Government and card industry will form working group with BC to discuss rotary, says Febraban – 04/17/2023 – Market

The government and members of the credit card industry are going to set up a working group with the Central Bank to delve deeper into the causes of the spread [diferença entre o custo de captação dos bancos e a taxa cobrada do cliente] in the credit card rotation, said this Monday (17) the president of Febraban (Federation of Banks), Isaac Ferreira.

Ferreira and the president of CNF (National Confederation of Financial Institutions), Rodrigo Maia, participated in a meeting with Minister Fernando Haddad (Finance) later this Monday afternoon.

In the end, Haddad said that the purpose of the meeting was to study the current model to understand the causes that lead to the high interest rate on the revolving credit. According to BC data, the average interest rate charged in the modality was 417.4% per annum in February.

“I asked for speed, because it is a concern of president Lula, and they asked to involve the Central Bank due to the regulation of the product, which also passes through the Central Bank. And we are going to do that”, he said. He stated that the banks had to draw up a timetable for the presentation of a study on the revolving credit.

Earlier, Haddad recalled that the origin of part of the default on bad debtor records is the credit card. “Not only that, but it’s also by credit card. And people can’t get out of the rotary. We need to find a way, a negotiated way, as we did with the reduction of payroll for retirees.”

President of Febraban, Isaac Ferreira said that the idea was to take a diagnosis to the ministry about the credit card market. “To reduce the cost of credit it is important that we not only attack the causes that make the bank spread high, but we need to understand what are the causes of the high cost of credit,” he said.

Ferreira said that no proposal was presented at the end of the meeting. “We will have to do some construction. The Central Bank is a relevant player and will also work on this agenda, it is already working.”

He stated that a working group will be created to “technically deepen the causes of the high spread on credit cards”. “To be able, by attacking the causes, to find the right solutions, solutions that can safeguard economic rationality,” he said. The group, which has no deadline to be set up, will have participants from the credit card industry, the government and the Central Bank.

The president of Febraban defended that the improvement of the guarantee marks is important to reduce the interest in the modality.

“One of the reasons that cause bank interest rates to be high is the lack of effectiveness of guarantees. There is a bill pending in Congress, already approved in the Chamber and now in the Senate. If the country has the legal framework for guarantees, we we take an important step to start reducing the cost of credit”, he said. “This goes for any line, including overdraft and credit card.”

In an interview with Sheet, the director of Regulation at the Central Bank, Otávio Damaso, stated that the monetary authority is not currently discussing the possibility of imposing any type of limit on the revolving or interest rate control. According to him, this could bring instability to the market.

“It is not on the agenda of the Central Bank some kind of interest rate regulation, what we are always looking for are mechanisms to make all types of financial instruments more efficient. Is there anything planned? No, but we are always analyzing this market,” he said.

“But the Central Bank is not thinking of any kind of cap [limite]because that could bring some kind of instability to a super relevant, important market, which feeds the economy and all sectors of the economy, especially retail, which is extremely dependent on this important payment instrument.”