Government negotiates new rules against default on emergency credit

While preparing the relaunch of credit programs created during the pandemic, the government is discussing with banks changes to increase the recovery of debtors’ resources and add the possibility of changing loan interest in case of renegotiations.

The measures are being debated amid the expectation of an increase in default in the country, and can also be extended to a set of up to R$ 137 billion in loans signed through emergency programs.

The main financial institutions in the country, such as Bradesco, Itaú and Banco do Brasil, project this year a gradual increase in the credit portfolio with delays of more than 90 days in payments.

“It is intuitive for us to imagine that delinquency may increase a little”, said this month the CEO of Bradesco, Octavio de Lazari Junior.

“We have already noticed signs of a delinquency rising. We were able to see this mainly in the individual indicator”, said the CEO of Itaú Unibanco, Milton Maluhy Filho.

In the case of emergency programs, institutions see limitations on charges. The reason is the legislation that governs them, which does not provide clear authorization for traditional measures to recover values.

Among the measures discussed is the authorization to replace the debtor in the event of a corporate change in the company that took the credit — in cases of spin-off or bankruptcy, for example — and the flexibility to apply new rates after debt renegotiation.

The legislation of the programs, which have already been closed for new operations, provides for limited interest or a pre-defined level.

In PEAC (Emergency Access to Credit Program), for example, the average rate charged by the financial institution cannot exceed 1% per month and the program’s regulation says that “the amendment of the contract with the credit borrower that increases the contract interest rate”.

The topic is discussed between representatives of the Ministry of Economy, Febraban (Brazilian Federation of Banks), ABBC (Brazilian Association of Banks) and BNDES (National Bank for Economic and Social Development).

Leonardo Vilain, Executive Director of Innovation, Banking Products and Services at Febraban, said that banks are concerned about an increase in default in 2022, mainly caused by the situation of economic activity and are without autonomy to renegotiate emergency program contracts.

“As much as the customer wants it and as much as I, the bank, understand that it is a good thing for that establishment, the law does not provide for renegotiation”, he told sheet. “We’ve been talking to the government about this collection process,” he said.

Vilain said that the changes would help clients’ financial recovery by unlocking debt renegotiation and would also be beneficial for public coffers, as emergency programs use Treasury resources.

Despite banks asking the government for flexibility to set new interest rates after renegotiations, Vilain said rates would not be raised. “You’re renegotiating to get something. If you don’t make the guy’s life easier, he’s going to get nothing.”

Paulo Solmucci, president of Abrasel (Brazilian Association of Bars and Restaurants), said that changes in the programs are welcome because a good part of the sector is in debt, but he fears that the changes will end up raising the charges levied.

“Higher rates would be a huge blow to those who live in this situation after paying an unfair and disproportionate bill for the collective good. Remembering here that our bank broke profit records, while those prevented from opening paid the bill that should be for the whole of society “, he said.

According to him, there are already reports of entrepreneurs having to renegotiate amounts at higher rates than the original contract in Pronampe (National Support Program for Micro and Small Businesses) — with an increase from 1.25% to 6% — in addition to have to face the escalation of the Selic, which soared from 2% at the end of 2020 to 10.75% this year.

The Pronampe law establishes maximum interest rates equal to those of the Selic, plus a rate of 1.25% – but opens a gap for this last percentage to reach 6% in operations signed from January 1, 2021.

This year’s credit package must be created through MP (provisional measure). The intention is to relaunch the two main lines of 2020 – Pronampe and Peac. A Caixa microcredit line is also planned for informal workers and individual micro-entrepreneurs to invest in their businesses, such as in the purchase of equipment.

In Peac and Pronampe, up to R$ 100 billion in credit would be granted to companies that earn up to R$ 300 million per year, and Pronampe would be maintained for smaller companies, up to R$ 4.8 million.

There will be no need for new contributions from the National Treasury, as funds from previous rounds would be used and returned to the guarantee funds. Through the press office, the Ministry of Economy stated that it is still studying the programs.

More than 60% of small businesses have sought loans since the beginning of the Covid crisis and almost a third of the total (28%) are in default, according to a survey by Sebrae and FGV (Fundação Getulio Vargas) carried out between November and December (the latest available). The value is lower than in the previous survey (31%), carried out in August 2021.

The increase in costs – with goods, fuel, rent and energy, for example – is the main difficulty pointed out by companies to return to the financial situation before the pandemic, cited by 50% of respondents. Next are the lack of customers (25%) and loan debts (10%).