TECHNICAL STANDARDS TO FACE BREACHES AND CONTRACTUAL OBLIGATIONS – DUE TO THE PANDEMIC COVID-19 ISSUED BY THE CENTRAL RESERVE BANK OF EL SALVADOR.
These Standards are intended to encourage the search for support mechanisms for the credit situation of borrowers who may have payment difficulties on their loans or to subjects contractually bound with the financial entities to which these Standards apply, as a consequence of the economic crisis derived from the effects of COVID-19, which was declared a pandemic by the World Health Organization.
The subjects compelled to comply with these Standards are: The banks incorporated in El Salvador, their overseas offices and their subsidiaries;
- a) Branches and offices of foreign banks established in the country, as applicable;
- b) Insurance companies, their foreign branches;
- c) Branches of foreign insurance companies established in the country, as applicable;
- d) Cooperative associations that provide insurance services;
- e) Cooperative banks, savings and credit companies and federations regulated by the Law of Cooperative Banks and Savings and Credit Companies;
- f) The Mortgage Bank of El Salvador;
- g) The Social Fund for Housing, the National Fund for Popular Housing and the Solidarity Fund for the Micro-Entrepreneur Family, in what does not contradict its Articles of Incorporation or the provisions of the Court of Accounts;
- h) The Agricultural Development Bank, in what does not contradict in its Articles of Incorporation or the provisions of the Court of Accounts;
- i) The Development Bank of El Salvador, in what does not contradict in its Articles of Incorporation or the provisions of the Court of Accounts;
- j) Mutual guarantee companies and their local bonding companies;
- k) The Social Security Institute of the Armed Forces; Y
- l) Credit card issuers.
The previous entities will implement procedures through which they will be able to modify the conditions of the credits agreed with the borrowers, new conditions for the payment of the obligations, review the terms and conditions of the loans, in their interest rates and terms, which will allow these entities to agree and grant grace periods, maintaining the risk category, among others, provided that the extraordinary policies established by each entity are complied with.
Likewise, entities must adopt the necessary mechanisms to maintain the validity of the different insurance policies that cover the credit obligations of people affected by the COVID-19 pandemic.
People who are unable to meet their credit obligations as a result of the COVID-19 pandemic, will retain the risk category they present when applying the measure established in the entity’s policy, however, when they do not comply with the payment conditions previously agreed. Likewise, the count of the days in arrears will be suspended.
The entities that apply to these Standards must have a separate and updated register of borrowers and credit operations that have been subject to the benefits of these Standards and keep them available to the Superintendence.
TEMPORARY MEASURES FOR THE TREATMENT OF INSURANCE POLICIES
In accordance with the article 9 of Decree 593 of the National Emergency of the Pandemic by COVID-19, insurers must guarantee that the persons obligated to pay the premiums corresponding to the insurance they offer and that are affected by the situations generated by the COVID-19, do not incur in breaches of contractual obligations and can neither be imposed commercial penalties of any kind.
OTHER GENERAL PROVISIONS OF THE PRESENT POLICIES.
The effects of these Standards will be maintained for one hundred eighty days from the effective date of their issuance, which shall be effective as of March 19th, 2020.
The aspects not foreseen in terms of regulation in these Standards will be resolved by the Central Bank through its Standards Committee.
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