Regulation on Credit Operations of BANHPROVI

This Regulation aims to establish the normative framework that regulates financing granted under the Social Housing, Middle-Class Housing, Microcredit, Small and Medium Enterprise (SME), Agricultural, and other credit operations programs that the Financial System Law authorizes and the BANHPROVI Law permits.

The operations carried out by BANHPROVI through first-floor banking are governed by the Law of the Honduran Bank for Production and Housing (BANHPROVI) and its Regulation, the Financial System Law, the Law of the National Commission of Banks and Insurance (CNBS), the Law of the Central Bank of Honduras (BCH), Commercial Code, resolutions issued by the CNBS and the BCH, by the Board of Directors and Assembly of Governors of BANHPROVI and other applicable legal framework.

Annual credit programming is framed within the Strategic Plan, Business Plan, Policies and Credit Manuals, for which an operational plan must be presented in the third quarter of each year, in accordance with the calendar established by the State Department of Finance and the General Government Coordination Secretariat, to be executed in the following year, which contains the credit placement goals, number of clients, properly documented financial estimates and their technical projection bases for approval by the Board of Directors.

In accordance with BANHPROVI's organizational structure, it is established that those responsible for credit risk management are the Board of Directors, Executive Presidency, First-floor Banking Management, First-floor Banking Committees, Legal Department, Risk Division, and as a supervisory body the Internal Audit Unit. For the effective and efficient management of credit risk, those responsible for management must ensure strict compliance with the legal framework, credit policies and procedure manuals, as well as have personnel qualified in banking matters, promote a culture of sound banking practices and promote continuous improvement in all processes. TITLE II OF PRODUCTS CHAPTER I OF THE APPLICATION

Credit subjects may be natural or legal persons capable of exercising rights and contracting obligations, analyzed by BANHPROVI through first-floor banking and engaged in economic activities compatible with the Bank's objectives, who meet the conditions and requirements required by Law, this Regulation and applicable provisions on the matter. Once the application is submitted and prior to the procedures indicated in this Regulation, the applicant's credit history must be obtained and analyzed in accordance with the procedure defined for such purpose.

Every credit application must be submitted in approved forms, attaching all documentation required for each credit product, in accordance with what is contained in the Business Plan, policies and credit manuals of BANHPROVI for first-floor banking.

Debtors with problems in their credit history may access credit with BANHPROVI until they normalize their credit situation. Those debtors who have resulted in judicial execution of their assets to pay debts shall not be subjects of new BANHPROVI credits until five (5) years after this action and provided that their financial situation, according to the corresponding analysis, determines payment capacity. Debtors to whom BANHPROVI has written off obligations against reserves are excluded from new loans. CHAPTER II OF THE INFORMATION REQUIREMENT

Documentation required by current regulations, the Business Plan, Product Manuals and other resolutions approved by the Board of Directors of BANHPROVI.

Minimum required information: a. Small commercial debtors: 1. For Legal Entity: Internal financial statements of the last three (3) years, or those that correspond if the debtor has operated for less time, certified by a registered accountant (balance sheet, income statements and cash flow). However, when the credit facility granted is equal to or less than ONE MILLION LEMPIRAS (L1,000,000.00), the debtor's financial statements may be prepared by BANHPROVI personnel, who will evaluate the debtor's payment capacity in accordance with credit policy. 2. For Natural Person: Updated financial statements certified by a registered accountant (balance sheet and income statement). However, when the credit facility granted is equal to or less than ONE MILLION LEMPIRAS (L1,000,000.00), the debtor's financial statements may be prepared by Institution personnel, who will evaluate the debtor's payment capacity in accordance with the methodology established in credit policy. 3. For Natural and Legal Persons: Photocopies of feasibility studies of projects to be financed. Applies in cases where debtors initiate new projects. b. For microcredit portfolio, financial information sheet containing at minimum: 1. Assets 2. Liabilities and equity (of business and family) 3. Sales 4. Purchases 5. Gross Margin (Sales less Purchases) 6. Business expenses 7. Net Margin (Gross Margin less Business expenses) 8. Other family income 9. Family expenses 10. Net family income (Net Margin plus Other family income less Family expenses) 11. Projected cash flow in accordance with methodology prepared by BANHPROVI first-floor banking 12. Credit and financial analysis of debtor and co-debtor c. Agricultural credits for amounts between TWO MILLION FIVE HUNDRED THOUSAND LEMPIRAS (L2,500,000.00) and TWENTY MILLION LEMPIRAS (L20,000,000.00): 1. For Legal Entity: Internal financial statements of the last three (3) years, or those that correspond if the debtor has operated for less time, certified by a registered accountant (balance sheet, income statement and cash flow). 2. For Natural Person: Updated financial statements, certified by a registered accountant (balance sheet, income statements and cash flow). 3. For Natural and Legal Persons: Photocopies of feasibility studies of projects to be financed. Applies in cases where debtors initiate new projects. Agricultural credits for amounts less than TWO MILLION FIVE HUNDRED THOUSAND LEMPIRAS L2,500,000.00 shall be evaluated in accordance with the established methodology.

