Banks suspend INSS payroll after government forces lower interest
At least eleven Brazilian banks have already suspended the offer of payroll loans to INSS beneficiaries after the government lowered the maximum interest rate limit, on Monday (13). The banks’ argument is that the new interest rates could make credit operations in deficit – which is prohibited by the Central Bank.
According to press vehicles, private banks Itaú, Bradesco, C6 Bank, Daycoval, PAN, Mercantil, PagBank, Safra and Santander suspended credit lines this week, and even federal state banks Caixa and Banco do Brasil interrupted concessions.
When the National Social Security Council (CNPS) determined the reduction of the maximum interest on payroll, the Minister of Social Security, Carlos Lupi, stated that the decision would benefit more than 37 million retirees and pensioners. The CNPS reduced the maximum interest on payroll loans from 2.14% to 1.70% per month, and the maximum payroll credit card rate increased from 3.06% to 2.62%.
“I see these current rates as abusive for INSS beneficiaries, who are, for the most part, extremely vulnerable people. We seek to find a path that is best for the most fragile part: the Brazilian people”, said Lupi on Monday.
With the suspension, however, retirees will find it difficult to get new loans, carry out credit portability or renegotiate debts.
The Brazilian Federation of Banks (Febraban) said, in a press release this Thursday night (16), that the rate reduction affects the cost of raising money in the market (see full text).
“The financial sector had already manifested itself with the Ministry of Social Security and the INSS, stating that, at this moment, considering the high funding costs, a possible reduction in the ceiling could further compromise the offer of payroll loans and payroll credit cards” , said the representative of the banks.
Febraban states that the new ceilings “have a high risk of reducing the supply of payroll loans, leading an audience, lacking affordable credit options, to products that have more expensive rates in their structure (products without guarantees), since a considerable part is already negative”.
Also according to the Federation, the two INSS payroll credit lines (loan and card) have a balance of BRL 215 billion, with BRL 7.6 billion granted in January 2023 and the monthly average of grants in the last 12 months. , of BRL 5.2 billion, “today reaching around 14.5 million borrowers, with an average ticket (sic) of BRL 1,576.19”.
“Of the total number of INSS payroll takers, 42% of this public are people negative in credit bureaus, and they are practically the only lines accessible to this most vulnerable public”, completes the note from Febraban.