persons subject to the System

of Remuneration or administrative, control, or business unit represent for the Popular Financial Society, the

deferral of payments from one fiscal year to the next, the extension of performance evaluation periods until all results or risks are known or

materialize, or the reduction of Extraordinary Remuneration in the short term.

Additionally, Popular Financial Societies must incorporate non-financial measures

in performance evaluation, which must consider, among other aspects,

qualitative evaluations of compliance with risk management policies and their

compliance.

The measures referred to in the preceding paragraphs are not exclusive and the Society

Financial Popular must stay informed about the existence of new methods for

evaluations and, if applicable, their incorporation into the Remuneration System.

b)

The remunerations of persons subject to the Remuneration System in charge of the

integral risk management and internal control areas shall be established in such a way that, if applicable, the ratio resulting from dividing Extraordinary Remunerations by

Ordinary Remunerations is relatively lower than the respective ratio of

employees assigned to business areas. In this case, Popular Financial

Societies must determine that the payment of Extraordinary Remunerations to the

persons referred to in this subsection must be based on the achievement of the objectives of the

referred risk and internal control areas.

Popular Financial Societies must foresee in their hiring policies, the

specific remuneration schemes for each job profile of employees or persons subject to

the Remuneration System, that they have established in accordance with what is stated in the present

fraction.

III.

Incorporate, based on analyses carried out by the personnel responsible for the administration

of integral risk, the potential effect of the materialization of risks jointly with the payment

of Ordinary Remunerations or Extraordinary Remunerations to persons subject to the System

of Remuneration, and their corresponding effects on the liquidity and profitability of the Society

Financial Popular, to determine the optimal remuneration schemes for said persons.

IV.

Provide that the Popular Financial Society has sufficient flexibility to reduce or

suspend the payment of Extraordinary Remunerations when facing losses, or the risks that

materialize are greater than expected.

This provision must be contained in the remuneration policies that regulate the conditions of

work of Popular Financial Societies.

Article 209 Bis 2.- Popular Financial Societies, as a result of the application of the System

of Remuneration, must generate sufficient documentary information to allow permanent review

of the Remuneration System by the Remuneration Committee, as well as by the personnel responsible for

integral risk management or when this does not exist, by the Comisario (Auditor) or, if applicable, by the committee

of

risks.

Article 209 Bis 3.- Popular Financial Societies will make known through their Internet page,

as well as in the report referred to in fraction IX, third paragraph of Article 212 of these

provisions, information regarding their Remuneration System, updating such information

annually, and including at least the following:

I.

Qualitative information:

a)

Remuneration policies and procedures by job profile of employees or persons

subject to the Remuneration System.

b)

Information relating to the Remuneration Committee including at least:

i.

The composition and functions of the Remuneration Committee.

ii.

External consultants who have advised, the body by which they were commissioned, and in

what areas of the remuneration process they participated.

iii.

A description of the scope of the remuneration policy of the Popular Financial

Society, whether by regions or by business lines.

iv.

A description of the types of employees considered as risk-takers and their

directives, including the number of employees in each group.

c)

Information relating to the structure of the remuneration process which must include:

i.

General description of the main characteristics and objectives of the policy of

remuneration.

ii.

. . .

Last review of the remuneration policy by the Remuneration Committee and general description of changes made to said policy during the last year.

iii. An explanation of how the Popular Financial Society ensures that the remuneration of employees in risk management areas and control and audit areas is determined independently of the areas they supervise.

d) Description of the ways in which current and future risks relate to remuneration processes, considering the following:

i. General description of the main risks that the Popular Financial Society considers when applying remuneration measures.

ii. General description of the nature and type of measures to consider the risks mentioned in the previous point, as well as those not considered.

iii. Analysis of the ways in which these measures affect remuneration.

iv. Analysis of the nature and ways in which these measures have changed in the last year and their reasons, as well as the impact of said changes on remuneration.

e) Linkage of the Popular Financial Society's performance with remuneration levels during the period, shall include:

i. General description of the main performance parameters for the Popular Financial Society, business lines, and personnel at the individual level.

