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RISK MANAGEMENT SYSTEM OF CREDIT (SRC)

SRC-MA-01

RISK MANAGEMENT SYSTEM MANUAL CREDIT

University of Antioquia Teachers Cooperative

Medellin

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Risk Management System Manual Credit

COOPERATIVE OF TEACHERS OF THE UNIVERSITY OF ANTIOQUIA

"COOPRUDEA"

BOARD OF DIRECTORS

AGREEMENT No. 004 of 2020

By which the Manual of the Risk Management System of Credit - SARC-.

The Board of Directors of the Cooperative, in use of its legal and statutory powers, and that:

CONSIDERING:

1. It is the power of the Board of Directors to adopt and reform the manuals and regulations of the various control systems of the Cooperative.

2. The Board of Directors has the duty to establish the policies, define the mechanisms, instruments and procedures that will be applied in the entity and the other elements that make up the SARC.

3. Within the powers as the Board of Directors, there is the internal regulation of the matters determined by the Law, therefore:

AGREES

SINGLE ARTICLE. Adopt the Manual of the Credit Risk Management System "SARC", which sets forth the different criteria and policies that are applied in COOPRUDEA with respect to credit management, adjusting to current regulations.

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CONTENT

GENERAL PRESENTATION 6

OBJECTIVES 8

2.1 GENERAL OBJECTIVE 2.2 SPECIFIC OBJECTIVES

8 8

ORGANIZATIONAL STRUCTURE OF THE SARC 9

3.1 FUNCTIONS IN RELATION TO THE MANAGEMENT OF CREDIT RISK 9 9

eleven

12 12

3.1.1 CCOUNCIL OF TODMINISTRATION 3.1.2 COMITÉ OF ANDVALUATION OF CARTERA 3.1.3 RPRESENTING LEGAL 3.1.4 RRESPONSIBLE FOR THE GESTIÓN OF RIESGOS

POLICIES FOR THE GRANTING OF CREDITS 13

4.1 4.2 4.3 4.4 4.5 4.6

OBJECTIVES TARGET MARKET TARGET MARKET SEGMENTATION SCOPE OF APPLICATION CREDIT GRANTING POLICIES PRINCIPLES ANALYSIS CRITERIA

13 13 14 14 14 fifteen

16 16 16 16 16 17 17 17 18 18 18 18 19 twenty

twenty-one

4.7 4.7.1 4.7.2 4.7.3 4.7.4 4.7.5

CPAYMENT APACITY ANDDEBT SFORGIVENESS OF THE DEBTOR

CPAYMENT AGREEMENT GARANTIES LIBRANZAS4.7.6

4.8 CREDIT GRADING SYSTEM 4.9 GENERAL REQUIREMENTS AND CONDITIONS 4.9.1 RGENERAL EQUISITES 4.9.2 CCHARACTERISTICS OF THE SUPPORT DOCUMENTS FOR THE GRANTING OF CREDIT 4.10 TYPE OF CREDITS 4.10.1 CCONSUMPTION RETURNS 4.10.2 CHOUSING INCOME 4.10.3 CCOMMERCIAL PROFIT 4.11 POLICIES ON CREDIT EXPOSURE LIMITS 4.12 MINIMUM AMOUNT OF CREDIT

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4.13 CONDITIONS FOR SETTING THE DEADLINES 4.14 GUARANTEES

22 27 28 28 28 29 30 36 37 38 2. 3 24 24 25 26 26 26 26 26 27 27 27 27

4.14.1 4.14.2 4.14.3 4.14.4 4.14.5 4.14.6 4.14.7

GELIGIBLE ARANTIES GNON-ALLOWABLE ARANTIES CGENERAL CONDITIONS TODMINISTRATION OF GARANTIES CRITERIA FOR ACCEPTANCE OF THE GUARANTEES VALORATION OF GUARANTEES DOCUMENTS FOR STUDYING AND CONSTITUTION OF ADMISSIBLE GUARANTEES CCOVERAGE OF WARRANTIES4.14.8

4.15 GRANTING INSTANCES 4.15.1 COMITÉ FINANCIAL 4.15.2 COMITÉ OF CREVENUE 4.15.3 CCOUNCIL OF TODMINISTRATION 4.16 CREDIT PROTECTION 4.16.1 SDEBTORS LIFE INSURANCE 4.16.2 SHOME SAFE 4.16.3 SVEHICLE INSURANCE 4.17 AMORTIZATION AND INTEREST 4.17.1 MPAYMENT AGREEMENT 4.17.2 AMORTIZATION 4.17.3 IINTERESTS 4.18 PROCEDURES

POLICIES FOR PORTFOLIO MANAGEMENT 27

5.1 DEFINITION AND GENERALITIES 5.2 OBJECTIVES 5.3 GENERAL POLICIES FOR PORTFOLIO MANAGEMENT 5.4 PORTFOLIO STANDARDIZATION ACTIONS

38 39 39 40 40 40 42 42 46 46 47 48 48 49 49 49 49

5.4.1 RSTRUCTURING 5.4.2 CPORTFOLIO ASTIGO 5.5 MONITORING AND CONTROL POLICIES 5.5.1 EVALUATION AND QUALIFICATION OF THE PORTFOLIO 5.5.2 IMONITORING AND CONTROL REGULATIONS 5.6 SUPPLY POLICIES 5.7 NOVATIONS 5.8 OTHER MODIFICATIONS TO OBLIGATIONS 5.9 LEGAL COLLECTION 5.10 OTHER PROVISIONS 5.10.1 CRISK ENTRALS 5.10.2 CARTERY OF ASSOCIATES REQUESTING WITHDRAWAL OF COOPRUDE 5.10.3 RSETTLEMENT OF LIQUIDATIONS

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5.10.4 DSAVINGS ACCOUNT SUCCESS 5.10.5 ESUPPLIED BORROWERS 5.10.6 CASOS NOT EXPECTED

fifty

DISCLOSURE OF INFORMATION 51

CONTROL BODIES 51

7.1 FUNCTIONS OF THE CONTROL BODIES 52 52 52

7.1.1 AUDITORY INTERNAL 7.1.2 REVISORY FISCAL

CONTROL OF CHANGES IN DOCUMENT 53

APPROVAL 54

LIST OF TABLES

Table 1. Terms and limits for credit lines ........................................ ............. 18 Table 2. Maximum concentration by credit modality .................................. 21 Table 3. Minimum amount by credit modality ......................................... ..... 22 Table 4. Range of approval by granting instance ............................. 23

LISTING OF FIGURES

Figure 1. SARC structure ............................................. ..................................... 7 Figure 2. SARC organizational structure ............................................ ................ 9

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GENERAL PRESENTATION

This document sets forth the different criteria and policies observed in COOPRUDEA with respect to the Credit Risk Management System.

Its purpose is to promote the definition, compilation, updating and approval of the granting, monitoring, control and recovery policies that make up the Credit Risk Management System of the Cooperative, adjusting to current regulations in accordance with the purpose of the Entity.

The design of the Credit Risk Management System - SARC- includes the regulatory provisions implemented by the Superintendency of the Solidarity Economy in its Basic Accounting and Financial Circular and other external circulars.

The structure of this manual contains the following elements, which will be technically developed and supported in the different documents organized by the Cooperative, through the Integrated Management System (Quality Management System and Comprehensive Risk Management System):

▪ Credit Risk Management Policies

▪ Adequate organizational structure to support the SARC

▪ Credit Risk Management processes and procedures

▪ Disclosure of information

▪ Control bodies

In a first level, there are the policies, which refer to: general policies of credit risk (CR), granting, target market, and other conditions for granting, monitoring and control policies and finally recovery policies and normalization of the loan portfolio.

The credit risk management processes are established in the Credit Granting Technical Document (SRC-DT-01) and in the Portfolio Recovery, Monitoring and Control Document (SRC-DT-02), in which the actions are aligned , parameters, characteristics and limits of the different policies issued and considered by the Board of Directors of the Cooperative. It is intended that the aforementioned document is periodically reviewed by the Board of Directors and provides the objective and necessary considerations for its improvement.

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At a third level, the aspects related to the organizational structure that will manage the Credit Risk Management System and the processes inherent to the SARC are determined.

In addition to the above, it intends to order a control structure that minimizes the concentration of functions and ensures correct performance of each of the instances inherent in credit risk management, avoiding in the same way any conflict of interest that may arise, in order to which will establish compliance with the control environments.

Figure 1. SARC structure

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OBJECTIVES

2.1 GENERAL OBJECTIVE

The purpose of this document is to order the policies, tools, structure, processes, human capital, technological infrastructure and control mechanisms in its different stages of the SARC system, necessary to guarantee a thorough and objective analysis of the risk of credit operations, In order to reduce the possibility of the Cooperative incurring losses, which decrease the value of its assets as a consequence of a debtor or counterpart not complying with its obligations and consequently affecting its solvency level.

2.2 SPECIFIC OBJECTIVES

▪ Manage credit risk in a proactive way, with knowledge and according to the nature, volume of operations, characteristics of COOPRUDEA and its potential businesses.

▪ Ensure proper credit and portfolio management as a financial systemic component.

▪ Assess the risks inherent in credit risk management in order to minimize expected and unexpected losses.

▪ Order the organizational structure that allows a timely response in the credit service.

▪ Dynamize the commercial function with greater knowledge of the market and the trends in credit consumption.

▪

Increase the level of credit placement at the lowest possible cost.

