Brazil’s National Monetary Council, a body charged with regulating and monitoring Brazilian capital markets and financial institutions, recently increased the limit for each microcredit loan from BRL 20,000 (USD 9,840) to BRL 40,000 (USD 19,677). Brazilian Central Bank Regulations Department Coordinator Sergio Odilon dos Anjos reportedly believes that the measure will facilitate banks’ access to as much as one third of the BRL 3 billion (USD 1.4 billion) that is retained at the central bank under a requirement that banks set aside 2 percent of deposits for lending to smaller-scale borrowers. Finally, he added that the new rules may be more advantageous for banks, because small borrowers in Brazil traditionally present lower rates of loan delinquency than the national average.
By Chioma Okwudiafor, Research Associate
About National Monetary Council of Brazil
The National Monetary Council, under the direction of the minister of finance, is Brazil’s chief financial policy-making body. It oversees the Central Bank of Brazil, which issues currency (the Brazilian real) and controls the money supply, credit, foreign capital, and other top-level financial matters.
About Central Bank of Brazil
The Central Bank of Brazil (BCB in Portuguese) is the primary regulatory authority tasked with establishing the country’s monetary policy and supervising the country’s financial and macroeconomic policies. BCB has the legal authority to supervise microfinance institutions and credit unions. In 2004, BCB formed a national task force of government ministries called “Microcredit and Microfinance Inter-Ministry Team” that coordinates the development of the microfinance sector.
Sources and Additional Resources:
NASDAQ Article: Brazil Raises Small Borrower Credit Limit to Boost Lending
http://www.nasdaq.com/article/brazil-raises-small-borrower-credit-limit-to-boost-lending-20121030-01297#.UJdy_eRX1fG
MicroCapital Story: July 3, 2012, “MICROCAPITAL BRIEF: Central Bank Of Brazil Launches Financial Inclusion Action plan”
https://www.microcapital.org/microcapital-brief-central-bank-of-brazil-launches-financial-inclusion-action-plan/
MicroCapital Universe Profile: Central Bank of Brazil
http://microcapital.org/microfinanceuniverse/tikiindex.php?page=Central+Bank+of+Brazil+%28BCB%29
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