Resolution SBS No. 1706-2018: Regulation on the Participation of Municipal Savings and Credit Institutions in the Law Promoting Regional and Local Public Investment with Private Sector Participation

Los Laureles Nº 214 - Lima 27 - Peru Tel.: (511) 6309000 1/6 Lima, May 02, 2018

Resolution S.B.S.
No. 1706-2018

The Superintendent of Banking, Insurance and Private Pension Fund Administrators

CONSIDERING:

That, through Law No. 30608, the modification of Article 1 of Law No. 29230, the Law that promotes regional and local public investment with private sector participation, was approved;

That, said Law No. 30608 aims to promote macro-regional microeconomic articulation through the possibility of intervention of municipal savings and credit institutions in the financing and/or execution of public investment projects in agreement with regional and local governments;

That, said modification establishes that during the process of participation of municipal savings and credit institutions in public investment projects under Law No. 29230, the corresponding supervision and control of the Superintendence of Banking, Insurance and Private Pension Fund Administrators and the Comptroller General of the Republic are available, in accordance with current regulations;

That, the supervision by the Superintendence referred to in the previous consideration implies the power to establish prior requirements and prudential criteria for the participation of municipal savings and credit institutions, linked to issues of profit capitalization, risk management and corporate governance;

That, it is necessary to modify the Internal Audit Regulation, approved by Resolution SBS No. 11699-2008 and its modifying norms;

That, in order to collect the opinions of the general public regarding the proposal for modification of the regulation, the pre-publication of the draft resolution was ordered, under the provisions of the Thirty-second Final and Complementary Provision of the General Law and Supreme Decree No. 001-2009-JUS;

With the approval of the Adjunct Superintendencies of Banking and Microfinance and of Legal Advice; and,

In exercise of the powers conferred by numbers 7 and 9 of Article 349 of the General Law of the Financial System and the Insurance System and the Organic Law of the Superintendence of Banking and Insurance – Law No. 26702 and its modifying norms, hereinafter General Law, and the power granted in Article 1 of Law No. 29230, modified by Law No. 30608;

Los Laureles Nº 214 - Lima 27 - Peru Tel.: (511) 6309000 2/6

RESOLVES:

Article First.- Approve the Regulation on the Participation of Municipal Savings and Credit Institutions in the Law that Promotes Regional and Local Public Investment with Private Sector Participation, as indicated below:

“REGULATION ON THE PARTICIPATION OF MUNICIPAL SAVINGS AND CREDIT INSTITUTIONS IN THE LAW THAT PROMOTES REGIONAL AND LOCAL PUBLIC INVESTMENT WITH PRIVATE SECTOR PARTICIPATION

CHAPTER I
GENERAL PROVISIONS

Article 1.- Scope
The provisions of this regulation are applicable to municipal savings and credit institutions included in number 3 of letter A of Article 16 of the General Law.

Article 2.- Definitions
For the purposes of this regulation, the following definitions shall be considered:

1. High-risk portfolio: The sum of restructured, refinanced, overdue and judicially collected credits.
2. Certificate: Certificate of regional and local public investment (CIPRL) or certificate of national government public investment (CIPGN), as applicable. These certificates are used in accordance with what is established in the Law that promotes regional and local public investment with private sector participation, Law No. 29230 and modifications.
   1
3. Investment agreement: Regional and local public investment agreement, indicated in the Works for Taxes Law.
4. CMAC: Municipal Savings and Credit Institution.
5. Management: Joint Management or General Manager, as applicable.
6. Works for Taxes Law: Law that promotes regional and local public investment with private sector participation, Law No. 29230 and modifications.
7. Works for Taxes Mechanism: Mechanism referred to in Law No. 29230 and modifications.
   2
8. Work: Investment project defined in the Regulation of Legislative Decree No. 1252, Legislative Decree that creates the National System of Multiannual Programming and Investment Management and repeals Law No. 27293, Law of the National Public Investment System, approved by Supreme Decree No. 027-2017-EF and modifications.
9. 3
   10.Regulation for the Requirement of Effective Equity for Credit Risk: Regulation for the Requirement of Effective Equity for Credit Risk approved by Resolution SBS No. 14354-2009 and its modifying norms.
   11.Subordinated Debt Regulation: Subordinated Debt Regulation applicable to Financial System Companies approved by Resolution SBS No. 03950-2022. 4
10. SUNAT: National Superintendence of Customs and Tax Administration.
11. Superintendence: Superintendence of Banking, Insurance and Private Pension Fund Administrators.

1 Number replaced by Resolution SBS No. 01803-2025 of May 20, 2025.
2 Number replaced by Resolution SBS No. 01803-2025 of May 20, 2025.
3 Number eliminated by Resolution SBS No. 03955-2022 of 12.22.2022, effective from 01.01.2023.
4 Number modified by Resolution SBS No. 03955-2022 of 12.22.2022, effective from 01.01.2023.

