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Print articleFinancial Market Commission Issues Regulation Regarding the Treatment of Provisions and Information Requirements for Covid-19 Loans
May, 2020 - Carey Banking & Finance
The Financial Market Commission (CMF) reports that its Council approved on April 30th, 2020 a regulation (Circular No. 2,252), containing provisions for banks with regard to Covid-19 loans from the Guarantee Fund for Small and Medium-Sized Companies (FOGAPE).
The regulation addresses the following issues: exceptional measures for the treatment of provisions for credit in installments of the commercial portfolio; classification of debtors and calculation of delinquency; establishment of control procedures for the eligibility conditions of debtors; use of funds and; submission of periodic information to the CMF.
Among the main aspects of the regulations, it should be noted that for those loans granted under the Fogape Covid-19 program, the provisions of the debtor’s installment loans that are rescheduled, and that meet the established conditions, may remain constant during the grace period or rescheduling period granted by the financial institution. This may be for up to six months.
This measure facilitates the conditions to provide this financing and, at the same time, protects prudential aspects of credit risk that must be observed by the financial institutions participating in the Covid-19 credit lines of Fogape.
The document also details the information that the institutions must provide to the CMF, with the aim of adequately monitoring the evolution of the granting of these loans, registration of fees and the main features of these operations.
The CMF will also require the banks to set procedures for verification of credit requirements and commitments in regard to the use of funds, in accordance with the Law and the Regulations of Fogape Covid-19, which must be made available to the Commission.
The terms of this regulation will be effective as of April 30th. April 3oth. until October 31th 2021. Access here the Circular issued by the Financial Market Commission (Spanish).
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