On February 18, 2021, a draft of a decree (the "Draft") was approved by the Mexican Senate, which amends and adds the General Law of Securities and Credit Operations, the General Law of Credit Organizations and Auxiliary Activities and the Law for the Protection and Defense of Financial Services Users, in order to regulate payroll loans.

The Draft defines the payroll credit agreement as a simple credit opening agreement or a current account, by which the payments will be made by the employer through a third party; it also establishes that, prior to the execution of such agreement, a payment compliance agreement must be executed with the employer or with the social security institutions.

The Draft intends for the payroll credit, mainly: (i) to be regulated in accordance with credit operation; (ii) establishes that it may only be granted by financial institutions; (iii) establishes that the sources of payment may be subject to deductions; (iv) forces the creditor to consult the debtor's credit history; (v) forces employers to notify the parties on the day the deduction is made and the payment is made; (vi) forces the employer to implement an automated system that allows access to the authorities, debtors, employers and creditors; and (vii) regulates payment compliance agreements and requires that they be registered before the Consumer Protection Agency.

Should you have any questions or require further information regarding this note, please contact info@rapa.mx.