Ensure the loyalty of the associate through the credit service.

Increase the level of objectivity in the credit decision, through the automation of the granting process.

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ORGANIZATIONAL STRUCTURE OF THE SARC

Figure 2. SARC organizational structure

3.1 FUNCTIONS IN RELATION TO THE MANAGEMENT OF CREDIT RISK

The Board of Directors establishes the following functions in relation to credit risk management, which will be mandatory. These functions are subdivided into four segments:

3.1.1 Board of directors to. Recognize risk management and administration as a managerial practice, which

provides the Cooperative with greater security in financial, commercial, administrative and operational operations.

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b. Empower Management in the development of financial and operational risk management models, and support the strategies it assumes for their consolidation.

c. Determine the policies on granting, monitoring, control, recovery, guarantees and provision of exposure for credit risk.

d. Approve the policies of rates, terms, quotas and amounts, in accordance with the financial situation of the Cooperative and the economic environment.

and. Determine the appropriate organizational structure and the corresponding qualities, responsible for the administration of the SARC system of the Cooperative.

F. Determine the characteristics of the target market for the credit service, set tolerance levels against risk and discriminate between potential users, the allocation limits for each of them, according to the credit modalities.

g. Approve the manuals involved in the credit process and in credit risk management, as well as their respective updates.

h. Define the instances for the decision of credits and the levels of attributions for each one of them, as well as carry out an assessment of the same according to the level of quality of the portfolio.

i. Approve actions in the event of exceeding or exceeding the exposure limits to credit risk, as well as exceptions on internal policies.

j. Appoint the Credit Portfolio Evaluation Committee and define its functionsand approve its regulations, in accordance with the legal regulations that apply.

k. Designate the number of members that will be part of the Credit Committee, and monitor compliance with the policies.

l. Evaluate the proposals for improvement to the SARC presented by Management and comment on them.

m. Guarantee integrity in compliance with the parameters defined for credit operations and determine the type of reports, content and periodicity that they must have, in order to assess the level of compliance with existing policies on financial risks.

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n. Follow up on the periodic reports presented by Management and the Risk Committee on the corrective measures applied to ensure that the credit risk limits are met, leaving a record in the minutes of the respective meetings.

or. Approve the Internal Audit processes of the SARC that the person in charge of said function in the Cooperative will follow.

p. Decide on policies that guarantee timely action to mitigate the impact of non- compliance and minimize unexpected losses.

q. Guarantee the development of methodologies for estimating credit risk exposure, by type of portfolio and individual by debtor, which may be delegated to the Portfolio Evaluation Committee, when deemed appropriate.

r. Stimulate the development of a risk management culture throughout the organization's structure and provide the necessary resources.

s. Guarantee the existence of technological developments and sufficient information to support the different processes and activities involved in the SARC system.

3.1.2 Portfolio Evaluation Committee

to. Permanently evaluate the risk of the loan portfolio, in accordance with the criteria indicated in the circulars and / or resolutions issued by the Superintendency of the Solidarity Economy.

b. Recommend the technical conditions for setting the levels and limits of exposure of total, individual and portfolio credits, as well as the allocation quotas and concentration limits by debtor, sector or economic group.

c. Evaluate and recommend to the Board of Directors the methodological criteria in the evaluation of the loan portfolio, in order to provide good support for decision-making.

d. Analyze and validate the updating of the credit rating by risk level.

and. Establish priorities for monitoring the loan portfolio.

F. Validate that the debtors comply or are complying with the agreed conditions for the attention of the respective obligation.

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g. Evaluate the guarantees constituted and their suitability

h. Validate the collection actions and the status of the judicial collection processes.

i. Present reports to the Board of Directors with the results of the loan portfolio evaluations.

j. Provide the competent bodies with information related to the evaluation and reports on the credit portfolio.

k. Review the sufficiency in the level of coverage of the deterioration of COOPRUDEA's portfolio and formulate the appropriate recommendations.

3.1.3 Legal representative to. Establish and guarantee effective compliance with the policies defined by the

Board of Directors and propose changes to the policies and other elements of the SARC.

b. Present to the Board of Directors for its study and approval, the proposed methodologies and / or procedures that will be used in the credit process and for the adequate management of credit risk in the granting, monitoring and recovery of the loan portfolio.

c. Perform permanent monitoring of the SARC, and the fulfillment of the functions of the area responsible for credit risk management and keep the Board of Directors informed.

d. Adopt the necessary corrections to maintain an adequate SARC in COOPRUDEA.

and. Monitor the relationships they have with associates, employees of the commercial areas and the areas in charge of credit analysis, credit risk management and collection and / or portfolio monitoring, efficiently controlling conflicts of interest. interest that may be presented.

F. Monitor and pronounce on the reports presented by the Statutory Auditor on credit risk management.

3.1.4 to. Address the recommendations of the Board of Directors and Management.

Responsible for Risk Management

b. Ensure that the areas that participate in the credit process strictly comply with the policies, quotas and credit limits established by the Senior Management of COPRUDEA and by current legal regulations.

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c. Design, develop and guarantee the implementation of the methodologies and / or procedures used in granting, monitoring and recovering the portfolio.

d. Prepare the reports and proposals for improvement to the components of the SARC, the Risk Committee and the Portfolio Evaluation Committee, for subsequent presentation and approval by the Board of Directors.

and. Present a periodic report to Management on the general status of the SARC.

F. Respond for the content of legal reports on the SARC.

g. Carry out the calculation of portfolio impairments and ensure that their proper accounting record is carried out.

POLICIES

4.1 POLICIES FOR THE GRANTING OF CREDITS

The Board of Directors will be the one who establishes the rules for granting the credit service.

4.1.1 OBJECTIVES COOPRUDEA will carry out active credit operations with its associates, with the following objectives:

▪ Provide financial resources, under reasonable conditions and costs and in a timely manner.

▪ Finance productive activities and satisfy personal and family needs.

▪ Contribute to the improvement of the living conditions of the associate and his family group.

▪ Ensure that the financial structure allows the development and attention of the credit service.

4.1.2 TARGET MARKET They are the potential population groups of all social strata where COOPRUDEA will focus the sales force to offer the products and

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services, provided that the economic activities of its associates are licit and whose economic income is in accordance with the granting policies.

The credit will be granted in the form and conditions stipulated in this Manual and in the Technical Document of Credit Granting, which should be oriented, in a special way, to the economic, social and personal growth of the associate and his family group.

4.1.3 TARGET MARKET SEGMENTATION It will be observed as market segments, the associated legal persons or natural persons, who have a demonstrable economic activity, such as: labor dependent, independent with or without a business establishment, retirees and pensioners, with an age limit in accordance with internal policies of the Cooperative, and that within these activities ensure the permanence of income as a source of payment for the obligations acquired.

4.1.4 AREA OF APPLICATION Operate in the national and international territory, after evaluating the risk factors and market analysis, through the technological platforms provided for the operations of the Cooperative.

4.1.5

The following are general policies for granting credit services:

CREDIT GRANTING POLICIES

▪ COOPRUDEA will provide its associates with the credit service in accordance with cooperative principles, current legal regulations on the matter, the Statute and this Manual.

▪ COOPRUDEA will ensure that the use of the credit is done in a rational and technical way, in order to effectively contribute to the improvement of the living conditions of the associate and his family.

▪ The credit service will be provided based on the own resources from the capitalization, the savings of the associates, the collection of the portfolio and other resources generated in the financial management of the Institution. As a complement to the associative effort, when the circumstances require it, the Cooperative will be able to obtain external resources, in order to better cover the needs of the associates and provide a better and timely service.

▪ The credit service will use the appropriate and available technology at its fingertips.

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▪ The Cooperative will establish placement interest rates, under reasonable conditions, having as a reference: monetary policies, regulations of the surveillance and control entity, conditions of the Colombian Financial System and the financial capacity of the Cooperative.

▪ The Cooperative will be competitive and efficient in administrative, operational, financial and legal aspects in relation to credit operations.

▪ The credit service will be granted prior to the study of the conditions that allow establishing the debtor's basic knowledge, the payment capacity, solvency, the quality of the payment sources, the internal and external payment behavior and the guarantees offered when take place to them.

▪ Measurement methodologies will be applied that make it possible to assess the effectiveness of the granting of credits, using techniques previously verified and adapted to the Cooperative.

▪ The Cooperative will carry out orientation, training, information and advice programs for associates on the use of credit resources.

4.1.6 COOPRUDEA will grant credits in accordance with the following principles:

BEGINNING

▪ Security. By virtue of this principle, it will ensure that the requirements for granting the credit are aimed at effectively making the payment of the respective obligation. For this purpose, coverage will be established that is sufficient and offers the maximum support for the obligation.

▪ Quality. The Cooperative will ensure the mechanisms and means that allow it to have information that meets the quality parameters and characteristics.

▪ Covering. Coverage mechanisms will be applied to safeguard the quality of the assets, through the application of provisions.

▪ Coverage. Various types of insurance will be established to cover the assets given as collateral as support for credit operations and, in the event of the death of the debtor, the application of debtor life insurance.

▪ Risk aversion. Credit exposure limits will be established by type of debtor and credit modality, avoiding the concentration of indebtedness in a specific debtor or group of debtors.

▪ Equity. All associates may have access to this service according to the characteristics and qualities that it presents as a credit subject. By

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Therefore, access to credit services will be made in accordance with the particular conditions of each associate.

