Circular No. 4029 — Amends Circular No. 3,975 to Establish Deductibility of Credit Balances for Working Capital Financing and DPGE Applications

The Executive Board of the Central Bank of Brazil, in a session held on June 3, 2020, based on art. 10, items III and IV, of Law No. 4,595, of December 31, 1964, and art. 66 of Law No. 9,069, of June 29, 1995,

R E S O L V E:

Art. 1º Circular No. 3,975, of January 8, 2020, shall be effective with the following alterations:

“Art. 5º-A With respect to the exigibilities of savings deposit resources, in the free and rural modalities, calculated in the manner of arts. 4º and 5º, the following deductions shall apply, regarding operations contracted and applications made from June 29, 2020, until December 31, 2020:

I - of the balance of credit operations for working capital financing for companies with annual revenue up to R$50,000,000.00 (fifty million reais), excluding refinancings; and

II - of the balance of applications in Special Guarantee Time Deposits (DPGE) from institutions that do not belong to the same conglomerate.

§ 1º The sum of the deductions referred to in items I and II of the main text shall be distributed between the two savings modalities, free and rural, in proportion to their VSRs.

§ 2º The sum of the deductions referred to in items I and II of the main text shall not exceed 30% (thirty percent) of the exigibility of the mandatory reserve on savings deposit resources, in the free and rural modalities, calculated in the manner of arts. 4º and 5º.

§ 3º The sum of the deductions referred to in items I and II of the main text shall correspond to, at minimum, 5% (five percent), starting from the calculation period beginning on August 10, 2020, and 10% (ten percent), starting from the calculation period beginning on September 8, 2020, and until the calculation period ending on December 31, 2020, of the exigibility of the mandatory reserve on savings deposit resources, in the free and rural modalities, calculated in the manner of arts. 4º and 5º.

§ 4º The deductions referred to in items I and II of the main text exclude Savings and Loan Associations, Real Estate Credit Societies, and Credit Cooperatives.

§ 5º The deductions referred to in items I and II of the main text shall be applied until the calculation period beginning on June 5, 2023, and ending on June 9, 2023, whose adjustment will occur on June 19, 2023, or until the maturity of the operations, whichever occurs first.

§ 6º The credit operations for working capital financing referred to in item I of the main text shall only be considered for deduction if they meet the following conditions:

I - minimum term of 365 (three hundred and sixty-five) days; and

II - minimum grace period for principal payment of 180 (one hundred and eighty) days.

§ 7º The applications in DPGE referred to in item II of the main text shall only be considered for deduction if they meet the following conditions:

I - having as depositary institutions that belong to the prudential regulation segments S3, S4, and S5, as defined in art. 2º of Resolution No. 4,553, of January 30, 2017; and

II - including institutions from segments S4 and S5, considered jointly, with at least 30% (thirty percent) of the balance of applications that will be used as a deduction until December 31, 2020.” (NR)

“Art. 7º ......................................................

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§ 3º In case of non-compliance with the minimum deduction amounts referred to in § 3º of art. 5º-A, the amount equivalent to 30% (thirty percent) of the balance of the exigibility of the mandatory reserve on savings deposit resources, in the free and rural modalities, calculated in the manner of arts. 4º, 5º, and 5º-A, shall not be entitled to remuneration.

§ 4º The control of the provision in § 3º shall be carried out on the last day of each calculation period and will imply effects on the remuneration of all days of the respective movement period.” (NR)

Art. 2º This Circular enters into force on the date of its publication, producing effects starting from the calculation period beginning on June 29, 2020, and ending on July 3, 2020, whose adjustment will occur on July 13, 2020.

Bruno Serra Fernandes Director of Monetary Policy