2020 - YEAR OF GENERAL MANUEL BELGRANO

COMMUNICATION “A” 7024 26/05/2020

TO FINANCIAL INSTITUTIONS,
TO MUTUAL GUARANTEE SOCIETIES,
TO NON-FINANCIAL COMPANIES ISSUING CREDIT CARDS, TO CREDIT PORTFOLIO ADMINISTRATORS OF FORMER FINANCIAL INSTITUTIONS, TO TRUSTEES OF FINANCIAL TRUSTS INCLUDED IN THE LAW OF FIN- ANCIAL INSTITUTIONS, TO PUBLIC GUARANTEE FUNDS, TO OTHER NON-FINANCIAL CREDIT PROVIDERS, TO NON-FINANCIAL COMPANIES ISSUING PURCHASE CARDS:

Ref.: Circular
LISOL 1 - 887
OPRAC 1 - 1032

Classification of debtors.
Credit management.
Grading of credit.
Minimum provisions for risk of uncollectibility. Update .

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We address you to send you the pages that, in replacement of those previously provided, should be incorporated into the reference standards based on the provisions disseminated through Communications “A” 6938 and 6946.

It is noted that on the page of this Institution www.bcra.gob.ar, by accessing “Financial System – LEGAL AND REGULATORY FRAMEWORK – Ordering and summaries – Ordered texts of general regulations”, you will find the modifications made with texts highlighted in special characters (strikethrough and bold).

We greet you attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Matías A. Gutiérrez Girault
Darío C. Stefanelli
Manager of Issuance of Standards
Principal Manager of Issuance and
Regulatory Applications

ANNEX

CLASSIFICATION OF DEBTORS
B.C.R.A.
Section 3. Classification task.

3.1. Portfolio analysis procedures.

The entity must develop portfolio analysis procedures that ensure: a) an adequate analysis of the debtor's economic and financial situation and b) a periodic review of its situation regarding the objective and subjective conditions of all risks assumed.

3.2. Periodicity of classification.

The classification of debtors must be carried out with a periodicity that attends to its importance –considering all the financings included–, and in all cases the analysis carried out must be documented.

3.3. Manual of classification and provisioning procedures.

The following shall be recorded in a “Manual of classification and provisioning procedures”:

3.3.1. The procedures implemented, in a manner that allows appreciating the process followed in the matter.

3.3.2. The levels involved in the analysis and decision in the granting of facilities, the classification of debtors and the provisioning of receivables, according to the attributions assigned to each of them and in accordance with the requirements established for the approval of the classification and provisioning.

3.3.3. The exercise of the option to group commercial financings of up to the equivalent of twice the reference amount established in point 3.7., whether or not they have preferred guarantees, together with consumer or housing credits.

3.3.4. The possibility that customer files be kept on magnetic, electronic or other similar technology media or be maintained in a place other than that of the account's location, in accordance with the provisions of points 1.1.4. and 1.1.5. of the standards on “Credit management”.

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CLASSIFICATION OF DEBTORS
B.C.R.A.
Section 5. Portfolio categories.

5.1. Categories.

The portfolio shall be grouped into two basic categories:

5.1.1. Commercial portfolio.

It covers all included financings, with the exception of the following:

5.1.1.1. Consumer or housing loans.

Loans of this class that exceed the equivalent of twice the reference amount established in point 3.7. and whose repayment is not linked to fixed or periodic income of the client but to the evolution of its productive or commercial activity shall be included within the commercial portfolio.

5.1.1.2. At the option of the entity, commercial financings of up to the equivalent of twice the reference amount established in point 3.7., whether or not they have preferred guarantees, may be grouped together with consumer or housing loans, in which case they shall receive the treatment provided for the latter.

When the client maintains financings for both concepts, consumer or housing loans shall be added to those of the commercial portfolio to determine their placement in one or the other portfolio based on the indicated amount, for which purpose loans with preferred guarantees shall be weighted at 50 %.

If exercised, this option must be applied generally to the entire portfolio and must be provided for in the “Manual of classification and provisioning procedures” and may only be changed with 6 months' prior notice to the Superintendency of Financial and Exchange Entities (SEFyC).

5.1.2. Consumer or housing portfolio.

It comprises:

5.1.2.1. Consumer loans (personal and family, for professionals, for the acquisition of consumer goods, credit card financing).

5.1.2.2. Loans for own housing (purchase, construction or renovation).

5.1.2.3. Loans to Microcredit Institutions –up to the equivalent of 40 % of the reference amount established in point 3.7.– and to microentrepreneurs (as provided in point 1.1.3.4. of the rules on “Credit management”).

5.1.2.4. Commercial financings of up to the equivalent of twice the reference amount established in point 3.7., whether or not they have preferred guarantees, when the entity has opted for it.

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6.3.1. In the course of each calendar quarter, with respect to clients individually considered whose included financings at some point are equivalent to 5 % or more of the RPC or of the assets of the financial trust of the month prior to the end of said period, as the case may be for entities or financial trusts, respectively. For these purposes, the group of connected counterparties shall be treated as a single client.

6.3.2. In the course of each calendar semester, with respect to clients individually considered whose included financings at some point total between 1 % –or the equivalent of twice the reference amount established in point 3.7., whichever is lower– and less than 5 % of the RPC or of the assets of the financial trust of the month prior to the end of said period, as the case may be for entities or financial trusts, respectively. For these purposes, the group of connected counterparties shall be treated as a single client.

At the close of the first calendar semester, the examination must have covered no less than 50 % of the total amount of the included commercial portfolio, counting the clients referred to in point 6.3.1., so that, if necessary to reach that value, it shall be completed with the review of clients whose included financings are less than 1 % of the aforementioned RPC or of the assets of the financial trust, or of the equivalent of twice the reference amount established in point 3.7., following a decreasing order based on their magnitude.

6.3.3. In the course of the fiscal year, in the other cases, so that at its end the review must have covered the entirety of the included commercial portfolio.

6.4. Mandatory reconsideration of the classification.

In addition to the minimum periodicity set forth above, an analysis must be carried out –leaving a reasoned record of the decision adopted in the client's file– and, if necessary, the classification must be modified each time any of the following circumstances occurs:

6.4.1. Modification of any of the objective classification criteria arising from these rules (delinquency term, legal status of the client or of its debts, compliance with refinancings and requests for refinancings of obligations).

6.4.2. Negative modification of the client's classification in the “Central de deudores del sistema financiero”, bringing it to a grade lower than that of the entity, by at least another financial entity or financial trust whose claims represent at least 10 % of the total reported by all creditors.

6.4.3. Notification of the final determination of the SEFyC of the adjustment of provisions, as provided in the matter as a consequence of inspection tasks.

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However, there are possible situations that, if not controlled or corrected in a timely manner, could compromise the client's future payment capacity.

Among the indicators that may reflect this situation, the following stand out: the client:

i) Presents a good financial and profitability situation, with moderate indebtedness and adequate cash flow for the payment of debts for principal and interest. The cash flow tends to weaken to meet payments since it is highly sensitive to the variation of one or two variables, over which there is a significant degree of uncertainty, being especially susceptible to changes in circumstances linked to the sector.

ii) Incurs delays of up to 90 days in the payments of its obligations. It shall be understood that the client makes the payment of its obligations when it does not resort to new direct or indirect financing from the entity.

In the analysis to be carried out, account must be taken, where applicable, of the possible impact that the situation of the other members of the group of connected counterparties to which it belongs may have on its payment capacity.

iii) Have a qualified and honest management.

iv) Have an adequate information system that allows regular knowledge of the client's financial and economic situation. The information is consistent. When the financings have preferred guarantees "B", according to the rules applicable in that matter, the entity may require that information with the frequency that allows it to carry out the evaluation of the debtor, observing the minimum periodicity established in point 6.3.

v) Belong to a sector of economic activity or line of business whose future trend presents questionable aspects, possibility of a decline in income, increased competition or structural costs.

vi) Maintain payment agreements resulting from court-approved judicial or out-of-court compositions (including approved out-of-court preventive agreements) due or private arrangements entered into jointly with creditor financial entities when at least 10 % of the amount involved in the aforementioned agreement has been paid.

In order to determine the amount of the cancellation, it will be admissible to count 50 % of the additional guarantees to those originally offered, constituted on assets not linked to the debtor's operation –with the exception of mortgages on rural properties which, therefore, will be countable–, observing the coverage margins established in the rules on "Guarantees".

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The agreement with the financial entity must be reached within 90 or 180 days counted from the date on which the default in the payment of the obligations occurred, depending on whether it is necessary to reach agreements with up to two entities or with more than two, respectively.