▪ Legality. The Cooperative will abide by the legal and technical standards and guidelines regarding credit operations.

4.1.7 ANALYSIS CRITERIA The granting of credit must be based on the knowledge of the credit subject, their payment capacity and the characteristics of the contract to be entered into between the parties, which include, among others, the financial conditions of the loan, guarantees, sources of payment, quality of the sources of payment and the conditions to which it may be exposed. The criteria that will be evaluated for the granting of credit, both for the debtor and the co-debtor, are the following:

4.1.7.1 Ability to pay

The evaluation of the expected payment capacity of a debtor is essential to determine the probability of default of the respective loan. For these purposes, it should be understood that the same analysis will be carried out to the co-debtors, and, in general, to any natural or legal person that is or may be directly or indirectly obliged to pay the credits. To evaluate the payment capacity, the Cooperative must analyze at least the debtor's income and expenses flows.

4.1.7.2 Indebtedness

The condition of indebtedness for credit applicants will be established with the purpose of limiting the granting amounts, not only due to the reflected payment capacity, but also due to the maximum levels of indebtedness, generating a valid technical relationship between the installment to be paid and the maximum amount to be awarded.

The levels of indebtedness will be established for each of the credit modalities.

4.1.7.3 Solvency of the debtor

It will be verified, through variables such as: the level of income and indebtedness, the quality and composition of the debtor's assets, liabilities, equity and contingencies. In the case of real estate, vehicles or other admissible security, the information must be verified as to whether they are affected by any of the domain limitations.

4.1.7.4 Payment behavior

4.1.7.4.1 External payment

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It refers to the credit history conditions that will be observed for the granting of credits, registered in the financial risk centers, with the purpose of fully evaluating the credit risk of the associate.

COOPRUDEA, will consult in the risk centers and other databases that the Cooperative has, the associate and their co-debtor, with prior authorization from them, complying with the habeas data law.

4.1.7.4.2 Internal payment

COOPRUDEA will carry out an evaluation of the internal payment behavior of the debtor and co-debtor associates, through the monitoring and control reports ordered and prepared by the Portfolio Committee. For this, it will have the IT tools and appropriate technology.

4.1.7.5 Guarantee

The guarantees, which back up the operation, are necessary to calculate the expected losses in the event of default and, consequently, to determine the level of impairment of the portfolio. The guarantees must be valid, with a value established based on technical and objective criteria, that offer legally effective support for the payment of the guaranteed obligation and whose possibility of realization is reasonably adequate. For this, the provisions of Decree 2555 of 2010 will be taken into account.

4.1.7.6 Libranzas

Drafts are a payment mechanism, but they are not considered as guarantees, since they do not comply with the characteristics of an admissible guarantee.

4.1.8 CREDIT GRADING SYSTEM For the placement of resources, through active credit operations, a typical methodology will be used Credit Score (Scoring), hereinafter referred to as the Credit Rating System. This methodology is established to qualify the associate's information, mitigate credit risk and streamline the operational process in decision-making and not as an instrument that determines the final decision; therefore, the verification and analysis of the applicant will not be omitted.

The Credit Rating System must be periodically calibrated in order to define decision thresholds, in accordance with historical criteria and behaviors.

For the execution of the Credit Rating System, the administration will rely on a technical document, which is an integral part of this Manual and which contains the description, characteristics and scope of each of the variables.

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4.1.9 GENERAL REQUIREMENTS AND CONDITIONS The types of person that will be established for the attention of the credits will be natural or legal persons.

4.1.9.1 General requirements

Those who meet the following general requirements may benefit from the credit service:

▪ To be an active associate and to be up to date in the fulfillment of its obligations.

▪ Submit request through the means provided by the Cooperative.

▪ Authorize the consultation of risk centers, including the database of the University of Antioquia and in binding and non-binding control lists.

4.1.9.2 Characteristics of the supporting documents for the granting of credit

The supports of credit applications must meet the following conditions:

▪ The Cooperative may request the documents that certify the economic activity carried out by the applicant and co-debtor (s), which will be fully detailed in the Technical Document of Credit Granting.

▪ The authenticity of the documents that are provided by applicants must be verified with the source of their issuance; Likewise, technological means may be used for the respective verification.

▪ The documents provided must be clear, of good quality and easy to verify.

4.1.10 TYPE OF CREDITS The Cooperative will provide its credit service through the following modalities: consumer, housing and commercial. Likewise, it will assign maximum indebtedness limits, which will be mandatory monitoring.

Table 1. Terms and limits for credit lines Term

maximum (years)

Indebtedness maximum (SMMLV)

Modality Line

Consumption Free destination 400

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Term maximum (years)

Indebtedness maximum (SMMLV)

Modality Line

Free destination with Mortgage

Free destination for homebuying

Rotating quota living place

Legal person

400 fifteen

fifty

600 1500

6 fifteen

10 living place

Commercial

4.1.10.1 Consumer loans

They are active credit operations, granted to natural persons. Its amount is up to 400 SMMLV. They are classified in the following lines:

4.1.10.1.1 Free destination

For credits approved by this modality, a specific destination is not required. They will have a maximum term of eight (8) years and their amount is up to 400 SMMLV.

When the credit is backed with a mortgage guarantee, the term may be extended up to fifteen (15) years.

If a free destination loan is accompanied by a home loan, and it is used exclusively for the acquisition of this asset, the term may be extended up to fifteen (15) years.

This line will only apply in cases in which the Cooperative is a mortgagee in the second degree, and the Welfare Fund in the first degree

4.1.10.1.2 Rotating quota

It is a credit quota that the Entity assigns to the associates, according to their payment capacity, level of indebtedness, and their credit history, with the purpose that the associate disposes of the money in an agile and timely manner. Its maximum amount is fifty (50) SMMLV, and the term will be six (6) years.

The remuneration interest rate will be fixed throughout the term of the loan, unless the parties agree to a reduction thereof and must be expressed only in terms of the effective annual rate. Interest must be collected in arrears and cannot be capitalized.

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4.1.10.2 Housing loan

They are active credit operations, granted to natural persons, for the acquisition of new or used housing, the construction of individual housing or the release of mortgage lien. These credits must be covered by an open mortgage guarantee in the first degree and without a limit on the amount constituted on the financed home. Its maximum amount is 600 SMMLV and a term of up to fifteen (15) years.

For this type of credit, the Cooperative will observe the provisions of Law 546 of 1999 and its regulations:

1) The remuneration interest rate will be fixed throughout the term of the loan, unless the parties agree to a reduction thereof and must be expressed only in terms of the effective annual rate. Interest must be collected in arrears and cannot be capitalized.

2) The amount of the credit may be granted up to seventy percent (70%) of the commercial value of the property. In loans destined to finance low-income housing, the amount of the loan may be up to eighty percent (80%) of the commercial value of the property.

3) For new properties acquired with legal entities, the value of the loan to be granted will be calculated based on the sale value stipulated in the respective promise of sale and / or trust order.

4) The first installment of the loan may not represent more than thirty percent (30%) of the family income. They are made up of the resources that the credit applicants can prove, provided that there is a kinship relationship between them or they are spouses or permanent partners. In the case of relatives, they must be, up to the second degree of consanguinity, first of affinity and only civil.

4.1.10.2.1 Assignment of mortgage

In accordance with article 24 of Law 546 of 1999, the Cooperative may act as the assignor or transferee of housing loans.

In cases where it acts as assignor, the Cooperative will accept the binding offer presented by the entity where the associate wishes to assign the obligation, informing that the assignment of the credit with its guarantees will be made once COOPRUDEA has received the full payment of the obligation. If the associate who owns the home loan has other loans, with the same mortgage guarantee, the total payment must include said loans, in order to carry out the assignment.

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In the cases in which the Cooperative acts as transferee, it will be necessary for the associate to exhaust the credit application and approval procedure for the housing line, being an essential requirement that the associate be the owner of the property and holder of the mortgage obligation in the entity. financial entity that will carry out the assignment. In this event, the amount of the loan will be equal to the balance of the mortgage loan certified by the financial institution.

4.1.10.3 Trade credit

Commercial credit is understood as the one granted to legal entities, for the development of productive activities.

Its maximum amount will be 1,500 SMMLV and its maximum term is ten (10) years. Up to twelve (12) months of grace can be considered on this line of credit.

4.1.11 POLICIES ON CREDIT EXPOSURE LIMITS Limits will be assigned to credit exposure, both by credit modality and by concentration according to the quality of the applicant.

The limits determine the maximum capacity of the Cooperative to serve the credit service, and the conditions under which it will be developed.

The Cooperative must establish in the processes and procedures, how to manage these limits, and in the same way it will ensure that in each credit operation they are preserved as a measure of control and aversion to risk.

The limits will always be a prudential measure that guides the Entity to carry out the credit operation within the real financial capacities, avoiding the concentration and increase of the exposure of credit risks and therefore of possible losses.

Each of the credit modalities will be affected by the maximum indebtedness limit, in accordance with the conditions of maximum credit exposure and tolerated loss due to the technical patrimony of the Cooperative.

The guarantee offered by the associates or potential debtors will not be a parameter of maximum indebtedness as a credit limit, it will always be valued as the financial collateral to support the credit operation.

COOPRUDEA will allocate the resources for the granting, with a distribution by modality determining maximum limits as shown in the following table.

