CMN Resolution No. 4802: Renegotiation of Rural Credit for Producers Affected by Drought and Special Financing for Pronaf, Pronamp, and Procap-Agro

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 an extraordinary session held on April 8, 2020, considering the provisions of Article 4, item VI, of Law No. 4,595 of 1964, Articles 4, 14, and 21 of Law No. 4,829 of November 5, 1965, and Article 5 of Law No. 10,186 of February 12, 2001,

R E S O L V E S:

Art. 1 Financial institutions are authorized to renegotiate the installments and rural credit operations for working capital and investment, in a compliant status as of December 30, 2019, backed by controlled resources as described in the Rural Credit Manual (MCR 6-1-2), due or maturing from January 1, 2020, to December 30, 2020, including those extended by authorization of the National Monetary Council (CMN), contracted by rural producers and singular agricultural production cooperatives that suffered losses due to drought or dry spells in municipalities with a declared emergency situation or state of public calamity in the period from January 1, 2020, until the date of publication of this Resolution, recognized by the Ministry of Regional Development (MDR), observing the following conditions:

I - The outstanding balances shall be calculated based on normal contractual charges;

II - Repayment:

a) working capital: up to 7 (seven) years, according to the income generation period;

b) extended working capital operations and investment: up to 1 (one) year, after the final maturity of the contract, for each extended installment;

III - when the extension referred to in Article 1 involves rural credit operations or installments for working capital and investment contracted with financial charge equalization by the National Treasury (TN), in the form of MCR 6-1-2-“c”, these must be previously reclassified by the financial institution to Mandatory Resources as described in section 6-2 of the MCR, or another non-equalizable source, and the value of the operation or extended installment must be excluded from the calculation base for the purpose of calculating the payment of equalization;

IV - the rural working capital operations referred to in item I, which have been covered for losses by the Agricultural Activity Guarantee Program (Proagro) or by a rural insurance modality, can only be renegotiated upon exclusion of the value corresponding to the indemnity received by the beneficiary, considering the revenue obtained;

V - the following rural credit operations cannot be subject to renegotiation:

a) contracted until the date of publication of this Resolution and that are in the grace period until December 30, 2020;

b) that have been classified as losses by financial institutions until the date of formalization of the new operation;

c) financed enterprise that has been conducted without the application of recommended technology, including non-compliance with the Agricultural Zoning for Climatic Risk (ZARC) and the agricultural calendar for planting the crop;

d) debts arising from operations renegotiated based on Article 5 of Law No. 9,138 of November 29, 1995, or classified under Resolution No. 2,471 of February 26, 1998, renegotiated or not in accordance with Law No. 10,437 of April 25, 2002;

VI - formalization: until June 30, 2020.

VII - the assessment of payment capacity, as described in MCR 2-6-4, renegotiation may provide for the contracting of rural insurance during the validity of the renegotiated contract.

Art. 2 Section 19 (Transitional Credit Lines) of Chapter 10 (National Program for Strengthening Family Agriculture - Pronaf) of the MCR shall enter into force with the following alterations:

“11 - The granting of special credit is authorized to family farmers classified under Pronaf who suffered losses due to drought or dry spells in municipalities with a declared emergency situation or state of public calamity in the period from 1/1/2020 to 9/4/2020, recognized by the Ministry of Regional Development (MDR), observing the general rural credit norms applicable to Pronaf and the following special conditions:

a) purpose: agricultural and livestock working capital credit, which may be allocated up to 40% (forty percent) of the budget for the purposes provided in MCR 10-4-11;

b) credit limit: up to R$20,000.00 (twenty thousand reais) per borrower;

c) financial charges: effective interest rate of up to 4.6% p.a. (four and six-tenths percent per annum);

d) repayment term: up to 36 (thirty-six) months, including up to 12 (twelve) months of grace period;

e) contracting period: until 6/30/2020;

f) source of resources: Mandatory Resources, as described in MCR 6-2.” (NR)

Art. 3 Section 2 (Transitional Norms) of Chapter 8 (National Program for Support to Medium Rural Producers - Pronamp) of the MCR shall enter into force with the following alterations:

“4 - The granting of credit is authorized to rural producers classified under Pronamp who suffered losses due to drought or dry spells in municipalities with a declared emergency situation or state of public calamity in the period from 1/1/2020 to 9/4/2020, recognized by the Ministry of Regional Development (MDR), observing the general rural credit norms applicable to Pronamp and the following special conditions:

a) purpose: agricultural and livestock working capital credit, which may be allocated up to 25% (twenty-five percent) of the budget for the purposes provided in MCR 8-1-1-“b”-I;

b) credit limit: up to R$40,000.00 (forty thousand reais) per borrower;

c) financial charges: effective interest rate of up to 6% p.a. (six percent per annum);

d) repayment term: up to 36 (thirty-six) months, including up to 12 (twelve) months of grace period;

e) contracting period: until 6/30/2020;

f) source of resources: Mandatory Resources, as described in MCR 6-2.

5 - The balances of the operations provided for in item 4 may be used to comply with the Pronaf Sub-requirement, as described in MCR 6-2-10, until the settlement of the operations.” (NR)

Art. 4 Section 2 (Program for Capitalization of Agricultural Cooperatives - Procap-Agro) of Chapter 13 (Programs with BNDES Resources) of the Rural Credit Manual (MCR) shall enter into force with the following alterations:

“9 - Exceptionally, until 6/30/2020, the financing referred to in item 3 is authorized for singular agricultural production cooperatives whose members have suffered income losses due to drought or dry spells in municipalities with a declared emergency situation or state of public calamity in the period from 1/1/2020 to 9/4/2020, recognized by the Ministry of Regional Development (MDR), observing the following special conditions:

a) purpose: transfer of up to 100% (one hundred percent) of the amount due by members due to overdue and maturing debts between January 1, 2020, and December 30, 2020, provided that they were contracted with the cooperative for the acquisition of inputs for use in the 2019/2020 harvest;

b) credit limit: R$65,000,000.00 (sixty-five million reais) per cooperative, in one or more operations, regardless of other limits established for this Program, not exceeding R$40,000.00 (forty thousand reais) per active member whose obligation will be renegotiated;

c) financial charges: effective interest rate of:

I - up to 6% p.a. (six percent per annum), for singular cooperatives constituted by beneficiaries of the National Program for Strengthening Family Agriculture (Pronaf), provided they have an active Declaration of Aptitude for Pronaf (DAP); and

II - up to 8% p.a. (eight percent per annum), for other beneficiaries;

d) repayment: up to 48 (forty-eight) months, including up to 12 (twelve) months of grace period;

e) the granting of credit referred to in item 9 shall be conditioned on proof of the transfer of the financing conditions to the members, requiring a copy of the legal instrument of the renegotiation of the original obligation between the cooperative and the member;

f) contracting period: until 6/30/2020;

g) source of resources: the financing may be originally contracted with Mandatory Resources as described in MCR 6-2, observing the provisions in items “h” and “i”;

h) from 7/31/2020 to 8/31/2020, according to the contracting day of the operation, the financing balance shall be reclassified to the BNDES resource source, through an instrument defined by this institution, maintaining the other contractual conditions;

i) in the impossibility of the reclassification provided for in the previous item, the balance shall be reclassified to the uncontrolled resource source of the financial institution granting the credit;

j) the balances of the operations provided for in item I of item “c” of item 9 may be used to comply with the Pronaf Sub-requirement, as described in MCR 6-2-10, while the operation remains backed by Mandatory Resources.”(NR)

Art. 5 This Resolution enters into force on the date of its publication.

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