If the agreement has not been reached within the established period, the debtor must be reclassified into the corresponding lower category, in accordance with the indicators established for each level.

Debtors that have paid all accrued interest may be classified as being in a "normal situation" if they also meet the other conditions provided for that category.

Debtors that have not paid at least the accrued interest within 180 days of the refinancing being agreed must be reclassified into the category "with high risk of insolvency".

For the purposes provided in the last two preceding paragraphs and even if the aforementioned percentages of debt have been paid, debtors that have received additional credit under the terms referred to in point 2.2.5. of the rules on "Minimum provisions for bad debt risk", and to the extent that such additional financing has not been paid, must remain in this category for at least 180 days, counted from the date on which the additional credit was granted or from the date on which the refinancing agreement was entered into, whichever is more recent. This is so unless, by application of other guidelines, it should be categorized at the lower level.

Debtors that incur delays of more than 31 days with respect to the conditions agreed in the refinanced obligations must be recategorized at the immediately lower level "with problems".

6.5.2.3. Under special treatment.

For refinancings granted for the first time within the calendar year and once the first installment of said refinancing has been paid, the client may be reclassified only once into this situation. After the aforementioned refinancing and for classification purposes, only the default in the delay of its obligations must be taken into account.

For subsequent refinancings, they will receive the general treatment provided in these provisions.

6.5.3. With problems.

The analysis of the client's cash flow shows that it has problems in normally meeting all of its financial commitments and that, if not corrected, these problems may result in a loss for the financial entity.

Among the indicators that may reflect this situation, the following stand out: the client:

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6.5.3.1. Presents an illiquid financial situation and a level of cash flow that does not allow it to meet the payment of all of the principal and interest of the debts, being able to cover only the latter. Low earning capacity. The cash flow projection shows a progressive deterioration and a high sensitivity to minor and foreseeable changes in its own or environmental variables, further weakening its payment possibilities.

In the analysis to be carried out, account must be taken, where applicable, of the possible impact that the situation of the other members of the group of connected counterparties to which it belongs may have on its payment capacity.

6.5.3.2. Incurs delays of up to 180 days, excluding the debtors included in point 6.5.2.2. For this purpose, the computation of the periods will not be interrupted by the granting of renewals when the effective cancellation of the overdue obligations has not previously occurred, that is, without resorting to direct or indirect financing by the entity.

6.5.3.3. Has management with little capacity and/or experience and/or of unclear and/or weak honesty and/or with objectionable internal control systems.

6.5.3.4. Has an information system that is not entirely adequate, which makes it difficult to know exactly the client's real financial and economic situation. The information is not totally consistent and there is no adequate updating process that allows it to be available at the opportune moment.

6.5.3.5. Have repeated and systematic refinancings of the owed capital linked to insufficient capacity to pay it even when interest is paid and provided there are no reductions in capital, that the agreed interest rates are not reduced –unless this derives from market conditions– or that it is not necessary to accept goods in payment of part of the obligations.

When at least 5% of the refinanced obligations has been paid, without having incurred arrears greater than 31 days, and all accrued interest, plus the accumulated percentage that could correspond if the refinancing had been granted had the debtor been in lower categories, it may be reclassified into higher levels (“under observation” or “normal situation”) if, in addition, the other conditions provided for in the corresponding category are observed.

The debtor that, being classified in this category, has refinanced its debt –even if it has paid the percentage established in the preceding paragraph– and received additional credit under the terms referred to in point 2.2.5. of the rules on “Minimum Provisions for Bad Debt Risk”, and to the extent that such additional financing has not been paid, must remain in this category for at least 180 days counted from the date on which the additional credit was granted or from which the refinancing agreement was entered into, whichever is more recent. This, unless by application of other guidelines it should be categorized at the lower level.

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6.5.3.6. Maintain payment agreements resulting from court-approved or out-of-court approved compositions (including approved out-of-court preventive agreements) due or private arrangements entered into jointly with creditor financial institutions when 10% of the amount involved in the aforementioned agreement has not yet been paid.

In order to determine the amount of the payment, it will be admissible to count 50% of the additional guarantees to those originally offered, constituted over assets not linked to the debtor's operation –with the exception of mortgages on rural real estate which, therefore, will be countable–, observing the coverage margins established in the rules on “Guarantees”.

6.5.3.7. Incur recurrent arrears, non-compliance of up to 180 days with respect to contractual conditions or no movement in the accounts with the entity.

6.5.3.8. Belong to a sector of economic activity or line of business whose future trend is not firm, and have a perspective of decrease in income and profits, or there exists the possibility that demand for the products may be reduced.

6.5.3.9. Be located below the sector average with difficulties in facing competition and with minor problems in terms of adaptation to technology. Present problems in its relationship with suppliers and customers.

6.5.3.10. Maintain private arrangements with the financial institution that have the opinion of the entity's external auditor on the feasibility of compliance with the refinancing, when 15% of the amount involved in the aforementioned agreement has not yet been paid and provided that such agreement was reached when the debtor was categorized in the levels “with high risk of insolvency” or “irrecoverable”.

In order to determine the amount of the payment, it will be admissible to count 50% of the additional guarantees to those originally offered, constituted over assets not linked to the debtor's operation –with the exception of mortgages on rural real estate which, therefore, will be countable–, observing the coverage margins established in the rules on “Guarantees”. It will be an indispensable requirement, in addition, to have the favorable opinion on the quality of the guarantees, formulated by the external auditor.

In cases of agreements exceeding the equivalent of 2.5 times the reference amount established in point 3.7., the initial reclassification of the client to this category may be made provided there is no objection on the part of the SEFyC, to which each situation must previously be submitted individually.

6.5.3.11. Have been sued judicially by the entity for the collection of its claim, when this is linked to non-payment and records a delay in the payment of obligations not exceeding 180 days. Cases in which the actions refer to discussion about other contractual aspects are excluded.

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6.5.3.12. Have refinanced its debt with the granting of capital reductions and, in accordance with the methodology established in point 2.2.6. of the rules on “Minimum Provisions for Bad Debt Risk”, this classification level corresponds, provided that the other conditions provided for in this category are also observed.

The debtor may access higher classification levels in accordance with the provisions of the second and third paragraphs of point 6.5.3.5.

6.5.4. With high risk of insolvency.

The analysis of the client's cash flow shows that it is highly improbable that it can meet all of its financial commitments.

Among the indicators that may reflect this situation, it stands out that the client:

6.5.4.1. Presents an illiquid financial situation and a very high level of indebtedness, with negative operating results and the obligation to sell assets important for the activity carried out and that materially are of significant magnitude. The cash flow is manifestly insufficient, not even covering the payment of interest, and it is feasible to presume that it will also have difficulties in complying with eventual refinancing agreements.

In the analysis carried out, account must be taken, where applicable, of the possible impact on its payment capacity of the situation of the other members of the group of connected counterparties to which it belongs.

6.5.4.2. Incurs arrears of up to one year. For this purpose, the calculation of the periods shall not be interrupted by the granting of renewals when the effective cancellation of the matured obligations has not previously occurred, that is, without resorting to direct or indirect financing by the entity.

6.5.4.3. Has incompetent and/or dishonest management. A lack of control is observed in the internal systems.

6.5.4.4. Has an inadequate information system, which prevents knowing with accuracy the real financial and economic situation of the company. The information presented is not reliable because it does not have adequate supporting documentation. In general, the information is not consistent and is not up to date.

6.5.4.5. Has refinancings of the owed capital and accrued interest linked to insufficient capacity to pay them, with the granting of debt forgiveness or with a reduction in the agreed interest rates – unless this derives from market conditions – or when it has been necessary to receive assets in payment of part of the obligations. However, the debtor whose debts have been refinanced with the granting of capital debt forgiveness may be directly reclassified into higher levels (“with problems”, “under observation”) by applying the methodology established in point 2.2.6. of the rules on “Minimum Provisions for Bad Debt Risk”, provided that the other conditions set forth in the corresponding categories are also observed.

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When at least payment has been made, without having incurred arrears greater than 31 days, of 10 % of the refinanced obligations and all accrued interest, plus the cumulative percentage that could correspond if the refinancing had been granted had the debtor been in the lower category, it may be reclassified to the immediately higher level if, in addition, the other conditions set forth in the aforementioned level are observed.

The debtor that, being classified in this category, has refinanced its debt – even if it has paid the percentage established in the preceding paragraph – and received additional credit under the terms referred to in point 2.2.5. of the rules on “Minimum Provisions for Bad Debt Risk”, and to the extent that such additional financing has not been paid, must remain in this category for at least 180 days counted from the date on which additional credit was granted or from which the refinancing agreement was entered into, whichever is the most recent circumstance. This is so unless, by application of other guidelines, it should be categorized at the lower level.