Every credit application that is backed with real guarantees, whether these are mortgages, chattels or a combination of both, must have appraisals prepared by a professional with a current identification and registered in the registry maintained for such purpose by the CNBS. In the case of new movable assets, only invoices, pro-forma invoices and quotes must be presented. The cost of the appraisal shall be the responsibility of the applicant, the value of which is set by the appraiser professional in the field.

Appraisers who conduct appraisals of guarantees offered for credit granting must incorporate in such reports at minimum the information detailed in current regulations. Appraisals of guarantees already accepted, as provided in the regulation on the matter issued by the National Commission of Banks and Insurance, must be updated every four (4) years; valuation work performed on mortgage guarantees other than housing, the latter not requiring update except in extraordinary cases determined by the Institution or the CNBS, and every two (2) years on chattel guarantees.

Each person to whom BANHPROVI first-floor banking grants credits shall have an individual file and in it all documents, letters, plans, etc., received in relation to the loan shall be maintained. The formation of the file shall be done in accordance with the provisions issued by the CNBS. The guarantees and their contracts, public instruments, securities shall be custodied by the BANHPROVI Guarantees Section.

The institution shall require for all credits a life insurance, property damage insurance and/or agricultural insurance for the agricultural sector, in which BANHPROVI appears as irrevocable beneficiary, for an amount equal to the loan, renewed annually and for a period not less than the term thereof. CHAPTER III CREDIT CONDITIONS

Credits granted by BANHPROVI through first-floor banking must be for the sectors or purposes established in its Strategic Plan and Business Plan, prioritizing the financing of activities that promote the development of the Sectors: Housing, Microcredit, SME and Agricultural, observing the policies and procedures established in the current credit manuals for each purpose. Likewise, through credit policies approved by the Board of Directors, BANHPROVI determines its degree of participation and risk exposure limits in each market sector it decides to serve (risk appetite). All approved credits must be legalized before disbursement with their respective document, through the presentation of an executable instrument that ensures legal action for fund recovery. The responsibility for approving credit applications rests with the authorized bodies according to the instances defined by the Board of Directors, and compliance and quality of credit administration process is the responsibility of First-floor Banking Management through the executives in charge of the business relationship with clients and the collections area.

BANHPROVI may not grant financing in the following cases: 1. Credits based on large concentrations of guarantees. 2. Credits for the acquisition of shares. 3. Credits for financing political campaigns. 4. Credits to finance military equipment. 5. Credits to Churches or institutions with religious purposes that are not with the purposes established by BANHPROVI. 6. Credits intended for consumption (purchase of debts from credit cards, purchase of personal use vehicles, payment of debts with social security institutions or any other activity not related to the productive sector of the country). 7. Other prohibitions established by the Board of Directors.

FINANCING MODALITIES: BANHPROVI may grant financing in the following manner: 1. Direct financing to the credit applicant. 2. Revolving or rotating credit line for direct financing to the Agricultural and SME Sector, understood as the modality under which BANHPROVI approves the grant of a direct credit facility in favor of a client, establishing a maximum amount in accordance with the coverage of the guarantee and a term as provided in its credit policies and manuals. 3. Other modalities authorized by the Board of Directors.