Los Laureles Nº 214 - Lima 27 - Peru Tel.: (511) 6309000 3/6

CHAPTER II
PRIOR CONDITIONS AND REQUIREMENTS FOR THE PARTICIPATION OF MUNICIPAL SAVINGS AND CREDIT INSTITUTIONS

Article 3.- Responsibility of the Board of Directors
Directors are responsible for:
a) Establishing policies and procedures to carry out the works for taxes mechanism and for appropriate management of risks derived from it. b) Approving the participation of CMACs in the works for taxes mechanism and selecting the work they intend to develop. c) Providing the necessary resources (internal or external) for the management of the works for taxes mechanism, allowing them to comply with the provisions of the Works for Taxes Law and other regulations governing said mechanism.

Article 4.- Responsibility of Management
Management is responsible for:
a) Implementing the works for taxes mechanism in accordance with the policies, procedures and agreements adopted by the Board of Directors. b) Permanently monitoring the execution, degree of progress and amount of the work, which must be reported quarterly to the Board of Directors, unless some relevant fact warrants being reported with a lower frequency. 5 c) Communicating to this Superintendence, within five (5) business days of becoming aware of its occurrence, any event that affects the non-issuance of certificates in favor of the CMAC, indicating the corrective measures adopted.

Article 5.- Corporate governance and integrated risk management requirements 6
5.1 To participate in the works for taxes mechanism, the CMAC must have good corporate governance and integrated risk management practices, as established in this article.
5.2 It is considered that the CMAC has good corporate governance and integrated risk management practices when it meets the following conditions:
a) The Board of Directors is composed of at least five (5) Directors. b) The Joint Management is complete with titular members, and exceptionally, two (2) Acting Managers may be allowed for a maximum term of six (6) months. c) The high-risk portfolio indicator minus the total provisions for placements, divided by effective equity, must be less than five percent (5%) as of the cutoff date of the report referred to in Article 7 of this Regulation. d) The CMAC complies with conservation cushions, by economic cycle and by market concentration risk, and with the requirement of effective equity for additional risks. 7 e) The “Tier 1 Ordinary Capital to Total Risk-Weighted Assets and Contingent” indicator defined in Article 15 of the Subordinated Debt Regulation is greater than 5.125%. 8 f) The CMAC does not present pending requirements for provisions, liquidity or capital, of a regulatory or prudential nature, formulated by this Superintendence. 5 Letter replaced by Resolution SBS No. 01803-2025 of May 20, 2025. 6 Article replaced by Resolution SBS No. 3301-2020 of December 29, 2020. 7 Letter modified by Resolution SBS No. 03955-2022 of 12.22.2022, effective from 01.01.2023. 8 Letter modified by Resolution SBS No. 03955-2022 of 12.22.2022, effective from 01.01.2023.

Los Laureles Nº 214 - Lima 27 - Peru Tel.: (511) 6309000 4/6

g) The CMAC does not present losses in the last three (3) closed annual fiscal years as of the cutoff date of the report referred to in Article 7 of this Regulation.

5.3 In order to comply with the indicator indicated in letter c) of number 5.2, the CMAC may constitute voluntary provisions, which may only be reversed with prior authorization of this Superintendence.

5.4 This Superintendence may establish, for prudential reasons, additional requirements for the participation of CMACs in the works for taxes mechanism.

Article 6.- Profit capitalization requirement and limit on participation in the works for taxes mechanism

6.1 The CMAC must reasonably ensure that the maximum amount of the total investment for the execution of the selected work is determined as a percentage of the income tax corresponding to the previous fiscal year, which varies depending on the percentage of profit capitalization of the previous fiscal year as of the date of presentation of the report referred to in Article 7 of this Regulation, as follows 9:

Maximum amount of the work: X * income tax of the previous fiscal year according to the Annual Income Tax Sworn Declaration presented to SUNAT

Where X = 0.8 * (percentage of profit capitalization of the previous fiscal year as of the date of presentation of the report referred to in Article 7 of this Regulation) 2

6.2 In case the CMAC has agreed to capitalize one hundred percent (100%) of the profits obtained in the previous fiscal year, it may carry out up to two (2) works simultaneously, always maintaining the maximum limit of total investment indicated in the previous number.

6.3 The CMAC may apply the certificates obtained in accordance with what is established in Law No. 29230 and modifications 10.

6.4 The CMAC cannot carry out a new work under the works for taxes mechanism until the certificates obtained have been applied, having to communicate to this Superintendence the total application of the certificates obtained. This provision may be exempted by this Superintendence whenever the non-application of said certificates is due to causes unrelated to the CMAC, for which it must present its duly substantiated and documented exception request, which must be previously approved by the Board of Directors of the CMAC 11.