6.5.4.6. Has been sued judicially by the entity for the collection of its claim when this is linked to non-payment and records arrears in payment of up to one year. Cases in which the actions refer to discussion of other contractual aspects are excluded.

If arrears greater than 540 days are verified, the debtor shall be immediately reclassified to the next lower level.

6.5.4.7. Has requested preventive reorganization proceedings, entered into an out-of-court preventive agreement not yet homologated, or has been petitioned for bankruptcy, as long as it has not been declared, for obligations equal to or greater than 20 % of the client's equity or for obligations between 5 % and less than 20 % of equity when the bankruptcy petition persists after 90 days from the date it was requested. If the bankruptcy petition is withdrawn, the debtor may be reclassified into higher levels, according to the previous situation, if the conditions provided therein are observed.

In the case of debtors that have requested preventive reorganization proceedings or an out-of-court preventive agreement not yet homologated, immediate reclassification to the next lower level shall apply when arrears of more than 540 days are verified.

6.5.4.8. Is permanently in arrears in payment, with defaults greater than 180 days with respect to the contractual conditions.

6.5.4.9. Belongs to a sector of economic activity or line of business with a poor future trend, prospects of scarce or negative income and profits.

6.5.4.10. Is located far below the sector average with very serious problems in facing competition and has technology that requires urgent modernization. Serious difficulties are observed in its relationship with customers and suppliers.

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6.5.5. Irrecoverable. The debts of clients included in this category are considered uncollectible. Although these assets could have some recovery value under a certain set of future circumstances, their uncollectibility is evident at the time of the analysis.

Among the indicators that may reflect this situation, the following stand out: that the client:

6.5.5.1. Presents a bad financial situation with suspension of payments, decreed bankruptcy or a petition for its own bankruptcy, with an obligation to sell at a loss assets important to the activity carried out and that are materially of significant magnitude. The cash flow is not enough to cover production costs. In the analysis carried out, account must be taken, where applicable, of the possible impact on its payment capacity of the situation of the other members of the group of connected counterparties to which it belongs.

6.5.5.2. Incurs arrears greater than one year, has refinancing of capital and its interest and financing of operating losses. For this purpose, the calculation of the periods shall not be interrupted by the granting of renewals when the effective cancellation of the matured obligations has not previously occurred, that is, without resorting to direct or indirect financing from the entity. When at least payment has been met, without having incurred arrears exceeding 31 days of 15% of the refinanced obligations and all accrued interest, the debtor may be reclassified to the immediately higher level if, in addition, the other conditions provided for in the aforementioned level are observed. The debtor who, being classified in this category, has refinanced its debt –even if it has cancelled the percentage established in the preceding paragraph– and received additional credit under the terms referred to in point 2.2.5. of the rules on “Minimum Provisions for Bad Debt Risk”, and to the extent that such additional financing has not been cancelled, must remain in this category for at least 180 days counted from the date on which the additional credit was granted or from the date on which the refinancing agreement was entered into, whichever is more recent.

6.5.5.3. Have an incompetent and/or dishonest management and/or one capable of carrying out fraudulent acts. There is practically no internal control.

6.5.5.4. Have an inadequate information system, which prevents knowing with accuracy the real financial and economic situation of the company. The information presented is not reliable since it does not have adequate supporting documentation. In general, the information is not consistent and is not up to date.

6.5.5.5. Belong to a sector of economic activity or line of business in extinction, with serious structural problems or that are requiring a generalized restructuring.

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6.5.5.6. Be located in the lowest portion within its sector, not being in a position to compete and with obsolete, unprofitable technology.

In addition, clients who, whatever the reason (including for not having a file or for not having provided reliable and/or updated information), have not been evaluated with the corresponding periodicity, must be classified in this category, with the exception of debtors in bankruptcy or with an out-of-court preventive agreement requested or in judicial management who, for a period of up to 540 days counted from the opening of the bankruptcy, request for the preventive agreement or initiation of judicial collection efforts, as applicable, have not submitted the documentation that allows such evaluation, provided that there is a report from the lawyer of the creditor financial entity on the reasonableness of the recovery of the credits included.

This, without prejudice to the fact that these are debts that meet all the conditions provided for in point 2.2.3.2. of the rules on “Minimum Provisions for Bad Debt Risk”.

6.5.6. Irrecoverable by technical disposition.

The following shall be included:

6.5.6.1. Clients that are in turn debtors in irregular situation -considering as such those that record arrears exceeding 180 days in meeting their obligations-, according to the list that, for this purpose and based on the information that the administrators of the credit portfolios must provide, the Central Bank of the Argentine Republic (BCRA) prepares and provides of:

i) Entities liquidated by the BCRA.

ii) Residual entities of privatized public financial entities or in the process of privatization or dissolution.

iii) Financial entities whose authorization to operate has been revoked by the BCRA and are in a state of judicial liquidation or bankruptcy.

iv) Trusts in which SEDESA is a beneficiary.

Debtors are excepted from being classified in this category when the financings granted to them are intended to cancel the loans that originated their inclusion in the list of defaulting debtors and provided that the funds are credited directly in the accounts of the former creditor entities.

6.5.6.2. Banks, other financial institutions abroad and other borrowers not domiciled in the country that do not comply with the provisions of points 3.1. and 3.2., as applicable, of the rules on “Credit Evaluations”. For the purposes of compliance with the aforementioned points, there must be an international risk rating included in the “investment grade” category.

The following shall be excluded:

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7.2. Classification levels.

7.2.1. Normal situation.

It comprises clients that meet the payment of their obligations in a timely manner or with arrears that do not exceed 31 days.

Temporary advances in current account shall be considered of normal compliance up to 61 days counted from their granting.

For the purposes of establishing the days of arrears, in the case of financings instrumented through credit cards, those resulting after imputing the minimum payment required in each settlement to cancel the debt in decreasing order of age shall be considered.

Debtors who have accessed debt refinancings while being classified in lower levels may only be included in this category to the extent that the guidelines established for each of the corresponding levels have been observed and, in addition, that the rest of their debts meet the conditions for the client to be reclassified in this level.

Debtors who have refinanced their debts, even if they have not incurred arrears in the payment of their services, may remain in this category when they have accessed, at most, two refinancings, within 12 months, counted from the last refinancing granted.

For these purposes, assistance granted to debtors classified in this category shall not be considered refinancing provided that it involves greater principal debt –net of interest and accessories that are capitalized– with respect to the amount previously owed for the same concept and that the debtor's repayment capacity to meet the obligations arising from that increase in the credit margin is assessed.

Bank current account overdrafts for amounts exceeding the utilization margins previously agreed, or those that have been made effective –whatever their amount– without the current account holder having a margin previously and expressly assigned, shall also not be considered refinancing provided that such excesses are settled within 30 days.

If refinancings are verified under conditions other than those indicated in the preceding paragraph, the debtor shall be reclassified, at a minimum, to the immediately lower level.

7.2.2. Low risk.

7.2.2.1. Under observation.

It comprises customers that record occasional breaches in meeting their obligations, with delays of more than 31 up to 90 days.

As regards the debtor's legal situation, consideration shall be given to whether it maintains payment agreements resulting from approved judicial or out-of-court compositions (including approved out-of-court preventive agreements) due when at least 10 % of the amount involved in the cited agreement has been settled.

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Customers whose debts have been refinanced through periodic payment obligations (monthly or bimonthly) may be reclassified to the immediately higher level when they have punctually complied, or with delays not exceeding 31 days, with the payment of 1 installment or, in the case of single-payment, periodic longer than bimonthly or irregular financings, have settled at least 5 % of their refinanced obligations (by principal), plus the number of installments or the accumulated percentage that may correspond, respectively, if the refinancing had been granted had the debtor been included in lower levels.

A debtor that, being classified in this category, has refinanced its debt –even if it has settled the installment cited in the preceding paragraph– and received additional credit under the terms referred to in point 2.2.5. of the rules on “Minimum provisions for bad debt risk”, and to the extent that such additional financing has not been settled, must remain in this category for at least 180 days counted from the date on which the additional credit was granted or from the date on which the refinancing agreement was entered into, whichever is more recent.

If delays greater than 31 days are verified in the payment of the services of the refinanced debt counted from the inclusion of the debtor in this category, the debtor shall be immediately reclassified to the level resulting from considering the total number of days resulting from adding the days of delay actually recorded from the first unpaid installment of the refinancing and the minimum delays established by regulation that correspond to the category in which the debtor is classified in the month in which the new delay is verified.