CREDIT AMOUNT APPROVAL LIMITS: For the approval of credits, the following approval levels are established, through Credit Committees: 1. Agency Credit Committee: Will approve credits up to FIVE HUNDRED THOUSAND LEMPIRAS (L500,000.00). 2. Management Credit Committee: Will approve credits with amounts between FIVE HUNDRED THOUSAND LEMPIRAS WITH ONE CENT (L500,000.01) up to TWO MILLION LEMPIRAS (L2,000,000.00). 3. First-Floor Banking Credit Committee: Will approve credits with amounts between TWO MILLION LEMPIRAS WITH ONE CENT (L2,000,000.01) up to TEN MILLION LEMPIRAS (L10,000,000.00). 4. Board of Directors: Will approve credits greater than TEN MILLION LEMPIRAS (L10,000,000.00), which will be approved in first instance by the First-Floor Banking Committee and presented to the Board of Directors upon proposal of the Executive Presidency.

CONDITIONS OF FINANCING GRANTED BY BANHPROVI THROUGH FIRST-FLOOR BANKING: The conditions of financing and other operations stipulated in Article 3 of the BANHPROVI Law are established in the respective manuals of the products approved by the Board of Directors upon proposal of the First-Floor Banking Management or the Executive Presidency. The maximum amount to be financed, the form of amortization, interest rates, and term of each credit operation shall be constituted based on the conditions established in the financial products approved by the Board of Directors.

GENERAL CREDIT GUIDELINES: The Board of Directors of BANHPROVI is the body responsible for approving the percentages to be financed in its different products and credit destinations, which may be reviewed according to market conditions, in special cases and upon proposal of the Executive Presidency.

INTEREST RATES: The interest rate to be applied to credit products through first-floor banking shall be determined in accordance with revisable market conditions, and shall be approved by the Board of Directors upon proposal of the Executive Presidency in accordance with the provisions of Articles 3 as amended and 38 of the BANHPROVI Law.

SPECIAL TRANSACTIONS: It is the responsibility of First-Floor Banking Management to propose to the Management Credit Committee in accordance with the limits established in Article 17 of this Regulation to authorize the substitution, modification, subrogation, partial release, pledging of the mortgage or movable guarantee. The Credit Committee may authorize it, provided that the quality and coverage of the same is maintained, and must provide BANHPROVI with an updated appraisal prepared by an appraiser registered in the Registry maintained for such purpose by the CNBS, accompanied by the opinion of BANHPROVI's Legal Department.

CREATION OF NEW PRODUCTS: First-Floor Banking Management is responsible for proposing new financial products to the Board of Directors, in accordance with market demands following applicable regulations that allow minimizing, controlling, and managing risks inherent to the product.

PURPOSE: In order to ensure the payment of obligations, BANHPROVI may accept as an alternate source of payment guarantees permitted by law, preferably real guarantees. Surety bonds or personal endorsements must be properly qualified.

TYPES OF GUARANTEE: BANHPROVI may accept the following guarantees: 1. Mortgage guarantees 2. Movable guarantees 3. Those provided by Reciprocal Guarantee Fund Management Companies 4. Certificates of Deposit 5. Trust guarantees 6. Bank Guarantee / Surety bonds 7. Guarantee Trust Funds 8. Combination of the above. Regardless of the case, movable and immovable property offered as guarantee must be inspected by the Credit Officer to verify their existence and conditions through an appraisal.

GUARANTEES NOT QUALIFIED FOR LOANS: BANHPROVI shall not accept as loan guarantees: 1. Rights of co-owners that are pro-individuals unless all co-owners jointly grant the guarantee or are approved by the Board of Directors. 2. Properties whose ownership is subject to resolutory or suspensive conditions, except where there is consent from the respective interested parties. 3. Land titles issued by the INA within the land titling program that belong to natural or legal persons, while they are non-attachable. 4. Attached properties and those having prohibition on performing acts, contracts, and any other limitation of ownership. 5. Properties held in bare ownership. 6. Buildings or permanent improvements constructed on third-party land, except when the owner of the land constitutes as a mortgage guarantor. 7. Properties whose location is in protected zones or agroforestry exploitation. 8. Uninsurable real estate.

DEGREES OF MORTGAGE FOR GUARANTEES: On an immovable mortgaged in favor of BANHPROVI in first degree, additional mortgages on the same shall be accepted provided they are in favor of BANHPROVI.

GUARANTEE MARGINS: The guarantee margins and evaluation standards for loans that BANHPROVI grants contemplate the following: 1. Mortgage guarantees in first degree: a. For the housing sector: First mortgage shall be accepted up to NINETY PERCENT (90%) of the appraisal value, for the middle-class housing program and for the social housing program shall be accepted up to NINETY-FIVE PERCENT (95%). b. For the SME and Agricultural Sector: i. Urban Property: shall be accepted up to SIXTY PERCENT (60%) of the appraisal value. ii. Rural Property: shall be accepted up to FIFTY PERCENT (50%) of the appraisal value. 2. Movable guarantees in first degree: shall be accepted up to FIFTY PERCENT (50%) of the appraisal value.

