Council approves new reduction in the INSS payroll interest ceiling

The National Social Security Council (CNPS) approved this Thursday (11) a new reduction in the interest ceiling on payroll loans for retirees and pensioners of the National Social Security Institute (INSS). With the decision, the interest limit fell from 1.80% to 1.76% per month. For credit card and benefit card operations, the interest ceiling decreased from 2.67% to 2.61% per month.

Proposed by the government itself, the measures come into force eight days after the normative instruction is published in the Official Gazette of the Union (DOU), which will occur in the next few days. Normally, the deadline would be five days, but it was extended at the request of the banks, informed the Brazil Agency. The justification for the reduction was the 0.5 percentage point cut in the basic interest rate, the Selic.

On December 13, the Central Bank’s Monetary Policy Committee (Copom) reduced the Selic from 12.25% to 11.75% per year. With the new ceiling, some official banks will have to reduce rates for INSS payroll loans to continue lending through the modality.

The interest limit on INSS payroll loans was the subject of disputes last year. In March 2022, the CNPS reduced the ceiling to 1.7% per year. The decision opposed the ministries of Social Security and Finance.

The banks suspended the offer, claiming that the measure caused imbalances in financial institutions. Under protest from trade unions, Banco do Brasil and Caixa also stopped granting loans because the ceiling of 1.7% per month was lower than that charged by the institutions. The decision was made by President Luiz Inácio Lula da Silva (PT), who arbitrated the impasse and, at the end of March, decided on a ceiling of 1.97% per month.

In December, the Brazilian Federation of Banks (Febraban) criticized the Minister of Social Security, Carlos Lupi, after the CNPS reduced the payroll ceiling for INSS retirees and pensioners to 1.80% per month. The entity stated that the decision was taken “without the support of technical analysis” and in a “totally arbitrary and artificial” manner.