6.5 The CMAC must ensure, at the close of each month, that the maximum amount of total investment is not higher than the amount that, if recognized as an expense of the fiscal year and its consequent impact on effective equity, could cause the CMAC to violate the global limit established in number 3 of Article 199 of the General Law, the operational limits established in Articles 200 to 212 of the General Law, as well as the conservation cushions, by economic cycle and by market concentration risk, and the requirement of effective equity for additional risks. Such analysis must be available to this Superintendence. 12

Article 7.- Information to this Superintendence

9 Paragraph replaced by Resolution SBS No. 01803-2025 of May 20, 2025.
10 Paragraph replaced by Resolution SBS No. 01803-2025 of May 20, 2025.
11 Number replaced by Resolution SBS No. 3301-2020 of December 29, 2020.
12 Number modified by Resolution SBS No. 03955-2022 of 12.22.2022, effective from 01.01.2023.

Los Laureles Nº 214 - Lima 27 - Peru Tel.: (511) 6309000 5/6

7.1 The Internal Audit Unit of the CMAC must prepare an annual report supporting compliance with what is provided in Article 5 of this Regulation, with a cutoff date of December 31 of the previous year. Said report must be approved by the Board of Directors and sent to this Superintendence no later than April 30 of each year, together with the Board of Directors minutes where its approval is recorded.

7.2 Within a period not exceeding thirty (30) calendar days from the receipt of the annual report, this Superintendence analyzes the presented report. If this Superintendence does not pronounce itself within the aforementioned period, the evaluation of the Internal Audit Unit and the CMAC may continue with the participation process in the works for taxes mechanism is considered compliant.

The investment agreement may be signed no later than May 30 of the year following the receipt of the report by this Superintendence. This provision may be exempted by this Superintendence, whenever this, as a result of its evaluation, determines that the non-signing of said investment agreement is due to causes unrelated to the CMAC, for which the CMAC must present a duly substantiated and documented exception request, which must be previously approved by the Board of Directors of the CMAC. The CMAC must communicate to this Superintendence the signing of the investment agreement, describing the work to be executed and the maximum amount of the investment 13.

7.3 What is provided in the previous number does not relieve the obligation of this Superintendence to carry out subsequent supervision and pronounce itself in case it determines non-compliance with what is provided in Article 5 of this Regulation, said pronouncement having a binding character.

7.4 This Superintendence may dispose of prudential measures on the amount of participation for the execution of the works selected in the works for taxes mechanism.

TRANSITORY PROVISION

Sole.- For a single time, the CMAC that on 12/31/2017 meets the requirements indicated in Article 5 of this Regulation, may present the evaluation report of the Internal Audit Unit indicated in Article 7, at the latest until 07/31/2018. Within a period not exceeding thirty (30) calendar days from the receipt of the report mentioned above, this Superintendence will evaluate said report and may pronounce itself on it. If this Superintendence does not pronounce itself within the aforementioned period, it will be understood that the results of the evaluation of the Internal Audit Unit of the CMAC are compliant and the CMAC may continue with the participation process in the works for taxes mechanism. The investment agreement may be signed no later than 11/29/2019. 14

This Superintendence will pronounce itself in case it determines non-compliance with what is provided in Article 5 of this Regulation, said pronouncement having a binding character.

Exceptionally and for a single time, the CMAC may certify compliance with the requirements indicated in Article 5 of this Regulation until 05/31/2018.”

13 Number replaced by Resolution SBS No. 2677-2022 of August 31, 2022.
14 Paragraph replaced by Resolution SBS No. 2404-2019 of 05/29/2019 and Resolution SBS No. 5024-2019 of 10/28/19.

Los Laureles Nº 214 - Lima 27 - Peru Tel.: (511) 6309000 6/6

Article Second.- Modify the Internal Audit Regulation, approved by Resolution SBS No. 11699-2008 and its modifying norms, according to the following:

Incorporate into section I “Companies indicated in letters A, B and C of Article 16 of the General Law (except guaranteeing and guarantee companies), Banco de la Nación, Banco Agropecuario, MIVIVIENDA Fund and Development Financial Corporation (COFIDE)” of the Annex “Planned Activities”, the following:

“19) For Municipal Savings and Credit Institutions:
a) The evaluation of compliance with the standards indicated in the Special Norms for the implementation of Law No. 30607 referred to the capitalization of profits. b) The evaluation of compliance with what is provided in the Regulation on the Participation of Municipal Savings and Credit Institutions in the Law that Promotes Regional and Local Public Investment with Private Sector Participation, if applicable.”

Article Third.- This Resolution enters into force from the day following its publication in the official newspaper El Peruano

Register, communicate and publish.

SOCORRO HEYSEN ZEGARRA
Superintendent of Banking, Insurance and Private Pension Fund Administrators