7.2.2.2. Under special treatment.

For refinancings granted for the first time within the calendar year and once the first installment of said refinancing has been settled, the customer may be reclassified into this situation only once. After the cited refinancing and for classification purposes, only delinquency in the delay of its obligations shall be taken into account.

For subsequent refinancings, they shall receive the general treatment provided for in these provisions.

7.2.3. Medium risk.

It comprises customers that show some inability to settle their obligations, with delays of more than 90 up to 180 days.

As regards the debtor's legal situation, consideration shall be given to whether it maintains payment agreements resulting from approved judicial or out-of-court compositions (including approved out-of-court preventive agreements) due when 10 % of the amount involved in the cited agreement has not yet been settled.

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In order to determine the settlement amount, it shall be admissible to count 50 % of the additional guarantees to those originally offered, constituted over assets not linked to the debtor's operation –with the exception of mortgages on rural real estate which, therefore, shall be countable–, observing the coverage margins established in the rules on “Guarantees”.

Customers whose debts have been refinanced through periodic payment obligations (monthly or bimonthly) may be reclassified to the immediately higher level when they have punctually complied, or with delays not exceeding 31 days, with the payment of 2 consecutive installments or, in the case of single-payment, periodic longer than bimonthly or irregular financings, have settled at least 5 % of their refinanced obligations (by principal), plus the number of installments or the accumulated percentage that may correspond, respectively, if the refinancing had been granted had the debtor been included in the lower level.

A refinanced debtor that has complied with the provisions of the preceding paragraphs, as applicable, may be reclassified to the immediately higher level if, in addition, the rest of its debts meet, at a minimum, the conditions provided for in the cited level.

The debtor who, being classified in this category, has refinanced its debt –even if it has paid off the installments or the percentage previously established– and received additional credit under the terms referred to in point 2.2.5. of the rules on “Minimum Provisions for Bad Debt Risk”, and to the extent that such additional financing has not been paid off, must remain in this category for at least 180 days counted from the date on which the additional credit was granted or from which the refinancing agreement was entered into, whichever is the most recent circumstance.

If arrears greater than 31 days are verified in the payment of the services of the refinanced debt counted from the inclusion of the debtor in this category, the immediate reclassification of the debtor shall apply to the level resulting from considering the total number of days resulting from adding the days of arrears effectively recorded from the first unpaid installment of the refinancing and the minimum arrears established by regulation corresponding to the category in which the debtor is classified in the month in which the new arrears are verified.

7.2.4. High risk.

It comprises clients with arrears of more than 180 days up to one year.

It shall also include debtors who have requested preventive reorganization proceedings, entered into an out-of-court preventive agreement not yet homologated, or have had bankruptcy requested, as long as it has not been declared, for obligations equal to or greater than 20% of the client's equity or for obligations between 5% and less than 20% of the equity when the bankruptcy petition persists after 90 days from when it was requested. If the bankruptcy petition is lifted, the debtor may be reclassified into higher levels, according to the previous situation, if the conditions provided therein are observed.

In the case of debtors who have requested preventive reorganization or out-of-court preventive agreement or are in judicial management, who verify arrears of up to 540 days.

Version: 8th. COMMUNICATION “A” 7024
Effective date:
27/5/2020
Page 5

B.C.R.A.
CLASSIFICATION OF DEBTORS
Section 7. Classification of debtors in the consumer or housing portfolio.

Clients whose debts have been refinanced through periodic payment obligations (monthly or bimonthly) may be reclassified to the immediately higher level when they have complied punctually or with arrears not exceeding 31 days, with the payment of 3 consecutive installments or, in the case of single-payment, periodic longer than bimonthly or irregular financing, have paid off at least 10% of their refinanced obligations (by principal), plus the number of installments or the accumulated percentage that may correspond, respectively, if the refinancing had been granted when the debtor was included in the lower level. In the case of debtors who have requested preventive reorganization, immediate reclassification to the next lower level shall apply when arrears of more than 540 days are verified.

The refinanced debtor who has complied with the provisions of the preceding paragraphs, as applicable, may be reclassified to the immediately higher level if, in addition, the rest of its debts meet, at a minimum, the conditions provided in the aforementioned level.

The debtor who, being classified in this category, has refinanced its debt –even if it has paid off the installments or the percentage previously established– and received additional credit under the terms referred to in point 2.2.5. of the rules on “Minimum Provisions for Bad Debt Risk”, and to the extent that such additional financing has not been paid off, must remain in this category for at least 180 days counted from the date on which the additional credit was granted or from which the refinancing agreement was entered into, whichever is the most recent circumstance.

If arrears greater than 31 days are verified in the payment of the services of the refinanced debt counted from the inclusion of the debtor in this category, the immediate reclassification of the debtor shall apply to the level resulting from considering the total number of days resulting from adding the days of arrears effectively recorded from the first unpaid installment of the refinancing and the minimum arrears established by regulation corresponding to the category in which the debtor is classified in the month in which the new arrears are verified.

7.2.5. Irrecoverable.

It comprises insolvent or bankrupt clients with null or scarce possibility of credit recovery or with arrears greater than one year.

It shall also include clients who are in judicial management, or who have requested preventive reorganization or have requested out-of-court preventive agreement, even if there are possibilities of credit recovery, once more than 540 days of arrears have elapsed.

Clients whose debts have been refinanced through periodic payment obligations (monthly or bimonthly) may be reclassified to the immediately higher level when they have complied punctually or with arrears not exceeding 31 days, with the payment of 3 consecutive installments or, in the case of single-payment, periodic longer than bimonthly or irregular financing, have paid off at least 15% of their refinanced obligations (by principal).

The refinanced debtor who has complied with the provisions of the preceding paragraphs, as applicable, may be reclassified to the immediately higher level if, in addition, the rest of its debts meet, at a minimum, the conditions provided in the aforementioned level.

Version: 5th. COMMUNICATION “A” 7024
Effective date:
27/5/2020
Page 6

The debtor who, being classified in this category, has refinanced its debt –even if it has paid off the installments or the percentage previously established– and received additional credit under the terms referred to in point 2.2.5. of the rules on "Minimum provisions for bad debt risk", and to the extent that said additional financing has not been paid off, must remain in this category for at least 180 days counted from the date on which the additional credit was granted or from which the refinancing agreement was entered into, whichever is the most recent.

7.2.6. Unrecoverable by technical disposition.

It comprises the customers that meet the conditions set forth in point 6.5.6.

7.3. Mandatory reclassification.

The debtor must be reclassified when there is a discrepancy of more than one level between the classification given by the financial institution and those given by at least two other institutions or financial trusts or non-financial institutions issuing credit cards under the "closed system" modality in categories lower than the one assigned by the former, whose claims –in the aggregate– represent 40 % or more of the total reported by all creditors, according to the latest information available in the "Central de deudores del sistema financiero".

The reclassification of the debtor shall be made as from the month following the month in which the pertinent information from said central is made available, at least in the category immediately higher than the one in which it records the highest level of indebtedness, considering for this purpose that group of institutions, financial trusts and non-financial institutions issuing credit cards under the "closed system" modality that represent at least 40 % of the total reported by all creditors according to the latest information available in the "Central de deudores del sistema financiero".

For this purpose, the classifications made according to the evaluation of the institutions, that is, categories 1 to 5, shall be taken into account.

7.4. Information to the SEFyC on increases in the irregular portfolio.

In the cases in which the expression set forth below is greater than 5 % on the last day of a calendar quarter or 10 % in a year, the financial institution must report the origin of said circumstance to the SEFyC, and must provide the explanations required of it and, if applicable, the modifications to be made to its credit policy aimed at improving the quality of its credit portfolio.

FICCT - FICCT-1 - Max (FICCST - FICCST-1 ; 0)

Where:

FICC: quotient, expressed as a percentage, between the total amount of the financings of the consumer or housing portfolio, of the financial institution, classified in situation 3 to 5 according to the rules on "Classification of debtors" and the total amount of its financings of the consumer or housing portfolio.

Version: 4th COMMUNICATION “A” 7024
Vigencia:
27/5/2020
Página 7

FICCS: quotient, expressed as a percentage, between the total amount of the financings of the consumer or housing portfolio, of the entire financial system, classified in situation 3 to 5 according to the rules on "Classification of debtors" and the total amount of its financings of the consumer or housing portfolio, according to the information to be disclosed by the BCRA.

T: the last day of a calendar quarter to which the calculation of the quotient corresponds.

T-1: the last day of the immediately preceding calendar quarter and the last day of the same quarter corresponding to the previous year, as applicable.