Table 2. Maximum concentration by credit modality

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Modality Maximum Concentration (%) 85% 35% 5%

Consumption

living place

Commercial

Concentrations by credit modalities obey limits that do not necessarily have to add up to 100% in their combination, so ranges of participation percentages are determined for each of these, where in a modality acquiring the maximum limit, conditions that the other or the others do not necessarily reach the maximum value indicated, but must compensate the difference obtained.

The total of the credits of the lines of free destination with mortgage guarantee and free destination for the purchase of housing, together with the total of the credits of the housing modality, may not exceed a maximum concentration of 50% of the total portfolio of credits.

The sum of the balances of the credits of the same associate, may not, in any case, exceed ten percent (10%) of the technical patrimony of the Cooperative.

4.1.12 MINIMUM AMOUNT OF CREDIT

The following minimum amounts will be observed for credit operations, having established at a general level 20% of an SMMLV, but certain amounts are required by modality:

Table 3. Minimum amount by credit modality COMMERCIAL HOUSING CONSUMPTION

20% of a SMMLV 40 SMMLV 25 SMMLVMinimum amount

4.1.13 CONDITIONS TO SET THE DEADLINES The terms of credit operations will be defined under the following conditions:

▪ Financial situation of the Cooperative - Levels of flows of liquid resources available for placement.

▪

Rotation levels of the loan portfolio.

Quality of the source and funds that leverage the placement activity.

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▪

Gap analysis and asset and liability management.

Expected and projected turnover of the loan portfolio.

Projected operating profit.

Competitive trends - Business intelligence -. Lines of

credit and needs of associates. Needs of the

surrounding community.

Debt levels of the associates. Quality index

of the loan portfolio.

4.1.14 GRANTING INSTANCES The credit granting instances in the Cooperative are determined and authorized by the Board of Directors, who will assess the conditions of technical capacity, knowledge and credit risk management of its members.

The approval of credit applications will be the responsibility of the following decision- making bodies:

▪ Finance Committee

▪ Credit committee

▪ Board of directors

The credit approval instances will be defined by the amounts requested, privileged member status or credit modality.

In cases where the credit is not approved, the Cooperative reserves the right to inform the reasons for the decision.

Table 4. Range of approval by granting instance Instance

Finance Committee Range (SMMLV)

Credits between 0 and 60 ▪ Credits greater than 60 and less than or equal to

1500 All employee credits except legal representatives Over 1500 All credits of privileged members All credits of legal representatives

Credit committee ▪

▪ ▪ ▪

advise of Administration

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The traceability of the information of the credit applications will be supported with the “Credit application report. Final concept ”generated by the COOPRUDEA Financial Information System.

4.1.14.1 Finance Committee

4.1.14.1.1 Conformation

The Finance Committee will be made up of the Finance Department, the Savings and Credit Coordination and a Savings and Credit analyst. It will have as president the Chief Financial Officer. Decisions will be made by simple majority.

4.1.14.1.2 Functioning

It will meet every day from Monday to Friday, with the purpose of studying and deciding the credit applications received in the Cooperative and it will be able to hold its meetings in a remote manner, with the use of technological resources. In the same way, the Finance Committee may carry out the analysis and decision of a loan, through the same technological resources.

4.1.14.1.3 Powers

The Finance Committee may grant credits to associates, up to a maximum amount of sixty (60) SMMLV per request.

4.1.14.2 Credit Committee

4.1.14.2.1 Conformation.

It is made up of five (5) main members with voice and vote, appointed by the Board of Directors and with recognized technical experience, and by a representative of the Financial Management. The decisions of the Committee will be taken by simple majority.

4.1.14.2.2 Operation

It will ordinarily meet at least once a week, on the date and time agreed for that purpose. These dates will be announced to the associates for the purpose of planning the reception of applications and the study of credits. You will be able to hold your meetings in a remote manner, with the use of technological resources. In the same way, you can carry out the analysis and approval or denial of credits, through the same technological resources.

4.1.14.2.3 Installation and appointment

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At the Credit Committee installation session, the elected members will appoint a president from among them, who will be in charge of coordinating the meetings. Likewise, a secretary will be appointed at said facility.

4.1.14.2.4 Powers

The Credit Committee will decide on all those credits of associates natural and legal persons, that exceed 60 SMMLV up to 1500 SMMLV. Likewise, it will decide on the credits of the employees of the Cooperative, except the legal representatives, who will transfer the concept to the Board of Directors.

4.1.14.3 Board of Directors

The Board of Directors assumes the approval of the credits requested by the privileged members, upon recommendation of the Credit Committee and, those that correspond to the amount. In the case of requests from members of the Credit Committee, the concept will be issued by the same body, but the requesting member may not intervene in this concept.

The Board of Directors will know, on a monthly basis, all the credits granted.

4.1.14.3.1 Powers

It will decide on all those credits that are under the criteria established in the Bylaws, after a study by the Credit Committee. The amount subject to approval will be greater than 1500 SMMLV for natural and legal persons.

Additionally, credit operations carried out with the following persons or entities will require a number of favorable votes, which in no case is less than four-fifths (4/5) of the composition of the respective Board of Directors:

▪ Members of the Board of Directors.

▪ Members of the Vigilance Board.

▪ Members of the Credit Committee.

▪ Legal Representative and Alternate Legal Representative.

▪ Associated legal persons of which the foregoing are administrators or members of the oversight board.

▪ The administrators or associate directors of the associated legal entities.

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▪ The spouses and relatives up to the second degree of consanguinity, (parents, children, grandparents, grandchildren and siblings) second of affinity (brothers-in-law, in-laws, sons- in-law and daughters-in-law), and first civil (adopter and adoptive) of the persons indicated in the previous paragraphs .

In the minutes of the corresponding meeting, it will be recorded, in addition, that compliance with the regulations on limits to the granting of credit or maximum limits of indebtedness or concentration of risks in force on the date of approval of the operation has been verified, in those entities obliged to comply with these requirements.

In these operations, conditions other than those generally used by the Cooperative for its members may not be agreed.

4.1.15 CREDIT PROTECTION 4.1.15.1 Debtor life insurance

The credits granted by COOPRUDEA must be covered by a debtor life insurance, under the conditions established by the Cooperative, the cost of which will be assumed by the Entity.

In events in which the requesting associate does not meet the requirements to enter the policy offered by the Cooperative, he may back the credit with the contributions he has at the time of requesting it.

4.1.15.2 Home insurance

All loans with a mortgage guarantee granted by the Cooperative must be covered by insurance against the risks of fire, earthquake and malicious acts of third parties, at least for the value of the loan balance. This insurance will be established in favor of COOPRUDEA and must be in force for the entire loan.

4.1.15.3 Vehicle insurance

All loans with collateral granted by the Cooperative must be covered by an all-risk insurance, for the commercial value of the vehicle, in accordance with the values established by FASECOLDA. This insurance will be established in favor of COOPRUDEA and must be in force for the entire loan.

4.1.16 AMORTIZATION AND INTEREST

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4.1.16.1 Payment method

The amortization of the credits granted will be made, by means of periodic uniform installments due, through a draft, automatic debit or cash.

4.1.16.2 Amortization

Regarding the amortization of credits, extraordinary payments will be accepted, which may be charged for the reduction of the term or the amount of the installments. In any case, the number of agreed premiums, such as extra installments, may not exceed the number of premiums to be received, during the term granted for the credit. Credits may be canceled early or partially at any time, without any penalty.

4.1.16.3 Interests

The Management will propose to the Board of Directors for its study, the interest rates for each of the credit lines. These may be modified, taking into account criteria of administrative efficiency, cost rationality, current legal provisions on the matter and financial market trends.

The interest rate will be set in terms of the annual effective rate and may use different interest rates, taking into account the term, the line and the method of payment of the credit. The rates will be agreed upon expired.

4.1.17 PROCEDURES They are an integral part of the SARC Manual, the Technical Documents of Credit Granting (SRC-DT-01), that of Recovery, Monitoring and Portfolio Control (SRC-DT-02), and the Methodology for the Calculation of the Credit Score ( SRC-DT-03).

The cases not foreseen in this Manual, will be resolved, by the cooperative principles and by the legal norms that regulate the credit in them.

4.2 GUARANTEE POLICIES

The guarantees that back up the credit operations are necessary to calculate the expected loss in the event of non-payment and, consequently, to determine the level of impairment of the Cooperative's portfolio. In order to have sufficient support, which guarantees the probability of recovering the amounts given in loan, the Cooperative may demand the constitution of guarantees that it considers sufficient according to the type of loans.

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4.2.1 ELIGIBLE GUARANTEES In accordance with Decree 2555 of 2010, admissible guarantees or securities to guarantee obligations will be considered those that meet the following conditions:

1) That it has a value established based on technical and objective criteria, which is sufficient to cover the amount of the obligation.

2) That it offers a legally effective support to the payment of the guaranteed obligation, by granting the Cooperative a preference or better right, to obtain the payment of the obligation.

COOPRUDEA will consider admissible guarantees:

▪ Mortgage contracts.

▪ Pledge contracts without tenure.

▪ Money deposits covered by article 1173 of the Commercial Code.

▪ Social contributions in the terms of article 49 of Law 79 of 1988.

▪ Guarantee funds.

The list of admissible guarantees contemplated in this section is not exhaustive.

4.2.2 NOT ALLOWABLE GUARANTEES In accordance with Decree 2555 of 2010, those that consist exclusively of the pledge on the debtor's current assets or the delivery of securities will not be admissible as guarantees or securities for COOPRUDEA, except in the latter case, in the case of the Pledge of securities issued, accepted or guaranteed by financial institutions or securities issuers in the public market. Among them, the following are considered as inadmissible guarantees:

▪ Applicant's personal signature on the promissory note.

