The Argentine Central Bank amended the regulation on credits for productive investment, regarding the eligible credits and the maximum interest rate.
On August 6, 2012, the Central Bank of Argentina (the "Banco Central de la República Argentina" or "BCRA") issued Resolution "A" 5338 which amends the regulation on credits for productive investment, regarding the eligible credits and the maximum interest rate.
In regard to the eligible credits, the financing of productive projects -including the acquisition of fixed assets- is eligible only when the following requirements are performed:
- the projects do not belong to the primary sector;
- the amount of financing to be allocated to purchase real estate does not exceed 20% of the financing nor 50% of the value of the real estate;
- if the characteristics of the project to be financed, the expected increase in the production of goods and/or services and in the employment, and the impact of the real estate value are reported to the BCRA; and
- having obtained the prior authorization of the BCRA in respect to the fulfillment of the requirements of this line of credits.
Regarding the maximum interest rate, it regulates that if the term of 36 months for which financial institutions shall receive from customers a fixed annual nominal interest rate of up to 15.01 ends, and this rate is not kept, a variable interest rate that does not exceed the total BADLAR rate in pesos plus 400 basic points may be applied.
Additionally, the BCRA issued Resolution "B" 10428 in order to clarify certain aspects of the legislation. Among the most important points, we highlight the following ones:
a) Minimum application to eligible credits
The minimum quota of 50% for MiPyMEs (micro, small and medium-sized enterprises) is exclusive for this segment. Natural persons who develop a business or micro business activity in their personal capacity may also be included in this segment.
b) Eligible Credits
- Credits originated under the framework of pre-existing lines of credits may be eligible only if they are new credits that were agreed on and disbursed since Resolution "A" 5319 came into force. That destination includes extensions of existing projects.
- Ranches destined to reproduction or dairy farms may be considered as capital assets, provided that these ranches are not used for consumption and that the productive life and maintenance of the project do no last less than the term of the loan.
- Acquisitions of used capital assets shall not be financed.
- Companies from the public sector (according to the definition of the legislation of "Financing to the non-financial public sector") may be financed as far as both resolutions are fulfilled.
- Guarantees granted are not eligible for financing.
- Financing the construction of housing units and financing their ulterior acquisition are not eligible financings. Nonetheless, financing destined to the construction and/or the ulterior acquisition of clinics, warehouses, commercial offices, etc are eligible financings.
c) Maximum interest rate
A variable interest rate may be charged during the first 36 months; to the extent the rate does not exceed the annual rate of 15.01% in any period.
d) Currency and terms
A credit originated with the maximum interest rate (15.01%) shall have an average term of 24 months or more and the total term shall not be inferior to 36 months. Hence, the average should be calculated considering the depreciation for its term -not taking into account the interest or the present values.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