Version: 1st COMMUNICATION “A” 7024
Vigencia:
27/5/2020
Página 8

CLASIFICACIÓN DE DEUDORES
B.C.R.A.
Section 11. Transitional provisions.

11.1. With effect until 30.9.2020, for the purposes of the classification of debtors provided for in these provisions, financial institutions and other parties bound by these rules must increase by 60 days the permitted arrears periods for categories 1, 2 and 3, both for the commercial portfolio and for the consumer or housing portfolio.

Accordingly, until 30.9.2020 the days of arrears corresponding to the classification levels are:

Portfolio Category Days past due
1 ≤ 91 a) 92 a 150 b) 92 a 150
2 c)
Tratamiento especial
(punto 6.5.2.3.)
3 151 a 240
4 241 a 1 año
Comercial
5 > a 1 año
1 ≤ 91 a) 92 a 150
2 b)
Tratamiento especial
(punto 7.2.2.2.)
3 151 a 240
4 241 a 1 año
Consumo o vivienda
5 > a 1 año

In due course the BCRA will disclose a schedule so that they gradually classify their debtors in accordance with the arrears criteria pre-existing as of 19.3.2020.

11.2. Until 30.9.2020 the application of points 6.6. and 7.3. is suspended.

Version: 9th. COMMUNICATION “A” 7024
Vigencia:
20/03/2020
Página 1

B.C.R.A.
ORIGIN OF THE PROVISIONS CONTAINED IN THE RULES ON “CLASSIFICATION OF DEBTORS”

ORDERED TEXT	SOURCE STANDARD	OBSERVATIONS
Sect.	Point	Para.	Comm.	Annex	Point	Para.
1.	1.1.		"A" 2216	I		1st	Includes interpretive clarification.
	1.2.1.		"A" 2216	I	6.	2nd
	1.2.2.		"A" 2216	I	Ibid.	2nd and 3rd
	2.1.1. a 2.1.3. and 2.1.5.		"A" 2216	I		1st	According to Comm. "A" 5067.
			"A" 2216	I	Ibid.	1st
			"A" 2448				Statement of debtors' situation (point 6.1.).
			"A" 2587				Correspondence table between the Statement of debtors' situation and the Balance of balances (amended by Comm. "A" 2514).
	2.1.4.		"A" 2736		3.
	2.1.6.		"A" 6396		2.		According to Comm. "A" 6428. Includes interpretive clarification.
	2.2.1.		"A" 2448				Statement of debtors' situation (point 6.1., amended by Comm. "A" 2421). According to Comm. "A" 6396.
2.	2.2.1.1. a 2.2.1.4.		"A" 2448				Statement of debtors' situation (point 6.1., amended by Comm. "A" 2421).
	2.2.1.5.		"A" 2448				Statement of debtors' situation (point 6.1., amended by Comm. "A" 2421 and 3064).
	2.2.1.6. and 2.2.1.7.		"A" 2448				Statement of debtors' situation (point 6.1., amended by Comm. "A" 2421).
	2.2.2.		"A" 2448				Statement of debtors' situation (point 6.2.).
	2.2.3.		"A" 2287		5.
	2.2.4.		"A" 2412				In the 2nd paragraph of point 2.2.4.3. it incorporates a criterion not previously disclosed on a general basis. According to Com. "A" 5671 and 5740.
3.	3.1.		"A" 2216	I	2.	1st
	3.2.		"A" 2216	I	4.
	3.3.	1st	"A" 2216	I	2.	2nd
	3.3.1.		"A" 2216	I	2.	2nd
	3.3.2.		"A" 2216	I	2.	2nd	Includes interpretive clarification.
	3.3.3.		"A" 2216	I	6.	last	According to Com. "A" 2358 (point 1.), 4310 (point 1.), 4975, 5311, 5637, 5998, 6558 and 6938.
	3.3.4.		"A" 2216	I	7.	last
	3.3.5.		"B" 5644		2.
	3.3.6.						It incorporates a criterion not previously made known on a general basis.
	3.3.7.		"A" 4325		2.		According to Com. "A" 4559 (point 6.).
	3.3.8.		"A" 4683		2.
	3.3.9.		"A" 4683		3.

CLASSIFICATION OF DEBTORS

ORDERED TEXT
SOURCE RULE

							OBSERVATIONS
Sect.	Point	Para.	Comm.	Annex	Point	Para.
5.	5.1.1.1.		"A" 2216	I	I.	1st	According to Comm. "A" 2410, 4310 (point 1.), 4975, 5311, 5637, 5998, 6558 and 6938.
			"A" 2216	I	I.	2nd
			"A" 2216	I	II.	4th
	5.1.1.2.	1st	"A" 2216	I	6.	last	According to Comm. "A" 2358, 4310 (point 1.), 4975, 5311, 5637, 5998, 6558 and 6938.
		2nd	"A" 2216	I	I.	1st	According to Comm. "A" 2410.
		last	"A" 2216	I	6.	last	According to Comm. "A" 2358.
	5.1.2.1.		"A" 2216	I	6.	1st
	5.1.2.2.		"A" 2216	I	6.	1st
	5.1.2.3.		"A" 4891		6.		According to Comm. "A" 4975, 5637, 5998 and 6221.
	5.1.2.4.		"A" 2216	I	II.	3°	According to Com. "A" 2358, 4310 (point 1.), 4975, 5311, 5637, 5998, 6558 and 6938.
6.	6.1.		"A" 2216	I	I.	last	According to Com. "A" 6327.
	6.2.	1°	"A" 2216	I	I.a.	1°
		2°	"A" 3918				According to Com. "A" 3987.
		3°	"A" 4453				According to Com. "A" 4577 and 5398.
		4°	"A" 5398
		5°					It incorporates a criterion not previously made known on a general basis.
	6.3.		"A" 2216	I	I.a.	2°
	6.3.1.		"A" 2216	I	I.a.	2°, i)	According to Com. "A" 2223, 3339 and 6639.
	6.3.2.		"A" 2216	I	I.a.	2°, ii)	According to Com. "A" 2223 (point 1.), 3339, 4972 (point 10.), 5311, 5998, 6639 and 6938.
	6.3.3.		"A" 2216	I	I.a.	2°, iii)
	6.4.	1°	"A" 2216	I	I.b.	1°	According to Com. "A" 3339.
	6.4.1.		"A" 2216	I	I.b.	1°, i)	According to Com. "A" 3339.
	6.4.2.		"A" 2216	I	I.b.	1°, ii)	According to Com. "A" 3339.
	6.4.3.		"A" 2893		4.
	6.4.4.		"A" 3339		sole
	6.4.	last	"A" 2216	I	I.b.	last	According to Com. "A" 2223 (point 1.), 3339, 4972 (point 10.), 5311 and 5998.
	6.5.	1°	"A" 2216	I	I.d.	1°	According to Com. "A" 2440.
		2°	"A" 4060		10.
		3°	"A" 2216	I	I.d.	last	According to Com. "A" 3339 and 4972 (point 10.).
		last	"A" 2216	I	I.d.	last	Includes interpretive clarification.
	6.5.1.		"A" 2216	I	I.d.1.		According to Com. "A" 2932 (point 16.), 3339 and 5671.
	6.5.1.1.		"A" 2216	I	I.d.1.a)		According to Com. "A" 3955 and 6639.
	6.5.1.2.		"A" 2216	I	I.d.1.b)		According to Com. "A" 3339.
	6.5.1.3.		“A” 2216	I	I.d.1.c)
	6.5.1.4.		“A” 2216	I	I.d.1.d)		According to Com. “A” 2932 (point 5.).
	6.5.1.5.		“A” 2216	I	I.d.1.e)
	6.5.1.6.		“A” 2216	I	I.d.1.f)		According to Com. “A” 3339.
	6.5.2.		“A” 2216	I	I.d.2.		According to Com. “A” 3339.
	6.5.2.1.		“A” 2216	I	I.d.2.	1°, 2° and 3°	According to Com. “A” 3339.
		i)	“A” 2216	I	I.d.2.a)		According to Com. “A” 3339 and 3955.
		ii)	“A” 2216		I.d.2.b)		According to Com. “A” 3339 and 6639.
		iii)	“A” 2216	I	I.d.2.c)		According to Com. “A” 3339.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