▪ Co-debtors signature on the promissory note.

▪ Term savings deposit certificates, given as guarantee, and issued by COOPRUDEA.

4.2.3 The following factors will be observed for the issue of guarantees:

GENERAL CONDITIONS

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▪

Nature

Coverage

Value

Collateral liquidity

Likewise, it must be established within the technical processes for the application of guarantees, the costs of their realization and the legal requirements necessary to make them enforceable.

4.2.4 ADMINISTRATION OF WARRANTIES Cooprudea will have the following conditions for the administration of the guarantees:

▪ All admissible collateral must have the respective technical appraisal, which must comply with the respective technicality levels and due custody, and must also be carried out with the appraisers who are authorized by the National Registry of Appraisers and the Open Registry of Appraisers.

▪ They must be inventoried and registered in the information system of the Cooperative, they will be guarded respecting security and conservation conditions.

▪ The guarantees must be recorded in memorandum accounts and their operational administration is in charge of the Portfolio area.

▪ For all credit disbursements, the constitution of the guarantee must be previously guaranteed.

▪ The guarantees must be periodically valued using technical conditions.

▪ The Administration must support the procedures carried out, in order to maintain the quality of the guarantee.

▪ The commercial values of the admissible guarantees should be reviewed and compared against debt balances, to ensure due coverage.

▪ The Cooperative will abide by the provisions issued by Supersolidaria regarding admissible guarantees, and will carry out the operational processes of deterioration, qualification and reclassification of the portfolio.

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▪ It will carry out constant follow-up and monitoring of the obligations that present admissible guarantees and will generate the appropriate reports as a risk management measure, as well as the actions that allow maintaining the quality of the portfolio.

▪ The Cooperative may limit the acceptance of guarantees that by provision of the administration and exposure of risks are considered not viable for the coverage of the credits.

▪ The costs caused by the procedure for the granting of admissible guarantees such as notarial expenses, taxes, records, appraisals will be in charge of the beneficiary of the credit.

▪ In consumer loans guaranteed with a pledge or mortgage, and in home loans, the associate must subscribe and maintain an insurance policy that covers the asset in favor of the Cooperative that will correspond to the commercial appraisal of the asset. . The failure of the associate in the payment and timely renewal of the insurance of the vehicle or the property, will empower the Cooperative to request the reimbursement of the unpaid balance of this credit.

4.2.5 4.2.5.1 Mortgage guarantee

GUARANTEE ACCEPTANCE CRITERIA

4.2.5.1.1 Nature

The mortgage is a pledge right on real estate, which remains in the possession of the debtor. It is formalized by means of an accessory contract, which consists of constituting a lien on the property that is had on a property, leaving the asset affected to the payment of the obligation and the creditor being able to exercise the legal privileges of persecution and priority in the satisfaction of debts unsolute.

The mortgage can only be granted by whoever has the quality of owner of the asset that is offered as collateral, understanding as owner only the owner of the real property right registered in the respective public registry.

When the guarantee of an obligation is a first degree mortgage and the asset is not owned by the owner or owners, the owner of the same must sign as co- debtor providing the documents required by COOPRUDEA.

4.2.5.1.2 Coverage

COOPRUDEA will only accept as collateral the constitution of open mortgages without limit of amount, on residential homes in urban or rural areas of a national order, commercial premises and warehouses.

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4.2.5.1.3 Value

The value of the asset must be determined based on a technical appraisal prepared by suitable persons, duly registered in the respective registry, in accordance with the regulations issued on the matter. In the case of properties where commercial or industrial establishments operate, the appraisal must take into account the impact that the separation of property and establishment may imply, and in certain cases show that said appraisal will not be affected by the separation.

4.2.5.1.4 Liquidity

As a general rule, COOPRUDEA will only accept the constitution in its favor as a guarantee for first degree mortgages, except for mortgage lien release procedures, where this degree would be temporary. As an exception, COOPRUDEA will accept the constitution of second degree mortgages, only in cases in which the first degree mortgage is in favor of the University of Antioquia -University Welfare Fund- and in turn, the unpaid balance of both obligations ( COOPRUDEA and the University Welfare Fund) does not exceed 70% of the commercial appraisal.

When the good or goods are mortgaged to a greater extent, the partial disaffection of the respective property will be carried out concomitantly to the constitution of the mortgage in favor of COOPRUDEA.

In addition, mortgage guarantees on undivided rights will not be accepted.1 that do not cover 100% of the total domain of the property. Likewise, mortgages will not be accepted on assets that do not exist, even when it is reasonably understood that they may exist. In these cases, it will be accepted once the property is actually built, so that it can be objectively valued.

COOPRUDEA does not authorize subrogation of mortgaged assets until the cancellation of 100% of the obligations that it is supporting has been made.

When a mortgage guarantee is constituted to guarantee the obligations of a third party, the constituent must become the co-debtor of said obligation. In this case, an assessment of the ability to pay the mortgage co-debtor will not be carried out, since the real guarantee is independent of their economic income, and the lien falls on the asset.

1Pro-undivided law: Event in which a right belongs in community to several people in common without division between them. This legal situation involves the joint ownership or joint ownership of an asset (movable or immovable) by several people.

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4.2.5.2 Codeudor

4.2.5.2.1 Nature

The co-debtor is a guarantee by which the payment of an obligation instrumented in security is ensured in whole or in part.

The co-debtor is a personal guarantee, through which he commits his patrimony to the satisfaction of the guaranteed obligation, that is, COOPRUDEA acquires the possibility of pursuing the fulfillment of the obligation on the assets that make up the common pledge of the creditors, debtor (is ) and co-signer (s). Its essential characteristics are:

▪ A joint and several legal bond is created between the co-debtor and the debtor, and compliance with the obligation may be fully or partially required of each jointly or independently, at the option of COOPRUDEA.

▪ The co-debtor, regardless of the legal business that he has carried out with the debtor, cannot oppose to the Cooperative the legal relationship that unites him with the same.

▪ The obligation of the co-debtor is valid even when the obligation contracted by the debtor is not, is declared ineffective or the debtor dies. It means that, although the quality conditions of the debtor may be lost, those of the co-debtor will continue in force.

▪

The number of co-debtors that can guarantee an obligation is unlimited.

The co-debtor may only be a dependent or independent natural person, occupationally.

▪ In credits in which family income is taken into account to calculate the ability to pay, the family members who are part of the calculation must sign as co-debtors of the obligation.

▪ The employees, the members of the Board of Directors and the Supervisory Board of COOPRUDEA, cannot be co-debtors of each other.

4.2.5.2.2 Coverage

By virtue of the exchange rate and joint nature, the co-debtor guarantees the fulfillment of all the obligations breached by the debtor, without its liability being limited to a certain quota of the obligation. For this reason, COOPRUDEA will only accept pure and simple guarantees, not conditioned or limited to the tenor of the exchange law.

4.2.5.2.3 Value

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A natural person may be a co-debtor when he meets the criteria of ability to pay defined in section 7.1 of this document.

4.2.5.2.4 Liquidity

The co-debtor must present sufficient working, economic and financial conditions. The effectiveness of the co-debtor will be determined by compliance with the requirements and necessary legal acts, for the advancement of collection actions aimed at making the guarantee effective, on the assets that make up the common pledge of the co-debtor's creditors.

4.2.5.3 Garment

4.2.5.3.1 Nature

It is an accessory contract of guarantee, which consists of encumbering the property that one has on movable property, affecting them to the payment of an obligation. It can only be constituted by whoever has the quality of owner of the goods that are encumbered, to guarantee their own obligations or those of third parties.

By virtue of its real nature, the pledge grants the creditor the right to exercise the legal privileges of prosecution and priority in the satisfaction of the unpaid debt; that is, the creditor has the power to pursue the asset and collect the debt with the proceeds of its sale or adjudication regardless of whether the owner (registered or not) is a person other than the debtor of the obligation; and in the event of concurrence of creditors, you have the right to the priority satisfaction of your credit over the product of the pledged asset, without being subjected to proration.

COOPRUDEA will not accept the execution of pledge contracts with vehicle ownership.

4.2.5.3.2 Coverage

For coverage purposes, a garment is classified as:

▪ Closed: When it exclusively guarantees the payment of one or more obligations that the parties determine in the pledge contract.

▪ Open: When it guarantees any type of obligation contracted between the debtor and the Cooperative, even those that are acquired after the pledge contract is signed, and without its prior determination being necessary.

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COOPRUDEA will only accept the constitution of open garments in an undetermined amount.

Pledge guarantees will not be accepted on undivided rights that do not cover 100% of the total ownership of the asset, or on assets previously encumbered.

4.2.5.3.3 Value

The value of the asset must be determined based on objective and technical criteria, according to the type of asset to be affected. COOPRUDEA will take as an evaluation criterion the value indicated in the Fasecolda tables or, failing that, the specialized publications of the medium and of current dates.

The following goods will not be accepted:

▪ Motorcycles, motorcycle tricycles and ATVs.

▪ Heavy vehicles, such as backhoes, dump trucks, trucks, machinery, and the like.

▪

Buses, minibuses and minibuses.

Computer equipment.

Jewels and works of art.

Semovientes.

In general, assets that are difficult to carry out, monitor and control, or with rapid depreciation.

