Resolution No. CD-SIBOIF-588-2-JUN10-2009
Dated 10 June 2009

STANDARD FOR THE REFORM OF ARTICLES 11, 15 AND 47 OF THE STANDARD ON CREDIT RISK MANAGEMENT

The Board of Directors of the Superintendency of Banks and Other Financial Institutions, after the deliberations thereon,

SOLE CONSIDERATION

That based on the power granted to it by article 3, numerals 3 and 13, and article 10, numeral 7, of Law 316, Law of the Superintendency of Banks and Other Financial Institutions, and its reforms contained in Law 552, Law of Reforms to the aforementioned Law 316;

In exercise of its powers,

HAS ISSUED

The following,

Resolution No. CD-SIBOIF-588-2-JUN10-2009

STANDARD FOR THE REFORM OF ARTICLES 11, 15 AND 47 OF THE STANDARD ON CREDIT RISK MANAGEMENT

First: Articles 11, 15 and 47 of the Standard on Credit Risk Management, contained in Resolution No. CD-SIBOIF-547-1-AGOST20-2008, dated 20 August 2008, are hereby reformed, and shall read as follows:

Art. 11 Evaluation and classification.- The financial institution shall permanently carry out an evaluation of the quality of its risk assets, classifying them in accordance with the criteria established in this standard, in order to estimate the recoverability of its risk assets and take the corresponding corrective and safeguard measures. The financial institution shall keep the classifications of its debtors updated, in accordance with the background information that indicates variations in the debtor's level of loss risk. In no case shall unclassified portfolio be admitted.

The evaluations and classifications of the different types of portfolio shall be carried out as follows:

a) Consumer, residential mortgage and microcredit loans shall be permanently classified based on their repayment capacity measured in terms of their degree of compliance, reflected in the number of days of arrears. To determine the classification, all credit operations contracted by the debtor with said institution shall be pooled, such that the risk category assigned is the one corresponding to the credit with the highest recovery risk within the institution, provided that said credit is classified in categories "D" or "E", and its balance represents at least twenty percent (20%) of the total owed by the client within the institution.

When a commercial-type debtor maintains at the same institution other operations of another type (consumer, residential mortgage or microcredit), the debtor shall be evaluated as a whole based on the criteria for the evaluation of the commercial portfolio.

b) Commercial loans shall be permanently classified based on arrears or other events that warrant their reclassification, and must be reclassified at the time when, through the respective monitoring, deterioration in the debtor's repayment capacity or financial conditions is determined. Additionally, at least once a year, the asset evaluation and classification area of the financial institution shall carry out an in-depth evaluation based on all the criteria established in article 8 of this standard.

The additional provisions resulting from the evaluations and classifications must be constituted and reflected in the financial statements of the financial institution in the same month in which they are determined.

Art. 15 Scope and criteria for classification.- The financial institution shall

permanently classify its microcredit portfolio based on the criteria established in article 7 and literal a) of article 11 of this standard and constitute the corresponding minimum provisions in accordance with the following table:

Classification		Days of arrears	Provision
A	Normal risk	Up to 15	1%
B	Potential risk	From 16 to 30	5%
C	Real risk	From 31 to 60	20%
D	Doubtful recovery	From 61 to 90	50%
E	Irrecoverable	More than 90	100%

Said minimum provisions are without prejudice to each institution being able to increase their amount, if it considers that the assumed loss risk is greater than that determined in accordance with the indicated procedure.

The provision percentage shall be applied to the net balance not covered by eligible liquid guarantees as risk mitigants, as established in chapter XIII of this standard.

Additionally, for debtors that have constituted eligible real guarantees as risk mitigants referred to in numeral 1), literal b) of article 30 of this standard, whose appraised realization value is equal to or greater than one hundred percent (100%) of the outstanding balance, the institution may apply the provision percentage corresponding to the immediately lower risk classification prior to the one assigned to the debtor, without changing the classification corresponding to it.

Art. 47 Write-off.- All loans shall be written off in accordance with the provisions of the respective Single Chart of Accounts (MUC), on the days of arrears detailed below:

a) Consumer loans, on day of arrears number one hundred eighty-one (181). The financial institution may write off a consumer loan on day 360, when said loan has constituted real guarantees referred to in numerals 1), 3) (machinery and vehicles only) and 5) of literal b) of article 30 of this standard, whose appraised realization value is equal to or greater than one hundred percent (100%) of the outstanding balance and are in the process of judicial collection.

b) Residential mortgage loans, microcredits and commercial loans on day of arrears number three hundred sixty (360). Excepted are loans

residential mortgage, microcredit and commercial loans that have constituted eligible real guarantees as risk mitigants referred to in numeral 1), literal b) of article 30 of this standard, whose appraised realization value is equal to or greater than one hundred percent (100%) of the outstanding balance, provided they are in the process of judicial collection.

For control purposes, the Financial Institution must keep, for a period of no less than five years, records in Order Accounts of the balances originating from the write-offs made.

Second: This standard shall enter into force as of its notification, without prejudice to its subsequent publication in La Gaceta, Diario Oficial.

(f) J. Rojas R. (f) V. Urcuyo V (f) Roberto Solórzano Ch. (f) A. Cuadra G. (f) Gabriel Pasos Lacayo (f) Fausto Reyes (f) U. Cerna Barquero.

URIEL CERNA BARQUERO
Secretary Board of Directors SIBOIF