New conditions for micro financings to be exempted from the mandatory deposit

In Communication “A” 4,843, enforceable as of September 22, 2008, the Argentine Central Bank established new requirements that inflows of funds under foreign micro financings (microempendimientos y mejoramiento de la vivienda única y habitación familiar) must comply with in order to be exempted from the 30% mandatory deposit established under Communication “A” 4,359; thus amending Communication “A” 4,427.

1.     The financing must be agreed to be repaid in an average term of no less than 2 years (including in such calculation principal and interest payments).

2.     The by-laws of the borrower must include the provision of financings services allocated to micro financings. The borrower must also evidence that such financings form its regular activities by filing the last audited balance sheet.

3.     The loan must be granted for the provision of the services set forth in 1. above and the funds disbursed must be allocated to such purpose within 90 days following the date in which the foreign currency was sold in the foreign exchange market. The funds must be deposited and kept in a separate local bank account of the borrower and cannot be used, in whole or in part, to grant consumer credits.

4.     The borrower must comply with at least two of the following conditions:

(i)    be a non-profit organization exempted from specific tax obligations;

(ii)    provide technical assistance, follow-up and expertise to those who finally receive the financing for their business development;

(iii)   register within the prior 36 months donations or new financings from The Social Capital Fund (FONCAP) or other international organizations or agencies related to that type of activities; or

(iv)   have an auditor’s certificate stating that at least an 80% of the financings granted in its regular course of business correspond to loans which do not exceed the amount of A$ 6,000 per beneficiary.

Communication “A” 4,843 also exempts from the mandatory deposit 2 years average term financings granted to financial entities provided that, within 30 days following the sale of the foreign currency disbursed in the foreign exchange market, the funds are allocated to:

(a)   finance entities of the private non-financial sector under the conditions set forth in i, ii, y iii above; and/or

(b)    to micro financings directly for amounts that do not exceed A$ 6.000 per beneficiary.