4.2.5.3.4 Liquidity

The pledge contract is directly related to the priority that the creditor has in the exercise of pursuit and preference over the pledged asset, in addition to compliance with the legal requirements to make the guarantee effective through the corresponding judicial procedure.

In all cases in which a pledge is made, and to guarantee the effectiveness of the lien, it must be stipulated that the pledge debtor may not dispose, alienate or encumber the domain of the pledged assets without the prior consent of COOPRUDEA.

4.2.5.4 Social contributions

4.2.5.4.1 Nature

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They are those economic resources contributed by the associate for the patrimonial strengthening of COOPRUDEA. The value of the social contributions is directly affected from its origin in favor of COOPRUDEA as a guarantee of the obligations contracted with it.2.

4.2.5.4.2 Value

The value of this guarantee will be determined by the amount of the social contributions.

4.2.5.4.3 Coverage

100% of the social contributions will be affected by the fulfillment of the obligations of debtors and co-debtors. The coverage will be equal to the value of concurrence of contributions and credits, for each particular case, that is, the coverage of social contributions is up to the total value of the credits.

4.2.5.4.4 Liquidity

It will be determined by the exercise of the right of legal and contractual compensation that assists the Cooperative with respect to the unpaid debts of the associates, which does not need prior requirement or authorization, and operates by the sole ministry of the law.

COOPRUDEA may make use of this guarantee at any time in which there is a breach. In any case, as a general rule, all credit that must be subject to legal collection must be previously compensated with social contributions until the concurrence of both concepts.

COOPRUDEA may require additional or substitute guarantees in accordance with the comprehensive evaluation of the credit operation.

4.2.5.5 Pledge of securities (CDATs)

4.2.5.5.1 Nature

The pledge consists of the constitution of a real lien with legal effects similar to the pledge without possession of the creditor. This type of guarantee applies to intangible personal property such as credits, rights or contractual benefits of economic content, in this case incorporated in securities.

4.2.5.5.2 Coverage

2 Law 79 of 1988 article 49 and article 31 of the Cooperative Statutes.

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COOPRUDEA will only accept the constitution of a pledge on securities represented in CDATs.

4.2.5.5.3 In securities with credit content3

▪ The value will correspond to the current capital balance, in the case of securities amortized by installments.

▪

In securities with a single maturity, the capital value.

The real value of the securities to be pledged must be and remain at 100% of the value of the credit and / or its balance.

4.2.5.5.4 Exclusions

Pledges will not be accepted on:

▪ Bills

▪ Bills of exchange

▪ Checks

▪ Representative titles of merchandise

▪ Participation titles

4.2.5.5.5 Liquidity

In all cases in which a pledge is made, and in order to guarantee the effectiveness of the lien, it must be stipulated that the pledgee may not dispose, alienate or encumber the domain of the pledged assets without the prior consent of COOPRUDEA.

4.2.5.6 Concept and analysis of the guarantee.

The respective concept product of the analysis, for the pledge will proceed in the same way to the procedure of the garments.

4.2.6 GUARANTEE VALUATION

In order to establish the value of the guarantees at the time of granting and their subsequent update, COOPRUDEA must attend to:

3 Credit content security title: It is the one by which the issuer and grantor (obligated) certifies that it has contracted a debt with the legal holder and agrees to pay it under certain conditions.

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4.2.6.1 living place

The value at the time of grant will correspond to that obtained through a technical appraisal, which will have a maximum validity of one (1) year. COOPRUDEA may request a new technical appraisal of the property when it deems it pertinent.

4.2.6.2 Mortgage-backed consumer loans

The value at the time of grant will correspond to that obtained in a technical appraisal, which will be valid for no more than (1) year.

The appraisal will be updated when it is more than three years old, in order to establish its realization value and to be able to record the valuations in the balance sheet, as established in the Basic Accounting and Financial Circular of the Superintendency of the Solidarity Economy. However, COOPRUDEA from the Legal Area will, when required, update the commercial appraisal of the property through the application of the Urban Housing Valuation Index using the following formula:

COOPRUDEA may demand in exceptional cases regardless of the validity, a new technical appraisal of the property which will be assumed by the associate.

4.2.6.3 Collateral

Its value will be determined by the Fasecolda Securities Guide at the time of grant. Subsequent annual updates will correspond to the value of the vehicle published in said guide.

Of the appraisals that are dealt with in literal 13.4, COOPRUDEA will not require their updating as long as any of the following assumptions are met:

▪ When the value of the guarantee doubles the balance of the debt and the term is less than three (3) years.

▪

When the term to finalize the payment is less than one year.

When the guaranteed credit is provisioned at 100%.

4.2.7 DOCUMENTS FOR STUDY AND CONSTITUTION OF ELIGIBLE GUARANTEES

The documents required both for the study and for the constitution of the admissible guarantees must be sufficient and conditional on those requested by both the authorized technical appraisers, as well as by the employees of the Cooperative for their respective analysis.

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The authenticity of these must be validated, so that the Cooperative may have the necessary measures to carry out said activity, always trying to reduce the probability of fraud events.

The Cooperative is responsible for the proper custody and security of the documents, as well as keeping prudence of the documentary information and complying with the regulations for the reservation of financial information.

4.2.8 COVERAGE OF WARRANTIES The following are the guarantees to which the commercial value bases and percentage coverage factor for credit operations, established in the technical document, must be applied:

▪ First degree mortgage.

▪ Pledge on a new and used private service vehicle.

▪ Pledge on public service vehicle.

▪ Guarantee funds.

▪ Social contributions.

The guarantees must retain the condition of coverage over time on the obligation and / or indebtedness of the associate.

The guarantee coverage must cover the total debt of the obligation in a sufficiently large percentage that it also allows to cover other expenses inherent to it.

4.2.9 4.2.9.1 DEFINITION AND GENERALITIES

POLICIES FOR PORTFOLIO MANAGEMENT

Portfolio management will be understood as the continuous process of evaluation, monitoring and control of active credit operations, approved by COOPRUDEA under the different modalities set forth in this manual, which aim to promote the correct attention to the obligations acquired and minimize the risk inherent to the credit exercise.

COOPRUDEA will order the administration and management actions of the portfolio, in order to ensure the greatest asset that generates operating income, for this, the following collection stages must be observed: preventive, direct, pre- legal and legal.

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4.2.9.2 OBJECTIVES

COOPRUDEA will manage the loan portfolio with the following objectives:

▪ Analyze, design, apply and evaluate the administrative and legal norms and procedures that allow achieving the necessary productivity in the recovery and rotation of the Entity's economic resources, delivered to the associates in the form of credit.

▪ Identify the risk of the credits that may impair their payment capacity, solvency or quality of the guarantees that support them, due to the change in the initial conditions presented at the time of granting the loan.

▪ Evaluate the financial and credit information of the debtor and co-debtor associates, in accordance with the parameters established by the surveillance and control entities or those designated by the Cooperative itself.

▪ Implement technical procedures for efficient portfolio management.

▪ Maintain portfolio indicators within the risk patterns accepted by law.

▪ Create a culture of timely payment in the associate community, which contributes to the stability of the Cooperative and the improvement of its services.

▪ Establish mechanisms in accordance with the law that allow an adequate evaluation, qualification, classification and provision of the loan portfolio.

▪ Establish mechanisms that reveal and establish the contingencies of loss of portfolio value and carry out the records in accordance with their economic and accounting reality..

4.2.9.3 GENERAL POLICIES FOR PORTFOLIO MANAGEMENT

The following are general policies for the monitoring, control and collection of the portfolio:

▪ The collection of the portfolio will be carried out in accordance with cooperative principles, current legal regulations, the Statute and this Manual.

▪ The collection process will be aimed at creating a culture of good payment.

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▪ The recovery of the portfolio will be carried out in a way that contributes to the fulfillment of cash flows, with efficient collections and within the agreed terms.

▪ The collection process will be aimed at knowing in a timely manner the difficulties of the debtor, which allow reaching convenient payment agreements for the parties.

▪ The administration of the portfolio will be guided to generate direct payment commitments, which avoid unnecessary costs to the associate.

▪ The periodic evaluation and management of credit risk through rigorous monitoring and control.

4.2.9.4 PORTFOLIO STANDARDIZATION ACTIONS

For the sake of securing the portfolio, the productivity and the financial result of the Cooperative, the Board of Directors establishes the following actions in a Portfolio Management Technical Document: restructuring, write-off of the portfolio and dation in payment.

4.2.9.4.1 Restructuring

Credit restructuring is understood as the mechanism implemented through the celebration of any legal transaction that has the purpose or effect of modifying any of the originally agreed conditions, in order to allow the debtor the adequate attention to his obligation, before the real or potential impairment of your ability to pay.

Restructurings will be approved by the Portfolio Evaluation Committee. They will be an exceptional resource to regularize the behavior of the loan portfolio and cannot become a generalized practice.

All restructuring will be subject to permanent monitoring regarding compliance with the agreement.

4.2.9.4.2 Portfolio write-off

A delinquent credit may be subject to punishment, when the legal collection process demonstrates its total irrecoverability. Once the necessary procedures have been exhausted and this situation has been corroborated, due to considerations of the amount, age or deterioration of the guarantee, we will proceed to request the respective punishment. Likewise, it can be punished for the proven inability of the debtor and co-debtors, from the administrative collection, without having to be sent to legal collection.

