Special accounting standards in Mexico

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In response to the requests made by representatives of different financial entities regulated and supervised by the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores or “CNBV”), the authority issued special temporary accounting standards, addressed to Credit Institutions (Instituciones de Crédito), Financial Cooperative Associations (Sociedades Financieras Populares), Credit Unions (Uniones de Crédito) and Savings and Credit Cooperatives (Sociedades Cooperativas de Ahorro y Préstamo), in order to support those clients who are unable to meet their credit commitments. This, in view of the negative impact that the spread of SARS-CoV2 or COVID-19 could generate in various activities of the economy.

In general terms, the support will consist of the partial or total deferment of payments of principal, interests or both, for up to four months, with the possibility of extending such deferment to an additional two months, with respect to the total amount due, including ancillary costs. Restructured or renewed loans will not be considered past-due loans, so they will not have an impact on the income statement through the creation of credit reserves, which will neither have a negative impact on the capitalization index of such entities.

Likewise, the balances may be frozen without interest charges. The foregoing will be applicable as long as the credit is classified as performing as of February 28, 2020, in the case of credit institutions and as of March 31 in the case of Financial Cooperative Associations, Credit Unions and Savings, and Credit Cooperatives. It is important to note that these benefits do not apply to credits entered into with related parties, as defined in each applicable law.

Similarly, these accounting standards defer the creation of credit reserves derived from reductions (quitas), remissions (condonaciones), rebates or discounts (bonificaciones o descuentos), if these result in lower payments from the borrowers. In the event that the amount of the reductions, remissions, rebates or discounts exceeds the balance of the reserves associated with the loan, banks must make up to the difference on the date of the restructuring or monthly following the straight line method in a period not exceeding fiscal year 2020.


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