							CLASSIFICATION OF DEBTORS
CONSOLIDATED TEXT			ORIGINATING RULE				OBSERVATIONS
Sec.	Point	Para.	Com.	Annex	Point	Para.
	6.5.2.1.	iv)	“A” 2216	I	I.d.2.d)		According to Com. “A” 2932 (point 5.) and 3339.
		v)	“A” 2216	I	I.d.2.e)		According to Com. “A” 3339.
		vi)	“A” 2216	I	I.d.2.f)		According to Com. “A” 2427, 2947 (point 1.), 3339, 4060 (point 7.), 4972 (point 10.) and 6938.
		vii)	“A” 2947		2.		According to Com. “A” 3339, 4060 (point 7.), 4972 (point 10.), 5311, 5671 and 5998.
		viii)	“A” 4467				According to Com. “A” 4972 (point 10.).
		last	“A” 2947		2.		According to Com. “A” 3339.
	6.5.2.2.		“A” 3339	sole			According to Com. “A” 4060 (point 9.) and 4972 (point 10.).
	6.5.2.3.		“A” 6938		7.
	6.5.3.	1°	“A” 2216	I	I.d.3.	1°
	6.5.3.1.		“A” 2216	I	I.d.3.a)		According to Com. “A” 3339, 3955 and 6639.
	6.5.3.2.		“A” 2216	I	I.d.3.b)		According to Com. “A” 3339.
	6.5.3.3.		“A” 2216	I	I.d.3.c)
	6.5.3.4.		“A” 2216	I	I.d.3.d)
	6.5.3.5.		“A” 2216	I	I.d.3.e)		According to Com. “A” 3339, 4060 (point 8.) and 4972 (point 10.).
	6.5.3.6.		“A” 2216	I	I.d.3.f)		According to Com. "A" 2427, 2947 (point 1.), 3339, 4060 (point 7.), 4972 (point 10.) and 6938.
	6.5.3.7.		"A" 2216	I	I.d.3.g)		According to Com. "A" 3339.
	6.5.3.8.		"A" 2216	I	I.d.3.h)		According to Com. "A" 3339.
	6.5.3.9.		"A" 2216	I	I.d.3.i)
	6.5.3.10.		"A" 2947		2.		According to Com. "A" 3339, 4060 (point 7.), 4972 (point 10.), 5311, 5671 and 5998.
	6.5.3.11.		"A" 3339	sole
	6.5.3.12.		"A" 4467
	6.5.4.	1st	"A" 2216	I	I.d.4.	1st
	6.5.4.1.		"A" 2216	I	I.d.4.a)		According to Com. "A" 3955 and 6639.
	6.5.4.2.		"A" 2216	I	I.d.4.b)		According to Com. "A" 3339.
	6.5.4.3.		"A" 2216	I	I.d.4.c)		According to Com. "A" 3339.
	6.5.4.4.		"A" 2216	I	I.d.4.d)
	6.5.4.5.		"A" 2216	I	I.d.4.e)		According to Com. "A" 3339, 4060 (point 8.), 4467 and 4972 (point 10.).
	6.5.4.6.		"A" 2216	I	I.d.4.f)		According to Com. “A” 3339 and 4975.
	6.5.4.7.		“A” 2216	I	I.d.4.g)		According to Com. “A” 2414, 4210 (point 2.), 4972 (point 10.) and 4975.
	6.5.4.8.		“A” 2216	I	I.d.4.h)
	6.5.4.9.		“A” 2216	I	I.d.4.i)
	6.5.4.10.		“A” 2216	I	I.d.4.j)		According to Com. “A” 3339.
	6.5.5.		“A” 2216	I	I.d.5.		According to Com. “A” 2440.
	6.5.5.1.		“A” 2216	I	I.d.5.		According to Com. “A” 2440, 3955 and 6639.
6.
	6.5.5.2.		“A” 2216	I	I.d.5.		According to Com. “A” 2440, 3339, 4060 (point 8.) and 4972 (point 10.).

CLASSIFICATION OF DEBTORS

ORDERED TEXT
SOURCE STANDARD

						OBSERVATIONS
Sect.	Point	Para.	Com.	Annex	Point	Para.
6.	6.5.5.3.		“A” 2216	I	I.d.5.		According to Com. “A” 2440 and 3339.
	6.5.5.4.		“A” 2216	I	I.d.5.		According to Com. “A” 2440.
	6.5.5.5.		“A” 2216	I	I.d.5.		According to Com. "A" 2440.
	6.5.5.6.		"A" 2216	I	I.d.5.		According to Com. "A" 2440 and 4972 (point 10.).
	6.5.5.	last	"A" 2216	I	I.d.5.		According to Com. "A" 2826.
	6.5.6.1.		"A" 2216	I	I.d.6.		According to Com. "A" 2440.
		i)	"A" 2216	I	I.d.6.	i)	According to Com. "A" 2440.
		ii)	"A" 2216	I	I.d.6.	ii)	According to Com. "A" 2440.
		iii)	"A" 2216	I	I.d.6.	iii)	According to Com. "A" 2440.
		iv)	"A" 2216	I	I.d.6.	iv)	According to Com. "A" 2580.
		last	"A" 2440		2.	last
	6.5.6.2.		"A" 2287		2.		According to Com. "A" 2890 (point 3.), 5183, 5671, 5740 and 6628. Includes interpretive clarification.
	except	b), 2nd paragraph	"A" 2287		2.3.		According to Com. "A" 2497 (point 1.) and 5183.
		b), last paragraph	"A" 2287		2.5.		According to Com. "A" 2497 (point 1.).
	6.5.6.3.		"A" 2573		1.		According to Com. "A" 4545, 4972 (point 10), 5557 and 5998.
	6.6.		"A" 2216	I	I.c.		According to Com. "A" 2932 (point 6.) and 3339.
		last	"A" 4060		10.
7.	7.1.	1°	"A" 2216	I	II.	1º	According to Com. "A" 3142, 4325 (point 1.), 4559 (point 7.), 4648, 4660, 4683, 4738, 4972 (point 10.) and 5975.
	7.2.1.		"A" 2216	I	II.1.		According to Com. "A" 4648, 4660, 4683 and 4738.
	7.2.2.		"A" 2216	I	II.2.		According to Com. "A" 4648, 4660, 4683, 4738, 4972 (point 10.) and 6938.
	7.2.3.		"A" 2216	I	II.3.		According to Com. "A" 4648, 4660, 4683, 4738, 4972 (point 10.) and 6938.
	7.2.4.		"A" 2216	I	II.4.		Includes interpretive clarification. According to Com. "A" 4310 (point 2.), 4648, 4660, 4683, 4738, 4972 (point 10.) and 4975.
	7.2.5.		"A" 2216	I	II.5.		Includes interpretive clarification. According to Com. "A" 4310 (point 2.), 4648, 4660, 4683, 4738, 4972 (point 10.) and 4975.
	7.2.6.		"A" 2216	I	II.6.		According to Com. "A" 2440.
	7.3.		"A" 2216	I	II.	1º and 2º	According to Com. "A" 2932 (point 6.) and 3339.
	7.4.		"A" 4891		7.

CLASSIFICATION OF DEBTORS

							OBSERVATIONS
ORDERED TEXT			SOURCE STANDARD
Sec.	Point	Par.	Comm.	Annex	Point	Par.
8.	8.1.		“A” 2216	I	5.		According to Comm. “A” 2562.
	9.1.		“A” 2227	sole	5.2.1.	last	According to Comm. “A” 2649.
9.	9.2.		“A” 2227	sole	5.1.5. and 5.2.2.		According to Comm. “A” 2649.
	10.1.		“A” 2389				According to Comm. “A” 5593 (point 4.).
	10.2.1.		“A” 2703		3.		According to Comm. “A” 3145 (point 1.).
	10.2.2.		“A” 2703		4.
10.	10.3.		“A” 3141		4.		According to Comm. “A” 5275.
	11.1.		“A” 6938		1.		According to Comm. “A” 7024.
11.	11.2.		“A” 6938		8.

B.C.R.A.
CREDIT MANAGEMENT
Section 1. Requirements for the granting of financings.

Consequently, the margins agreed for current account overdrafts and the purchase limits of credit cards –in both cases, both the used and the available–, as well as pre-agreed personal loans –to the extent that they have not yet been formalized or disbursed to the client–, will not form part of the numerator of the estimated installment/income ratio because they do not have a periodic amortization. However, those installments that the client has for financed purchases under the credit card system must be considered within the concept of “installments”.

The income and installments to be considered will be those of the debtor and/or, where applicable, of the co-debtors.

• For MSMEs and legal persons, not linked to the entity, the capital owed at no time may exceed as a whole the equivalent of the reference amount established in point 1.10.

iii) Global limit for financings to MSMEs and non-linked legal persons.

40 % of the RPC of the entity of the month prior to the corresponding one.

iv) Classification of the client and information to the “Central de deudores del sistema financiero”.