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▪

For the punishment of a credit the following conditions will be observed:

▪ Financial incapacity of the debtor and co-debtor.

▪ Impairment of the guarantee.

Punishment conditions

▪ When the entire debt is not covered with the result of the auction of the goods.

▪

Total absence of the debtor and co-debtor.

In the event of the death of the debtor, when the obligation remains with an unpaid balance.

That the obligation is classified in the irrecoverable category and is fully provisioned.

▪ Remission and approval of the portfolio write-off

The Portfolio area will be in charge of preparing the report of the credits to be written off, in accordance with the need to purify the portfolio. Once these have been selected, they must be sent to the Portfolio Evaluation Committee, attaching the following information:

▪ Concept of the executing lawyer, if it is in legal collection.

▪ In case of auctions, attach proof of posting.

▪ Concept of the Portfolio area, on the obligations to be punished.

▪ Correspondence sent and procedures carried out in the collection process.

In order to request the approval of the write-off, it is necessary for the Portfolio Coordinator to present to the Board of Directors, at least the following:

▪ Amount of the loan portfolio to be written off, discriminating the conditions of each of the obligations.

▪ Steps taken to consider the credit obligations to be punished as uncollectible or irrecoverable.

▪ Legal, technical and legal concept on the irrecoverability of the obligation.

The Portfolio Evaluation Committee will forward to the Board of Directors the credits subject to write-offs. The Council will analyze the information presented for the punishment and will partially or totally approve or reject the proposal, which will be recorded in the corresponding minutes.

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COOPRUDEA will present to the Superintendency of the Solidarity Economy, a list of the write-offs of the loan portfolio that have been duly approved by the Board of Directors. In said relationship, the authorized punishments regarding obligations in charge of the legal representatives, members of the Board of Directors, Surveillance Board, and those that correspond to obligations in charge of the spouse, permanent partner and those who are in charge of the spouse, permanent partner and those who are within the second degree of consanguinity or affinity and first civil of these.

The report sent by COOPRUDEA to the Superintendency of Solidarity Economy, will be signed by the Legal Representative, will be sent together with the financial statements, in which the corresponding accounting record is made and must be accompanied by the following documents:

▪ Certification of the Statutory Auditor, stating the accuracy of the related data and the corresponding provisions to carry out the punishment.

▪ Copy of the minutes of the Board of Directors stating the approval of the penalties, as appropriate.

The portfolio write-off does not configure any legal effects of suspension or procedural inactivity, for which reason it continues with the due and timely collection management, investigating the assets or income that may be seized from the obligated parties.

The write-off of the loan portfolio does not relieve the administrators of the responsibilities that may arise due to the decisions adopted, in relation to the same and in no way does it relieve COOPRUDEA of its obligation to continue the collection procedures that are conducive.

▪ Sanctions

The Board of Directors will apply the sanctions provided for in the Bylaws, of the associates whose credits were punished.

POLICIES FOR THE MONITORING AND CONTROL OF THE PURSE

5.1.1 Portfolio evaluation and rating The Cooperative welcomes the measures and instructions that, in matters of portfolio evaluation and qualification, the surveillance and control entity regulates, always seeking

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comply with the objective of this, which is based on identifying the risk of credits that may deteriorate due to a decrease in the debtor's payment capacity, solvency or quality of the guarantees that support them, due to changes in the conditions initially presented .

5.1.1.1 Minimum criteria for portfolio evaluation

These criteria are established by COOPRUDEA in accordance with the guidelines established in Basic Accounting Circular No. 004 of 2008 in Chapter II Loan Portfolio:

to. Payment capacity. It will be updated and verified that the debtor maintains the particular conditions that it presented at the time of granting the loan, the validity of the documents provided, the information registered in the credit application and the commercial and financial information from other sources. In the case of financed projects, sectoral variables and externalities that affect their normal development will also be evaluated.

b. Debtor solvency. It will be updated and verified through variables such as the level of indebtedness, the quality and composition of the assets, liabilities, equity and contingencies of the debtor and / or the project. In the case of real estate, information must be requested as to whether they are affected by any of the domain-limiting guarantees established in the Civil Code.

c. Guarantee. Their liquidity, suitability, value and coverage will be evaluated taking into account, among other aspects, the speed with which they can be made effective and their commercial value, using for this purpose technical studies existing in the market, carried out by suitable persons or entities.

d. Debt service. Compliance with the agreed terms will be evaluated; that is, the timely attention of all installments (capital and interest) or facilities, understood as such, any payment derived from an active credit operation that the debtor must make on a certain date.

and. Restructuring. It is understood that the more restructured operations have been granted to the same debtor, the greater the risk of non-payment of the obligation.

F. Central risk. COOPRUDEA will make use of the consultation from credit bureaus.

5.1.1.2 Credit risk rating

The portfolio must be classified into different categories, in accordance with the conditions established in current regulations.

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To facilitate the management of credit risks, COOPRUDEA will classify the credits in the following categories:

▪ Category A or Normal Risk

▪ Category B or Acceptable Risk

▪ Category C or Appreciable Risk

▪ Category D or Significant Risk

▪ Category E or Bad Debt Risk

5.1.1.3 Individual risk factors

COOPRUDEA may order that debtors who meet the above conditions be classified in a higher risk category, present a greater exposure to internal and external factors such as:

▪ Evidence of a real decrease in the debtor's ability to pay and solvency

▪

External indebtedness greater than reflected capacity.

Associate's credit behavior evidenced in credit information centers.

▪

Type of relationship and job stability.

Debtors with restructured credit obligations.

Technical evidence of deterioration of the guarantee in the conditions of commercial value that puts its coverage at risk with respect to the value of the credit.

▪

5.1.1.4 Drag rule

Other technically bearable internal and external factors.

The alignment process will be carried out prior to calculating the impairment of the individual portfolio, in accordance with the provisions of the standard. In addition, the following will be observed for COOPRUDEA:

▪ When the Cooperative qualifies as B, C, D or E any of the credits of the same debtor, it must take the other credits that belong to the same classification to the higher risk category, which is called the carry-over rule.

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▪ Credit obligations up-to-date and guaranteed at least 100% with contributions will not be subject to the drag rule, provided that COOPRUDEA does not record accumulated losses or losses in the current year and is complying with the required solvency ratio.

For the purposes of the carry-over rule, the references made to the debtor shall not be understood as made to the co-debtor (s) who are linked to the respective credit operation.

5.1.1.5 Types of evaluations and periodicity

The Portfolio Evaluation Committee will carry out two types of evaluations:

5.1.1.5.1 Periodic evaluation

Which consists of evaluating the risk of the entire loan portfolio, in order to guarantee that the deterioration of the portfolio is duly covered. For this, COOPRUDEA prepares the risk map, which allows to graphically present the impact (severity or loss) and the probability (of occurrence) of risk factors, in order to:

▪ Determine priorities for the attention and decision-making of the identified risks.

▪ Evaluate the determined risk events taking into account their probability of occurrence and their impact.

▪ Monitor the payment behavior of the portfolio, to establish its own recovery strategies.

▪ Anticipate losses, due to non-compliance in the payment of credit obligations

The credits to be evaluated will be determined based on the delinquency rating, excluding the portfolio rated A. If the results of the rating change of the evaluations indicated in the previous paragraphs give rise to additional provisions, these must be made immediately.

Any rating to a higher risk category must be documented and supported by the Portfolio Evaluation Committee, which must rest with the Institution at the disposal of the Superintendency of Solidarity Economy.

The results of the evaluations carried out by the Portfolio Evaluation Committee will be reported to the Superintendency of the Solidarity Economy, in the report following its registration, as appropriate, in accordance with the established cuts and in accordance with the formats for such effect has the

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Supersolidarity. Likewise, this report will be delivered to the Board of Directors as an administrative control measure.

5.1.1.5.2 Mandatory assessment

The evaluation of these credits must be carried out at least in the months of March, June, September and December, and their results will be recorded at the end of the fiscal year of the months of April, July, October and January of the following year, in the following cases:

▪ Credits that are in arrears of more than one (1) day after being restructured or new.

▪ When the Cooperative is subjected to any precautionary measure, it must evaluate the credits approved for an amount greater than fifty (50) SMMLV.

▪ When the overdue portfolio indicator exceeds the sector average by two standard deviations.

▪ Credits granted to legal persons that do not comply with the provisions of article 21 of Law 79 of 1988.

5.1.2 Monitoring and control reports

COOPRUDEA will order the monitoring and control reports that will allow it to know the current status of the credit portfolio, behavior trend and its quality, in order to establish normalization and maintenance strategies.

The types of reports that will be handled will be the following:

▪ Bearing Matrix

▪ Harvest Report

▪ Administrative and management monitoring reports

5.2 SUPPLY POLICIES

COOPRUDEA accepts all the provision that the surveillance and control entity regulates in this matter, and registered in the credit rating matrix by risk. The provision is assumed as a financial type operation that allows anticipating the expected loss due to the risk level of the loan portfolio, therefore, the following will be reported to the Board of Directors:

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Level of overdue portfolio by days in

arrears Level of portfolio due to credit risk

Level of provision for each level of risk

General provision

Coverage level

The Board of Directors will establish the policy or guideline for the calculation of the individual portfolio provision, in search of adequate protection thereof and respecting the law or regulations established by the pertinent authorities in this regard.

Only in the case that COOPRUDEA does not record accumulated losses, nor in the current fiscal year at the cut of the immediately previous month, the individual provision will be constituted on the unpaid balance of the obligation, discounting the value of the social contributions of the respective debtor at the time to make the provision.