ii. Analysis of the linkage of individual remuneration with the performance of the entire Popular Financial Society and with particular performance.

iii. Analysis of measures put into practice to adapt remuneration in case the results of performance measurements indicate weaknesses.

f) Description of the way in which the Popular Financial Society adjusts remuneration considering its long-term performance, including:

i) Analysis of the Popular Financial Society's policy for transferring accrued variable remuneration, and how the transfer of the portion of variable remuneration is different for employees or groups of employees. Description of the factors that determine the variable fraction of remuneration and its relative importance.

ii) Analysis of the Popular Financial Society's policy and criteria for adjusting transferred remuneration before and after vesting through clawback agreements.

g) Description of the different forms of variable remuneration used by the Popular Financial Society and the justification for the use of such forms. The disclosure must include:

i. General description of the forms of variable remuneration offered by the Popular Financial Society (among others, in cash, shares or share-linked instruments, and other forms).

ii. Analysis on the use of different forms of variable remuneration, and if the combination of different forms of variable remuneration is different among employees or groups of employees, as well as an analysis of the factors that determine the mix and its relative importance.

II. Quantitative Information:

a) Number of Remuneration Committee meetings during the fiscal year.

b) Number of employees who received Extraordinary Remuneration during the fiscal year.

i. Number and total amount of guaranteed bonuses granted during the fiscal year.

ii. Number and total amount of awards granted during the fiscal year.

iii. Number and total amount of severance or settlement payments made during the fiscal year.

iv. Total amount of Extraordinary Remunerations pending to be granted, broken down into cash, shares, share-linked instruments, and other forms.

v. Total amount of remunerations granted and paid in the fiscal year.

c) Breakdown of the amount of remunerations granted for the fiscal year as follows:

i. Fixed and variable remuneration;

ii. Transferred and non-transferred, and

iii. The amounts and forms of Extraordinary Remuneration, divided into monetary benefits, shares, linked instruments, and other types.

d) Information on the exposure of employees to implicit adjustments (such as fluctuations in the value of shares or profit-sharing) and explicit adjustments (such as failed recoveries or similar reversals or downward-adjusted awards) of transferred remuneration and retained remuneration:

i. Total amount of pending transferred and retained remunerations exposed to subsequent explicit and/or implicit adjustments.

ii. Total amount of reductions during the fiscal year due to an explicit ex post adjustment.

iii. Total amount of reductions during the fiscal year due to implicit ex post adjustments.

The information classified as quantitative contained in this Article shall be disclosed for at least the two years prior to the one being reported, provided that such information exists.

Article 209 Bis 4.- The Board of Directors shall be responsible for the approval of the Remuneration System, the policies and procedures governing it, and its modifications. Likewise, it must monitor the proper functioning of the Remuneration System based on the semi-annual reports of the Remuneration Committee referred to in fraction V of Article 209 Bis 6 of these provisions, as well as the annual report on the performance of the Remuneration System and the report on the consistency in the application of said system presented by the risk and audit committees, as applicable.

Popular Financial Societies shall inform the Commission about the modifications they make to the Remuneration System, as well as keep the documentation related to said system available to them, for a period of five years counted from its generation or modification.

Article 209 Bis 5.- The Remuneration Committee must be a body capable of exercising independent judgment, whose decisions are based on the evaluation of the risks assumed by the Popular Financial Society in question.

The Remuneration Committee shall be composed in accordance with the following:

I. At least two incumbent members of the Board of Directors, of which at least one must be independent, who shall preside. Likewise, at least one of the Directors must be a person who, by their knowledge and development, has extensive experience in risk management or internal control.

II. The person responsible for comprehensive risk management, in the case of Popular Financial Societies with a total asset amount greater than 15,000,000 UDIS.

III. A representative from the human resources area.

IV. A representative from the area in charge of financial planning or budget preparation.

V. The Comisario in the case of Popular Financial Societies with a total asset amount equal to or less than 280,000,000 UDIS, or the Internal Auditor in the case of Popular Financial Societies with a total asset amount greater than 280,000,000 UDIS, who may participate with voice but without vote.

