[Brazil] $352 million in new payroll loans issued under revamped rules

On April 2, Brazil's presidential chief of staff announced that 2 billion reais ($352.02 million) in new payroll-deductible loans for private-sector workers have already been issued following new government rules aimed at expanding this type of credit, Reuters reports.

During a radio interview, Rui Costa said the government had a review meeting on April 1 with state-run lenders Banco do Brasil and Caixa Economica Federal.

The lenders have reportedly issued more than 1.2 million loans under the scheme with interest rates ranging from 1.5 per cent to 3 per cent per month.

According to the latest central bank data, that compares with an average monthly rate of 5.9 per cent for non-payroll-deductible personal loans.

According to Reuters reporting, new rules for payroll-deductible loans for private-sector workers were unveiled in March as part of moves by President Luiz Inacio Lula da Silva to halt a dramatic decline in his approval ratings.

The market is said to be monitoring the pace of loan issuance carefully due to concerns that it could contribute to overheating the economy, countermanding the central bank's efforts to cool it through an aggressive interest rate-hike cycle.

Central bank director Nilton David reportedly stated on March 31 that policymakers had yet to reach a firm conclusion on the impact of the changes. Mr David added that one possibility is borrowers refinancing expensive debt with cheaper credit. Another is taking on new debt.

Source: Reuters

On April 2, Brazil's presidential chief of staff announced that 2 billion reais ($352.02 million) in new payroll-deductible loans for private-sector workers have already been issued following new government rules aimed at expanding this type of credit, Reuters reports.

During a radio interview, Rui Costa said the government had a review meeting on April 1 with state-run lenders Banco do Brasil and Caixa Economica Federal.

The lenders have reportedly issued more than 1.2 million loans under the scheme with interest rates ranging from 1.5 per cent to 3 per cent per month.

According to the latest central bank data, that compares with an average monthly rate of 5.9 per cent for non-payroll-deductible personal loans.

According to Reuters reporting, new rules for payroll-deductible loans for private-sector workers were unveiled in March as part of moves by President Luiz Inacio Lula da Silva to halt a dramatic decline in his approval ratings.

The market is said to be monitoring the pace of loan issuance carefully due to concerns that it could contribute to overheating the economy, countermanding the central bank's efforts to cool it through an aggressive interest rate-hike cycle.

Central bank director Nilton David reportedly stated on March 31 that policymakers had yet to reach a firm conclusion on the impact of the changes. Mr David added that one possibility is borrowers refinancing expensive debt with cheaper credit. Another is taking on new debt.

Source: Reuters