Central Bank Resolution CMN No. 4835 - Instituting New Weighting Factors for Pronaf Operating Credit Operations Backed by Cash Resources

The Central Bank of Brazil, in accordance with Article 9 of Law No. 4,595 of December 31, 1964, makes public that the National Monetary Council, in a session held on June 25, 2020, considering the provisions of Article 4, item VI, of the aforementioned Law, Articles 4, 14, and 21 of Law No. 4,829 of November 5, 1965, and Article 81, item III, of Law No. 8,171 of January 17, 1991,

R E S O L V E S:

Art. 1 The Section 1 (General Provisions) of Chapter 6 (Resources) of the Rural Credit Manual (MCR) shall be in effect with the following alterations:

“18 - It is prohibited to count for compliance with rural credit obligations the balances of operations or credit installments:

a) written off as losses in accordance with applicable regulation; and

b) extinguished due to total renegotiation or novation of the original operation or installment.” (NR)

“19 - The weightings established in Sections 6-2 and 6-4, as well as those previously defined, applied to operations according to the date of their contracting, produce effects on the balances of the respective operations until their settlement, except for express provisions to the contrary.” (NR)

Art. 2 Section 2 (Mandatory) of Chapter 6 of the MCR shall be in effect with the following alterations:

“1 - For the purposes of Article 21 of Law No. 4,829 of November 5, 1965, mandatory resources are those destined for rural credit operations, derived from the Value Subject to Collection (VSR) related to cash resources, calculated in accordance with applicable regulation.” (NR)

“6 - ........................................................... ................................................................

f) the verification of compliance, under the responsibility of the Central Bank of Brazil, must be carried out starting from July 20 of each year, without prejudice to actions emanating from the inspection area, with the financial institution being required to observe the provisions of MCR 6-8, insofar as applicable.” (NR)

“17 - For the purpose of complying with the Pronaf Sub-requirement, the value corresponding to the daily average balance of operating credit operations supported by Pronaf, contracted from July 1, 2020, must be computed by multiplying them by the following weighting factors:

a) 1.24 (one and twenty-four hundredths) for operations contracted under the support of MCR 10-4-2-“a”; and

b) 1.11 (one and eleven hundredths) for operations contracted under the support of MCR 10-4-2-“b”.” (NR)

“20 - Balances of operations or credit installments whose financial charges have been increased due to borrower default, starting from the day following the increase of the contractual charge, cannot be counted for compliance with the requirement and sub-requirements.” (NR)

Art. 3 Section 4 (Rural Savings) of Chapter 6 of the MCR shall be in effect with the following alterations:

“1-E - Regarding the direction referred to in item 2 and the mandatory collection established by the Central Bank of Brazil, the following conditions must be observed for the cases provided for in items “a” and “b” of item 1-A:

..........................................................” (NR)

“3 - ........................................................... ................................................................

f) the verification of compliance, under the responsibility of the Central Bank of Brazil, must be carried out starting from July 20 of each year, without prejudice to actions emanating from the inspection area, with the financial institution being required to observe the provisions of MCR 6-8, insofar as applicable.” (NR)

Art. 4 Section 6 (Deposits Interbank Linked to Rural Credit) of Chapter 6 of the MCR shall be in effect with the following alteration:

“10 - The institutions referred to in items 8 and 9 are subject, insofar as applicable, to the rules of this manual, particularly those provided for in this Section and in MCR 6-2, 6-4, and 6-7, including with respect to the collection of financial cost, in accordance with Section 8 of this Chapter.” (NR)

Art. 5 The following are revoked:

I - the following provisions of Section 2 of Chapter 6 of the MCR:

a) items “a”, “b”, and “c” of item 1;

b) item 10-C;

c) item IV of item “a” of item 16;

d) item 18; and

e) items “a”, “b”, and “c” of item 20; and

II - the following provisions of Section 4 of Chapter 6 of the MCR:

a) item “d” of item 3;

b) item 8; and

c) item “d” of item 9.

Art. 6 This Resolution enters into force on July 1, 2020.

Roberto de Oliveira Campos Neto President of the Central Bank of Brazil