The Remuneration Committee shall meet at least quarterly, with at least a majority of its members present, but in any case, the incumbent member of the Board of Directors with independent status must attend. Sessions and agreements shall be recorded in detailed minutes signed by all attendees.

Article 209 Bis 6.- The Remuneration Committee, for the development of its purpose, shall perform the following functions:

I. Propose for approval by the Board of Directors:

a) Remuneration policies and procedures, as well as any modifications made to them;

b) Employees or personnel holding any position, mandate, commission, or any other legal title that Popular Financial Societies have granted for the conduct of their operations, which will be subject to the Remuneration System, considering in all cases those who make decisions that may imply a risk for the Popular Financial Society or participate in any process that concludes in that, and

c) Special cases or circumstances in which a person could be exempted from the application of authorized remuneration policies.

II. Implement and maintain the Remuneration System in the Popular Financial Society, which must consider the differences between the different administrative, control, and business units and the risks inherent to the activities performed by persons subject to the Remuneration System. For the purposes of the provisions of this fraction, the Remuneration Committee must receive and consider reports from the personnel responsible for comprehensive risk management or from the Comisario in the case of Popular Financial Societies with a total asset amount equal to or less than 15,000,000 UDIS, regarding the risk implications of remuneration policies and procedures.

III. Inform all relevant personnel about remuneration policies and procedures, ensuring at all times that interested parties understand the methods for determining, integrating, and delivering their remuneration, the risk adjustments applicable to them, the deferral of their Extraordinary Remunerations, and any other mechanism applicable to their remuneration.

IV. Hire external consultants in remuneration schemes and risk management when deemed necessary, to assist in the design of the remuneration scheme, avoiding any conflict of interest in this regard.

V. Inform the Board of Directors, at least semi-annually, about the functioning of the Remuneration System, and at any time when the risk exposure assumed by the Popular Financial Society, the administrative, control, and business units, or the persons subject to the Remuneration System, could result in an adjustment to said Remuneration System of the Popular Financial Society in question.

Article 209 Bis 7.- Popular Financial Societies that have a risk committee integrated in terms of Article 164 of these provisions may assign to this committee the functions attributed to the Remuneration Committee, provided that at least one of the members of the Board of Directors who make up the risk committee is independent, and another has extensive experience in risk management or internal control. In the case of Popular Financial Societies with a total asset amount equal to or less than 280,000,000 UDIS, which do not have a risk committee in terms of this paragraph, the Board of Directors may perform the functions of the Remuneration Committee.

Additionally, when the risk committee or the Board of Directors, as applicable, discusses the topics that would correspond to the Remuneration Committee, a representative from the human resources area and a representative from the area in charge of financial planning or budget preparation of the Popular Financial Society shall be invited to their sessions, who may participate with voice and vote only on topics referring to the Remuneration System. The favorable vote of the Independent Director will be required when the Board of Directors of the Popular Financial Society performs the functions of the Remuneration Committee.

" Article 335.- . . .

I. to XI.

. . .

XII.

Chapter IV Bis of Title Four of these provisions.

XIII. to XX.

. . .

. . . "

TRANSITORY PROVISIONS

FIRST.- This Resolution shall enter into force the day following its publication in the Official Gazette of the Federation, except for the following transitory articles.

SECOND.- Popular financial societies must approve their remuneration system in accordance with what is provided in this Resolution within a period of one hundred eighty calendar days from the entry into force of this instrument. Likewise, they must send to the National Banking and Securities Commission a report on the approval by their board of directors of the remuneration system within ten business days following the respective approval.

THIRD.- Popular financial societies with operation levels I and II will have a period of sixty days counted from the publication of this instrument to adjust to what is provided in article 14 of the General Provisions applicable to savings and credit institutions, integration organizations, community financial societies, and rural financial integration organizations, referred to in the Popular Savings and Credit Law, which is modified by this instrument.

Respectfully,

Mexico City, July 1, 2016. - The President of the National Banking and Securities Commission, Jaime González Aguadé. - Rubric.

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