In the event that the debtor has more than one obligation with COOPRUDEA, the social contributions will be discounted in proportion to the unpaid balance of each of the credits.

For the purposes of the constitution of individual provisions, the guarantees only support the capital of the credits. Consequently, the balances to be amortized of the credits protected with admissible guarantees defined in articles 3 and 4 of Decree 2360 of 1993, will be provisioned in the percentage that corresponds according to the credit rating, applying said percentage to the difference in the value of the balance unpaid and the value of the collateral accepted.

Depending on whether or not the guarantee is mortgage and the time of default of the respective loan, only the percentages of the total value of the guarantee established within the technical document for portfolio management will be considered for the constitution of provisions.

5.3 NOVATIONS

All credit lines can be reconditioned, in accordance with the provisions of the Basic Accounting Circular, under the novation modality.

The novation is the replacement of a new obligation to a previous one. The following are the forms of novation (article 1690 of the Civil Code):

Substitute a new obligation for another, without the involvement of a new creditor or debtor.

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That the debtor contracts a new obligation with respect to a third party, and consequently declares himself free from the obligation, to the first creditor.

When a new debtor is replaced by the old one who, consequently, is free.

The mere extension or reduction of the term of a debt does not constitute novation, but it puts an end to the liability of joint and several debtors and extinguishes the guarantees constituted. When a novation is carried out, it must be taken into account that, for this new loan, its own guarantees must be constituted. For this, the provisions established in title XV of the third book of the Civil Code are met.

A novation is not considered a restructuring, when the purpose is not to facilitate the adequate fulfillment of the obligation. In this case, the entire evaluation procedure, planned to grant the new loan, must be carried out.

5.4 OTHER MODIFICATIONS TO OBLIGATIONS

The following modifications may be made, prior agreement with the debtor and without changing the legal effects of the credit obligation, when:

Change the payment method.

Improve the guarantees.

Reduce the term of the credit.

Amortize the capital in advance, in order to reduce the value of the installments.

Carry out interest rate reduction programs to improve the living conditions of associates.

5.5 LEGAL COLLECTION

This type of collection must be reached once the collection processes have been exhausted. Regardless of the above, it can also be reached when the following cases occur:

Demerit or considerable loss of the value of the goods given as collateral.

When the assets given as collateral are seized or have any legal monitoring situation.

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When the debtor or co-debtor (s) is sued for the collection of other obligations or were declared in a state of bankruptcy or concordat and / or mandatory liquidation and given another situation that puts the recovery of the debt at risk.

When payment agreements or restructuring agreements have been breached.

When the acceleration clause is applicable.

When the obligations inherent to the credits are breached, such as updating insurance and appraisals.

The cases referred to legal collection will be reported to the Portfolio Evaluation Committee.

The legal area will present a monthly report to the COOPRUDEA administration, detailing the status of the process on a case-by-case basis.

5.6 OTHER PROVISIONS

5.6.1 Central risk COOPRUDEA will maintain the commitment to carry out the updates to the risk centers, to inform the payment behavior of all its associates and will take care of their veracity, accuracy and timeliness.

5.6.2 Portfolio of associates requesting withdrawal from COOPRUDEA If at the time of the associate's request for withdrawal there are obligations in favor of COOPRUDEA, the corresponding match must be made between the social contributions with the portfolio and / or accounts receivable.

If there is an unpaid balance in favor of COOPRUDEA, the monitoring, control and collection management must be carried out and in general all those actions that guarantee the collection and recovery thereof.

In any case, the existence of unpaid balances in favor of COOPRUDEA should not constitute an obstacle to deny the withdrawal of the associate, since a decision in that sense would be contrary to the constitutional precept of free association.

5.6.3 Withholding of settlements COOPRUDEA may retain the total of the liquidation of social benefits paid by the University of Antioquia to the associate, to pay them to the credits.

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The return of the settlement will be made with the authorization of the co-debtor in the following cases:

▪ Retirement resignation

▪ If you continue to work in another institution

▪ If you have an admissible guarantee

For the return of the liquidation of the associates who enter the retirement process, the following documents must be presented:

▪ Letter of resignation to the University of Antioquia

▪ Resignation response letter

▪ Request letter for the return of the settlement

The settlement must be paid at least three months of installment of credits and contributions. This in order to advance installments, while the new contract or the retirement payment is being managed.

5.6.4 Savings account debit When an associate is delinquent in the payment of his obligations, COOPRUDEA may make the corresponding deductions from the savings account, regardless of the form of payment.

5.6.5 Incentives to the debtor fulfilled COOPRUDEA may establish in its collection processes, incentives to associates who are in the habit of honoring their obligations in a timely manner.

5.6.6 Unforeseen cases The cases not provided for in these Regulations will be resolved, firstly, by cooperative principles and values and secondly, by the legal norms that regulate credit in COOPRUDEA.

WARRANTY MANAGEMENT

The management of guarantees includes their acceptance, custody, valuation, and effectiveness, updating The Portfolio Area will be in charge of both the custody and the

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administration of the guarantees in order to carry out the proper management for their updating. For the above, the procedure for the administration of guarantees is established within the Quality Management System.

6.1 CONDONATION OF INTEREST

It is the negotiation that allows the obligation to be fully recovered, forgiving the interest for immediate payment; COOPRUDEA may forgive up to 100% of the default interest and up to 100% of the contingent or uncaused interest.

6.2 CAPITAL DONATION

The cancellation of capital may only be approved by the Board of Directors.

DISCLOSURE OF INFORMATION

The Board of Directors, through the Management, will establish the means and forms of communicating to the associates, employees and the general public the risk status of the portfolio, as well as its evolution and improvement actions for the assurance of the assets, in order to which should structure the corresponding reports and order the forms of disclosure, the foregoing in the sense of transparency and timeliness.

CONTROL BODIES

The entities will be responsible for conducting a review and evaluation of COOPRUDEA's SARC and timely reporting the results of said evaluations to the Board of Directors and Management.

In COOPRUDEA the control bodies are the following:

▪ Internal Audit Area.

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▪ Tax inspection.

The control bodies must carry out audits that guarantee compliance with all the provisions issued by the Supersolidaria in the context of the SARC and all those that modify, complement or add to it. These evaluations must cover the operations that COOPRUDEA carries out with companies or persons related to the Entity.

8.1 FUNCTIONS OF THE CONTROL BODIES

8.1.1 ▪

Internal audit Evaluate and rate compliance with the policies established by the Board of Directors.

▪ Respond for compliance with the legal regulations related to the SARC, for which it must be kept duly updated on said matter.

▪ Plan the revisions to the areas related to the SARC and define the visit and inspection procedures, determining the scope of the audit.

▪

Identify and evaluate the quality of existing processes and controls.

Prepare reports of the results of the evaluation carried out and present his proposal of recommendations to the Management.

The recommendations must be specified in action plans, which, in turn, must be mandatory for the audited areas.

8.1.2 tax inspection The COOPRUDEA Statutory Auditor must have the appropriate human, technical and physical team to carry out said control function.

In compliance with the function enshrined in paragraph 2 of article 207 of the Commercial Code, it is the responsibility of the Statutory Auditor to timely submit reports to the Board of Directors or the General Assembly of COOPRUDEA, about deviations in compliance with external and internal instructions. , of the deficiencies in the internal controls, as well as of the irregularities found, that arise as a result of the examination of the SARC. These aspects must be sufficiently documented in the working papers and in the reports submitted.

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Additionally, in the report presented to the General Assembly of associates or delegates, the Statutory Auditor must give his opinion on the effectiveness of the SARC, corrected or not by COOPRUDEA's administration, at the cut-off date of the fiscal year in respect of which the Auditor Prosecutor presents the compliance and internal audit report referred to in article 209 of the Commercial Code.

CONTROL OF CHANGES IN DOCUMENT

Version Date Description September 07 of 201701 Creation of the SARC Manual document

In numeral 10.1.1 it is included that when the loan is backed with a mortgage guarantee, the term may be extended up to ten years. The foregoing by approval of the Board of Directors in Minute 869 of 2017.

Review and adjustment of the SARC Manual, in accordance with the Technical Document of Credit Granting.

September 27 of 201702

▪ ▪

Figures 1 and 2 are updated. Tables 1, 2 and 3 that were in the Technical Document of Credit Granting are added.

The attribution of the Finance Committee is increased to grant credits up to 60 SMMLV (Table 4). The numbering of the items in the document is updated. The last paragraph of the general requirements of the policies for the granting of credit is eliminated. Guarantee Funds are added as admissible guarantees. The definition of the Policy for Portfolio Management is expanded. Table 1 is modified, where the maximum term is increased from 10 to 15 years for the loans of the free destination consumer line with mortgage guarantee.

▪ July 31

201903. ▪

▪

▪ July 1

202004

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Version Date Description ▪ The maximum concentration limit of 50% is

added for the lines of free destination for home purchase, free destination with mortgage guarantee and housing modality in numeral 4.1.11

The foregoing by approval of the Board of Directors in Minute 915 of 2020.

APPROVAL

This Manual, Version 04, was approved by the Board of Directors in the city of Medellín on July 1, 2020 according to act No. 915 and is in force as of the date.

JAVIER CARVALHO BETANCUR CARLOS ALBERTO MEJÍA GIRALDO President Secretary Board of Directors Board of Directors

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