Febraban criticizes new reduction in the payroll ceiling and talks about ‘lack of responsibility’

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For the entity, reductions in the maximum interest rate for INSS payroll loans have led to a drop in the supply of this type of credit. Government says that decision is preceded by broad debate. The Brazilian Federation of Banks (Febraban) criticized this Tuesday (05) the decision of the National Social Security Council (CNPS) to once again reduce the maximum interest rate charged on loans granted to INSS retirees and pensioners. The measure was approved on Monday (04) by the CNPS – a council formed by 15 members, including the Minister of Social Security, Carlos Lupi, representatives of the government, retirees and pensioners, active workers and employers. Interest limit for payroll loans drops to 1.8% The only vote against the reduction in the ceiling was given by the representative of the National Confederation of Financial Institutions (CNF), of which Febraban is a member. Funding costs In the entity’s assessment, the criteria used to reduce the payroll ceiling — reducing the limit as the basic interest rate (Selic) is reduced — does not take into account the banks’ funding costs. “This is an action marked by a lack of responsibility with credit policy, by not taking into account any economically reasonable criteria, such as the cost structure of banks”, he says in a note. Because of this, the federation argues that there has been a drop in the supply of this type of credit. “The conduct of setting the interest ceiling at an economically unfeasible level has harmed the service of INSS beneficiaries who present greater risk, such as older retirees and those with lower income”, argues the entity. According to Febraban, between May and September 2023, the volume of payroll loans granted to INSS beneficiaries was R$29.7 billion, around 17% less than that made in the same period last year, R$36.1 billion. In a note, the Ministry of Social Security said that the decisions taken by the CNPS are “widely discussed” and “preceded by broad debates” both in the council and in a working group on the subject. For the body, the assessment made by Febraban “is frivolous in nature, since representatives of financial institutions participate in both discussion forums.” Remember the reductions made in 2023 March: CNPS decided to reduce the conventional payroll interest ceiling for INSS beneficiaries from 2.14% to 1.70%, the which led to an impasse with the banks. At the time, Banco do Brasil, Caixa Econômica Federal and other private banks temporarily suspended the offer of this credit, stating that the rates would not cover the costs of the operation. The council then approved a ‘middle ground’, and the ceiling was set at 1.97%. August: there was a further reduction, and the interest ceiling went from 1.97% per month to 1.91% in the case of conventional payroll loans. The CNPS decision came days after the Copom reduced the Selic for the first time in three years. October: the CNPS made a further reduction in the maximum interest rate for payroll deductions and the ceiling fell from 1.91% to 1.84% – again, the decision came after a new announcement of a Selic cut. December: council approved reducing the ceiling for conventional payroll loans, with payroll deduction, from 1.84% to 1.80% per month. The proposal was made by the National Confederation of Commerce (CNC), one of the employers’ representatives in the CNPS, and endorsed by the Ministry of Social Security. The new level only comes into force five working days after the publication of the decision in the Official Gazette of the Union (DOU) – which has not yet occurred.

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