CONDITIONS OF MORTGAGE GUARANTEES FOR USEFUL DOMAIN PROPERTIES: BANHPROVI must consider for lands with improvements or permanent crops that have been granted in useful domain with a special clause in the deed as follows: 1. For urban lands up to SIXTY PERCENT (60%) including the value of the land. 2. For rural lands cultivated with coffee up to SIXTY PERCENT (60%) of the value of the land and improvements. 3. For lands cultivated with other products declared unaffectable by the INA up to SIXTY PERCENT (60%) and for those exploited with other types of crops up to FIFTY PERCENT (50%), provided that the owner has obtained an unaffectability certificate from the INA. 4. Lands ceded as guarantee of the urban core of San Pedro Sula, Cortés.

CONDITIONS OF MOVABLE GUARANTEES: BANHPROVI must consider the provisions established in Articles 2 and 45 of the Movable Guarantees Law and Article 24 of its Regulation.

PURPOSE: The Credit Committees of first-floor banking of BANHPROVI are collegiate bodies whose function is to execute the credit and operational policies approved by the Board of Directors for the different credit programs. The Credit Committees must meet in Ordinary session at least once a week and Extraordinarily when convened by initiative of First-Floor Banking Management; in all cases, all actions must be recorded in the corresponding minutes that shall be signed by the members who attended the session.

COMPOSITION OF FIRST-TIER BANKING CREDIT COMMITTEES: The Credit Committees must have their respective regulations that contain at a minimum: composition, organization, objectives, scope of their activities, responsibilities, frequency of meetings and their powers, all of which shall be approved by the Board of Directors.

ARREARS MANAGEMENT COMMITTEE: As a follow-up to cases of loans in arrears and as a principal function to minimize impairment allowances and maintain acceptable arrears rates for the Bank, which guarantees the greatest return on its income, a Loan Arrears Management Committee shall be established for the Range comprised of the Credit Officer (Officer responsible for the loan), the Portfolio Recovery Manager, Legal Officer, Branch Manager, Portfolio Administration Manager, Credit Analysis and Business Intelligence Manager, and Division of Business Manager who presides over it. TITLE III SUPERVISION AND CONTROL

REVIEWS OF CREDIT OPERATIONS: In accordance with its credit policies, BANHPROVI must provide the monitoring it deems necessary to the credits granted to its clients, before, during and after the execution of investment plans, in order to guarantee the appropriate use of resources. Additionally, it must comply with what is established in the BANHPROVI Law and its Regulations, resolutions issued by the Board of Directors, this Regulation and resolutions issued by the regulatory entities. Likewise, compliance must be maintained with the current legal framework in matters of prevention of money laundering, financing of terrorism and designated non-financial activities and professions, as well as any other provision issued by BANHPROVI. TITLE IV FINAL PROVISIONS

CONFLICT OF INTEREST: No member of the first-tier banking Credit Committees may incur a conflict of interest and must commit to handling with prudence the confidential or privileged information for internal use to which they have access in the exercise of their duties. Likewise, any Committee member must refrain from participating with voice and vote when they have a legitimate, direct or indirect interest in the approval of a credit, and must withdraw from the session and note their abstention in the minutes.

OPERATIONS WITH ECONOMIC GROUPS: BANHPROVI must approve the policies for granting loans and other operations it grants to economic groups of borrowers. Likewise, those granted to legal entities in which all those previously described have majority participation or are in a position to exercise significant control or influence.

OTHER STANDARDS AND REGULATIONS: BANHPROVI is subject to the standards and regulations that have been communicated or may be communicated in the future by the National Banking and Insurance Commission, Central Bank of Honduras, or any State entity, in accordance with their corresponding powers, relating to this matter. Cases not provided for in this Regulation shall be resolved in the first instance by the First-Tier Credit Committee, in accordance with its powers and responsibilities established in this Regulation and, in the second instance, by the Board of Directors of BANHPROVI.

EFFECTIVE DATE: This Regulation shall enter into force as of its publication in the Official Gazette La Gaceta. ATTY. ICOR ALDUVIN RUIZ LÓPEZ SECRETARY