It shall be carried out on the basis of the objective guidelines as established in Section 7. of the rules on “Classification of debtors”.

v) The client's file must record the evaluation carried out in accordance with this procedure and, in the case of natural persons, the estimated income of the debtor and/or, where applicable, of the co-debtors.

Likewise, it may contain other elements that the financial institution, at its discretion, deems necessary for the credit evaluation, without this constituting a necessary condition for its application.

The institutions must carry out a detailed description of the procedure adopted for the evaluation of the client and the assignment of differentiated credit margins, if applicable, according to the type of credit.

vi) This procedure must have the prior opinion of:

• The highest-ranking officer of the credit or commercial area responsible for deciding on credit matters.

• General Manager or equivalent authority.

• Credit Committee, unless it does not exist in the functional structure of the institution.

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Effective date:
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B.C.R.A.
ORIGIN OF THE PROVISIONS CONTAINED IN
THE RULES ON “CREDIT MANAGEMENT”

TEXT ORDERED SOURCE RULE
Sec. Point Par. Comm. Annex Chap. Sec. Point Par.
OBSERVATIONS
1.1.1. “A” 3051
1.1.2. “A” 2729 3. 3.4.1. S/Comm. “A” 2950, 4972
(point 2.), 5093, 5520 and
6639.
1st “A” 49 I. 3.1. S/Comm. “A” 5387.
2nd “A” 5482
3rd “A” 5387 S/Comm. “A” 5728.
4th “A” 2729 3. 3.4.2. 2nd S/Comm. “A” 2950 and 6327.
5th “A” 2729 3. 3.4.2. 8th S/Comm. “A” 2950 and 3051.
6th “A” 4972 2.
1.1.3.1.
7th “A” 3051 i) “A” 2729 3. 3.4.2. 3rd S/Comm. “A” 2950 and 3051. ii) “A” 2729 3. 3.4.2. 4th and 5th S/Comm. “A” 2950, 5093 and 6558. iii) “A” 2729 3. 3.4.2. 7th S/Comm. “A” 2950. iv) “A” 2729 3. 3.4.3. S/Comm. “A” 2950. v) “A” 5482 S/Comm. “A” 6091.
1.1.3.2. vi) “A” 6558 1. S/Comm. “A” 6639.
a) “A” 3142 1. S/Comm. “A” 3182, 4325
(point 3.), 4556, 4559,
4891, 4972, 5557, 5995 and
6221.
1.1.3.3. b) “A” 4325 3. S/Comm. “A” 4559, 4572,
4637, 4891, 4972, 5557,
5637, 5998, 6221, 6558 and
6938. a) “A” 4891 2. S/Comm. “A” 5226, 5533, 5884 and 6221.
1.1.3.4. b) “A” 4891 2. S/Comm. “A” 5700 and 6327.
1.1.4. “A” 2729 3. 3.4.4. S/Comm. “A” 2950.
1.1.5. “A” 2729 3. 3.4.5. S/Comm. “A” 2950 and 6068.
1.2.1. “A” 3051
1.2.1.1. “B” 5464
1.2.1.2. “B” 5464
1.2.2. “B” 5464 Last S/Comm. “A” 6167.
1.2.3. “B” 5664 S/Comm. “A” 3051.
1.2.4. “C” 18820 S/Com. “B” 8833 and 9063.
1.2.5. “C” 18820 S/Com. “B” 9063.
1° “A” 2573 1. 1° S/Com. “A” 3051.
2° “A” 2573 1. 5°
1.3.1.
3° “A” 2573 1. 6°
1.3.2. “A” 2573 1. 2° S/Com. “A” 3051, 4522,
5557 and 5998.
1.3.3. 1° “A” 2573 1. 3° S/Com. “A” 3051 and 6639.
2° “A” 2573 1. 4° S/Com. “A” 6639.
1.3.4. “A” 2573 1. 7°
1° “A” 2573 1. 8° S/Com. “A” 6329.
2° “A” 4972 2. S/Com. “A” 6329.
1.
1.3.5.
3° “A” 4972 2. S/Com. “A” 6329.

GRADUATION OF CREDIT B.C.R.A.
Section 2. Financings included.

viii) Productive activities through the use of “warrants”.

ix) Commercial operations covered by credit insurance.

2.2.8.2. Coverage margin.

Preferred guarantees shall be computed at the coverage margin provided for by the rules on “Guarantees”.

2.2.9. Credits verified with debtors in insolvency proceedings that, following their refinancing by agreement of the creditors' meeting, exceed the maximum limits established, provided that the following conditions are met:

2.2.9.1. The granting of the assistance must not have constituted, originally, excesses over said caps.

2.2.9.2. No new assistance shall be granted.

2.2.9.3. Debtors must be duly classified.

2.2.10. Loans (net of amortizations made) to natural or legal persons or groups of connected counterparties not related that, in the aggregate for each client, do not exceed the equivalent of twice the reference amount established in point 2.3.

If the assistance exceeds said amount, the entire financing granted to the client is subject to the maximum limits on credit graduation.

This exemption is independent of the other exclusions and applies without prejudice to compliance with the current rules on credit policy and administration, as well as those relating to the adoption of guarantee safeguards.

2.2.11. Credits that have guarantees extended by mutual guarantee companies or by public guarantee funds registered in the registries authorized by the Central Bank of the Argentine Republic (BCRA).

2.2.12. Loans to other local financial institutions.

2.2.13. Financings granted to the non-financial public sector, considering for such purposes the definition in point 1.1. of the rules on “Financing to the non-financial public sector”, except those provided for in points 1.2.1. and 3.2.6. of that body of rules.

2.2.14. Commitments to provide funds assumed in loan syndication operations, until they are reflected in debt balances in the so-called “managing bank” or in the event that, at that later stage, the latter assumes the obligation to guarantee to the remaining participating institutions the repayment of the funds they contribute for the required financing.

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B.C.R.A.
ORIGIN OF THE PROVISIONS CONTAINED IN THE RULES ON “GRADUATION OF CREDIT”

TEXT ORDERED
SOURCE RULE

Section	Point	Paragraph	Com.	Annex	Point	Paragraph	OBSERVATIONS
1.	1.1.	1°	“A” 467	sole	2.		According to Com. “A” 5520 and 6639.
			“A” 467	sole	6.1.	last
		2°	“A” 3002				Incorporates interpretive clarification.
2.	2.1.		“A” 467	sole	2.		According to Com. “A” 5520 and 6639.
	2.2.1.		“A” 467	sole	4.1.		According to Com. “A” 5520 and 6639.
	2.2.2.	1°	“A” 467	sole	3.1.
		last	“A” 490	sole	2.
	2.2.3.		“A” 467	sole	3.2.		According to Com. “A” 6221.
	2.2.4.		“A” 467	sole	3.3.		According to Com. “A” 6221.
	2.2.5.		“A” 467	sole	4.2.
	2.2.6.	1°	“A” 467	sole	4.3.
		last	“A” 490	sole	4. and 5.
	2.2.7.		“A” 467	sole	4.4.
	2.2.8.		“A” 467	sole	4.5.		According to Com. “A” 2054, 5419 and 6558.
	2.2.8.1.	viii	“A” 467	sole	4.5.8.		According to Com. "A" 2074.
		ix	"A" 6558		5.
	2.2.9.		"A" 467	sole	4.6.		According to Com. "A" 2054.
	2.2.10.		"A" 467	sole	4.7.		According to Com. "A" 2098, "B" 5477, "A" 4310 (point 3.), 4975, 5311, 5637, 5998, 6558 6639 and 6938.
	2.2.11.		"A" 467	sole	4.8.		According to Com. "A" 2410, 3307, 4093 (penultimate paragraph), 4465 and 5275.
			"A" 2410		7.
	2.2.12.		"B" 5902		10.	last	According to Com. "A" 5013.
	2.2.13.		"B" 5902		10.	last	According to Com. "A" 5013, 5154 and 5368.
	2.2.14.		"B" 5902		10.	last	According to Com. "A" 5013.
	2.2.15.		"A" 4891		5.		According to Com. "A" 5998.
	2.3.		"A" 5998		1.		According to Com. "A" 6528.
3.	3.1.1.		"A" 467	sole	1.	1°	According to Com. "A" 2373.
	3.1.2.1.		"A" 467	sole	1.	2°	According to Com. "A" 2373, 5949 and 6467.
	3.1.2.2.	1° to 6°	“A” 467	sole	1.	2°	According to Com. “A” 2373 and “B” 5902. Includes interpretive clarification.
		7°	“B” 5902		10.	1°
		last	“A” 3002				Incorporates interpretive clarification.
	3.2.1.		“A” 467	sole	1.	3°	According to Com. “A” 2373, amended by Com. “A” 2960. Incorporates interpretive criterion.
	3.2.2.		“A” 2206		2.		According to Com. “A” 3183 and 6304.
	3.2.2.1.		“A” 2206		2.		According to Com. “A” 3086 and 3183.
	3.2.2.2.		“A” 2056		1.		According to Com. “A” 3086 and 4093 (penultimate paragraph).

