Public and private banks suspend payroll loans at the INSS

The reduction of the interest ceiling on payroll loans to retirees and pensioners is being poorly received by financial institutions. In this fridayOn Thursday (17), two official banks, Banco do Brasil (BB) and Caixa Econômica Federal, confirmed that they had suspended the offer of this type of credit to beneficiaries of the National Institute of Social Security (INSS).

Caixa and BB followed several private banks that had stopped granting loans in the quinta-Friday (16). The decision comes after the National Social Security Council (CNPS) reduced, from 2.14% to 1.7% per month, the interest ceiling on payroll loans. The rate for the payroll credit card was also reduced from 3.06% to 2.62%.

In a note, Caixa informed that it had to suspend the line because the new interest ceiling is lower than that charged by the bank. He added that the possibility of resuming payroll loans to retirees depends on technical studies of operational and economic-financial feasibility, which are being carried out to adapt the concessions to the bank’s new rules.

Banco do Brasil informed that it is carrying out technical feasibility studies on the new conditions of payroll loans to INSS beneficiaries and that, as soon as it has news, it will inform about the resumption of hiring.

Reaction

Through social networks, the Minister of Social Security, Carlos Lupi, reacted. In a post on Twitter, he defended that the government use public banks to maintain the INSS payroll loan offer. Lupi posted a repudiation note signed by trade union centrals that states that the suspension mainly harms retirees and pensioners who need credit to supplement their income and currently do not have access to other types of lines.

“Faced with this situation, the trade union centrals charge the government to use Banco do Brasil and Caixa Econômica Federal to guarantee lines of credit for retirees and pensioners who need it with the new rates in force”, wrote Lupi. He also published a link of the Central Bank (BC) report, according to which the payroll interest for the INSS ranged from 1.31% to 2.17% per month in the week between February 27th e March 3cho.

Average

Already quintaOn Thursday (16), the Brazilian Federation of Banks (Febraban) released a note, according to which the reduction in the interest rate ceiling would jeopardize the offer of payroll loans and payroll credit cards to INSS beneficiaries.

According to the entity, the initiative may distort prices of financial services, with banks having to increase interest on other lines of credit to compensate for the lower ceiling on payroll for the INSS.

“Initiatives such as these generate relevant distortions in the prices 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,” reported Febraban.

According to the Central Bank report cited by Lupi, in the week of February 27th a March 3ço, only four of the 38 financial institutions that offer INSS payroll loans charged rates below 1.7% per month: Sicoob (1.68%), Cetelem (1.65%), BRB (1.63%) and CCB Brazil (1.31%). The highest interest rates were with Zema (2.17%, above the old ceiling of 2.14% per month) and Pan (2.14%).