The Financial Board has already put into effect the new mechanism for debt relief in banks and cooperatives, agreed in dialogue tables

The Financial Policy and Regulation Board has just issued resolution JPRF-F-2022-032through which an “Extraordinary and Temporary Relief Mechanism” is put into effect, applicable to the public and private financial sectors and also to the popular and solidarity economy sector, that is, cooperatives.

This resolution was expected after this week it was learned that the indigenous sector and the Government reached a series of agreements at the private and public banking dialogue table. The dialogues were generated as a pacification mechanism for the country after 18 days of strikes, which caused the country losses of at least $500 million.

The resolution incorporates the two financial relief mechanisms: one for public and private banks, and another for cooperatives. Among the main points that apply for both segments are:

• Both banking and cooperative financial entities must consider, on a case-by-case basis, refinancing or restructuring the credit operations of the microcredit, productive SMEs and educational segments, granted to natural persons and organizations, which without having legal status have been subject to credit.
• The mechanism will be applied to debts that are overdue from January 1, 2020 to June 30, 2022, prior agreement with the debtor and at their request.
• It is also indicated that the instrumentation of said mechanism will not cause expenses or surcharges. It is indicated that “anatocism is prohibited”, that is, the charging of interest on interest. The refinanced or restructured operation will consider granting grace periods, not charging collection expenses, legal costs, fees, commissions, and additionally may grant additional resources, observing the legal framework and the legal nature of the creditor financial institution. As it is not a new credit operation, it is not affected by taxes, contributions and other charges.
• The increase in indebtedness or financial leverage of the debtor with refinanced or restructured operations may occur as long as it maintains the will to honor the credit.
• The mechanism will be applicable to the debtor who has decreased his ability to pay, but not his willingness to honor the credit received.
• For the refinancing or restructuring of credits, the consolidation of all the debts that the subject of credit maintains with the entity at the time of implementing the operation may be carried out, except in exceptional cases determined by the debtor or the creditor financial entity.
• The refinanced or restructured loans under this mechanism will obtain the “A1” risk rating at the time of their instrumentation and as long as their payments are kept up to date. The provisions that have been made by the financial institution at the time of implementation of this mechanism may not be reversed. From the payment of the third consecutive installment, without the debtor having registered delinquency, the corresponding qualification and provisions table will be applied in the calculation of provisions.
• The entities of the public and private financial sectors will report all the operations on the application of this mechanism to the Superintendency of Banks and the Superintendence of Popular and Solidarity Economy on a monthly basis, in the manner determined by the control entities.
• The term for the application of the mechanism established in this section is from July 21, 2022 and will be in force until December 31, 2022. (I)