Government decision dries payroll and takes retirees to higher interest rates

The government’s penchant for lowering interest rates on payroll loans to INSS retirees and pensioners, an attempt to forcefully reduce the cost of money in the country, has further complicated the situation for those in need of credit.

The rate may even be lower, but now it is difficult to find banks willing to lend money. At least ten institutions, including giants controlled by the government (BB and Caixa), suspended the INSS payroll offer, with the argument that the new interest ceiling makes operations unfeasible.

Result: retirees and pensioners will have to resort to more expensive lines. The average cost of credit, instead of decreasing, may increase. The impact could reach household consumption, an important component of the Gross Domestic Product (GDP) that was already slowing down.

Everything indicates that the government will have to step back and change the interest limit again, this time to a middle ground between the previous and current ceilings.

The episode also provoked a “split” in the government, with allies making public demands against the presidents of Caixa, Rita Serrano, and BB, Tarciana Medeiros, and indirect criticism of the Ministry of Finance, commanded by Fernando Haddad.

“This imbroglio affects the political capital of the government”, says Professor Carla Beni, from MBAs at Fundação Getulio Vargas (FGV).

Decision “on the basis of will” generates distortions

In addition to the political implications, there are those of an economic nature. “Any arbitrary decision on prices in the economy, as is the case with payroll loan interest, generates interference. It is natural that the market withdraws in movements like this”, says Sílvio Campos Neto, partner at Tendências Consultoria.

Economist Ariane Benedito, a capital market specialist, points out that decisions like this cannot be taken just “on a voluntary basis”. It is also necessary, according to her, to analyze a context that, at the moment, is not favorable for the Brazilian and global economy. “The economy is made up of booms and busts and that’s not why problems should be solved with a stroke of a pen”, she says.

“Initiatives such as these generate relevant distortions in the price of financial products, producing effects contrary to what is desired, as they tend to restrict the supply of cheaper credit, impacting economic activity, especially consumption”, highlighted the Brazilian Federation of Banks (Febraban).

Government will hold new meetings to decide payroll interest

The idea of ​​lowering the payroll interest ceiling came from the Minister of Social Security, Carlos Lupi, who chairs the National Social Security Council (CNPS), made up of government representatives, retirees, workers and employers.

On the 13th, the CNPS determined, by 12 votes to 3, a reduction in the maximum interest on payroll loans for INSS beneficiaries, which was 2.14% and changed to 1.70% per month. The interest ceiling for payroll credit cards was also reduced.

For Lupi, the previous rates were abusive for INSS beneficiaries – people who, according to him, are “mostly extremely vulnerable”.

With the suspension of loans by several banks, the government is now looking for a solution. This Monday (20), a meeting between ministers Lupi, Fernando Haddad (Finance) and Rui Costa (Casa Civil), plus the president of Caixa, Rita Serrano, ended without an agreement. It was decided that a new meeting, with the participation of more banks, will be held until Friday (24).

“The expectation is to reach an agreement on the rate. There is a forecast that next week, the minister of social security will call a new meeting of the National Council of Social Security to discuss the matter”, informed a note from the Civil House.

According to behind-the-scenes reports collected by “Valor”, the decision by the CNPS to lower the interest rate ceiling irritated Haddad, who would have appealed to Lupi not to put the matter on the agenda.

Four banks, out of 39, charged interest lower than the new payroll loan ceiling

The analyst of financial institutions at Banco Inter, Matheus Amaral, considers that the reduction of the ceiling brings negative impacts for the sector and for the players that operate in the segment, removing sustainability in the product offer, in addition to reducing its profitability.

Of the 39 institutions that reported interest rates on payroll-deductible loans to the Central Bank, only four practiced average rates below 1.70% (the new ceiling) in the first week of March (CCB Brasil, Cetelem, BRB and Sicoob).

Data from the Central Bank show that, in the third quarter of last year, 89% of the payroll loan market share was concentrated in six banks (BB, Caixa, Bradesco, Itaú, Santander and Banrisul).

Amaral points out that Bradesco and Itaú have a 6% exposure to payroll loans on their loan portfolios. At Santander, this percentage is 3% and, at Banco do Brasil, 2%.

“It should not bring relevant effects to those institutions that have a well-diversified credit portfolio. However, for more concentrated players, the effect on profits should be slightly greater, such as Banco Pan, BMG, among others”, cites the analyst in a report.

Febraban says new payroll loan ceiling reduces vulnerable public options

Febraban informed, through a note, that the financial sector had already manifested itself with the Ministry of Social Security, stating that, considering the high funding costs, an eventual reduction of the ceiling could further compromise the offer of payroll loans and the card of consigned credit.

The entity stated that the fixed interest levels need to be compatible with the cost structure of the product, in compliance with the rules of the National Monetary Council (CMN) that determine the control of the economic viability of the payroll operation.

The federation also points out that the new ceilings have a high risk of reducing the supply of payroll loans, leading an audience lacking options to products with more expensive rates, as they do not have guarantees.

Today, the country has just over 70 million defaulters, according to Serasa Experian, of which 12.5 million (17.8% of the total) are aged 60 or over. Four years ago, the participation of this age group in the total number of defaulters was lower, at 14.7%.

Data from the federation of banks show that the two INSS payroll credit lines (loan and card) had a balance of R$ 215 billion in January. The monthly average of concessions, in the 12 months ended in January, was R$ 5.2 billion.

Credit lines currently reach 14.5 million borrowers, with an average ticket of R$ 1,576.19. Of the total borrowers, 42% have restrictions in credit bureaus. “They are practically the only lines accessible to this most vulnerable public”, reported Febraban.