New Resolutions of the National Commission for Agricultural Credit
National Commission of Agricultural Credit issues resolutions, by which the capacity of the FAG and the validity of guarantees are modified.
The National Commission for Agricultural Credit issued Resolution No. 3 of 2020, amending Resolution 2 of 2016 and Resolution 17 of 2018, extending the capacity of the Agricultural Guarantee Fund (FAG) to assume risk, extending the term of the guarantees, temporarily eliminating the application of a discount on the FAG payment and adopting other provisions.
In accordance with that resolution, the following new features should be noted with respect to the previous resolutions: a) The FAG may grant guarantees until the current balance of the guarantees does not exceed 13.5 of its net worth. b) The term of the guarantee shall be equal to the term of the credit plus 720 calendar days. c) For the payment of the guarantee, it must be in force. The intermediary must also comply with the requirements established in Resolution 2 of 2016, within 720 calendar days of the entry into default of the guaranteed loan. d) The FAG guarantee may be used in conjunction with other complementary institutional guarantees. In case institutional guarantees are used, the financial intermediary must report to Finagro the coverage of such guarantee when applying for the FAG guarantee. When the guarantee is registered, the total sum of the coverage of both guarantees may not exceed the FAG's coverage limits established by type of producer and or scheme. For example, when complementary institutional guarantees are provided for agricultural and rural microcredit operations with microfinance technology, the sum of the coverage of such complementary institutional guarantees and the coverage of the FAG guarantee may not exceed 50% of the total value of the operation. e) On a transitional basis, the discount established in Resolution 15 of 2019 for guarantees registered with Finagro from 12 March 2020 to 31 December 2020 will not be applied.
The following should also be noted the Resolution 2 of 2020, issued by the National Commission for Agricultural Credit, by means of which Resolution 1 of 2016 is amended, and the rediscount rates for financial intermediaries are modified and other provisions are adopted. This Resolution adds a transitory paragraph to Article 5 of Resolution 1 of 2016 of the National Commission for Agricultural Credit, which establishes that until December 31, 2020 the rediscount rate for microcredits will be reduced by 1.5 effective annual percentage points.
Finagro will adopt the necessary procedures and measures for the development of both resolutions.
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