2.1. Basic guidelines.

2.1.1. General criterion.

On the total of the clients' debts, according to the classification that must be assigned to them, the following minimum provisioning guidelines must be applied:

Category	With preferred guarantees	Without preferred guarantees
1. Normal situation.	1 %	1 %
2. With special monitoring / Low risk
- Under observation (2.a.)	3 %	5 %
- Under negotiation or with refinancing agreements (2.b. for commercial portfolio)	6 %	12 %
- Under special treatment (2.c. for commercial portfolio; 2.b. for consumer or housing portfolio)	8 %	16 %
3. With problems / Medium risk.	12 %	25 %
4. With high risk of insolvency / High risk.	25 %	50 %
5. Irrecoverable.	50 %	100 %
6. Irrecoverable by technical disposal	100 %	100 %

2.1.2. Special criteria.

2.1.2.1. Participation certificates or debt securities guaranteed with assets of financial trusts included in the Law on Financial Institutions must be provisioned according to the percentage monthly indicated by the respective trustees in accordance with the corresponding appropriation model, pursuant to the rules on “Financial trusts included in the Law on Financial Institutions”.

2.1.2.2. When the classification in the “irrecoverable” category corresponds to the situation provided for in the last paragraph of point 6.5.5. of the rules on “Debtor classification”, the entirety of the debt must be provisioned at 100 %, except when it has preferred “A” guarantees.

2.1.2.3. For the purposes of determining regulatory provisions, financing shall be considered covered by preferred guarantees up to the amount resulting from the application of the coverage margins established in the rules on guarantees.

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2.2.10. Financing to MSMEs –included in point 1.5.5. of the rules on “Minimum cash” that is destined for the payment of salaries, shall be provisioned –until the cancellation of the financing– based on the classification of the MSME at the time of its granting.

The financing of points 2.2.1. to 2.2.9. shall be subject to the constitution of the minimum provision of the category immediately prior to the one that would have corresponded according to its classification, pursuant to the provisions of point 2.1.1. For this purpose, the classification assigned based on the evaluation performed by each entity shall be taken into account; that is, 1, 2.a, 2.b, 2.c, 3, 4 and 5.

2.3. Provisions higher than the minimums.

Entities may make provisions for amounts higher than the established minimums, if they deem it reasonable.

In such cases, it must be borne in mind that the application of percentages corresponding to other subsequent levels will determine the automatic reclassification of the client by assimilation to the quality grade associated with the minimum provision, except in the cases referred to in point 2.2.2. or when dealing with debtors included in the consumer or housing portfolio and commercial assimilable to the latter, in accordance with the provisions of point 7.1. of the rules on “Debtor classification”.

2.4. Nature of the provisions.

The provision on the normal portfolio shall be of a global nature, while those corresponding to the other categories shall have individual imputation, including in both cases those constituted in excess with respect to the minimum requirements established by the BCRA.

2.5. Fully provisioned debts of debtors in the “irrecoverable” category.

The debts of clients classified in the “irrecoverable” category and fully provisioned for risk of uncollectibility must be eliminated from assets starting from the seventh month following that in which those circumstances are verified.

This shall also be applicable to the debts of clients classified in the “irrecoverable by technical disposition” category, in case that due to their situation they should be placed in the “irrecoverable” category and those are fully provisioned.

2.6. Requirements of the Superintendency of Financial and Exchange Institutions.

Upon requirement made by the Superintendency of Financial and Exchange Institutions (SEFyC), financial entities must constitute provisions for risk of uncollectibility in the percentages that are established when:

2.6.1. from the analyses of the credit portfolio in order to verify the correct application of the provisions on debtor classification it arises, in the judgment of the SEFyC, that the provisions constituted are insufficient, according to the procedure provided for in point 2.7., or

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Effective date:
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2.6.2. from the elements made available to the acting inspectors it arises that the accounting records made by the entities do not accurately reflect the economic and legal reality of the operations or that actions or artifices have been carried out to distort or disguise the true character or scope of the operations, with effect as of the date indicated in each case.

2.7. Procedure for accounting recording of provisions at the requirement of the SEFyC.

For the purposes provided for in point 2.6.1., the SEFyC shall communicate to the entity the amount of the adjustments to be accounted for, which shall have a term of 30 consecutive days, counted from the day following the date of the pertinent notification, to formulate the considerations that, in its judgment, justify maintaining the criteria applied by it to constitute the observed provisions. Once said term has expired without any presentation by the entity in that regard, the regularization of the insufficient provisions must be reflected in accounting in the month in which this circumstance is verified.

In case the entity makes that presentation, the SEFyC shall rule within the following 20 consecutive days from the date of its receipt.

The accounting of the provisions resulting from that final determination must be made in the month of the pertinent notification.

2.8. Non-compliances in the accounting of provisions required by the SEFyC.

The provisions of the rules on “Disciplinary regime in charge of the Central Bank of the Argentine Republic, Laws 21.526 and 25.065 and their amendments” shall be applicable.

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Effective date:
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B.C.R.A.
ORIGIN OF THE PROVISIONS CONTAINED IN THE RULES ON “MINIMUM PROVISIONS FOR RISK OF UNCOLLECTIBILITY”

TEXT ORDERED			RULE OF ORIGIN				OBSERVATIONS
Section	Point	Parr.	Com.	Annex	Point	Parr.
1.	1.1.		“A” 2216		2.	1°
	1.2.1.		“A” 2216		2.	1°
	1.2.2.		"A" 2216	II		2°	Includes interpretive clarification.
	1.2.3.		"A" 2216	II		2°
	1.2.4.		"A" 2216	II		3°	According to Com. "A" 3040 (point 3.) and "B" 9074.
	1.2.5.		"A" 3040
	1.2.6.		"A" 3064
	2.1.1.	1° and table	"A" 2216	II		1°	According to Com. "A" 2440, 3339, 6938, 7024 and "B" 9074.
	2.1.2.1.		"B" 6331	6.			According to Com. "A" 6303.
	2.1.2.2.		"A" 2826		2°
	2.1.2.3.		"A" 2932		7°		Includes interpretive clarification.
	2.1.2.4.
	2.1.2.5.		"A" 3314				According to Com. "A" 6558.
	2.2.1.		"A" 2216	II		6°	According to Com. "A" 2932 (point 15.).
	2.2.2.		"A" 2216	II		9° and last	According to Com. "A" 3040 (point 5.), includes interpretive clarification. According to Com. "A" 3339, 3955 and "B" 9074.
	2.2.3.1.		"A" 2216	II		8°	According to Com. "A" 2442, 3091 and "B" 9074.
	2.2.3.2.		"A" 3091
	2.2.3.3.		"A" 3091
	2.2.3.4.		"A" 2216	II		8°	According to Com. “A” 2442 and 3091.
	2.2.4.		“A” 2440		2.	1°	According to Com. “A” 2890 (point 2.), 3157 (point 1.) and 3339.
	2.2.5.		“A” 3157		2.		According to Com. “A” 3918 and 4055.
	2.2.6.		“A” 4060		6.
	2.2.7.		“A” 4467
	2.2.8.		“A” 5398
	2.2.9.		“A” 6032		2.		According to Com. “A” 6489.
	2.2.10.		“A” 6946		2.
	2.2.	last	“A” 2216	II			According to Com. “A” 6938.
	2.3.		“A” 2216	II		7°	According to Com. “A” 4683 (point 5.).
	2.4.		“A” 2216	II		4°	According to Com. “A” 4738.
	2.5.	1° last	“A” 2357		1.		According to Com. “A” 6327. It incorporates a criterion not previously made known on a general basis.
	2.6.		“A” 2287		4.		According to Com. “A” 2893 (point 2.).
	2.6.1.		“A” 2287		4.		According to Com. “A” 2893 (point 2.).
	2.6.2.		“A” 2287		4.		According to Com. “A” 2893 (point 2.).
			“A” 2607		1.
	2.7.		"A" 2893		3.
2.	2.8.		"A" 2893		3.		According to Com. "A" 6167.
3.	3.1.	1st	"A" 2373		8. and 3.		Includes interpretive clarification.
		2nd	"A" 2373		8.
		last	"B" 5902		3.		Includes interpretive clarification.