Circular No. 349 - External Loans - Foreign Currency Deposits with Banks Authorized to Operate in Foreign Exchange

CIRCULAR NO. 000349

We communicate that the Central Bank of Brazil, considering the provisions of Resolution No. 432, of this date, has decided to approve the norms described below, to be observed regarding deposits in foreign currencies, with banks authorized to operate in foreign exchange, in the country, made by borrowers of external loans.

CONSTITUTION OF THE DEPOSIT

2. The foreign currency deposits to which this refers shall be based exclusively on external loan operations, in currency, entered under the protection of Law No. 4,131, of September 3, 1962, with the alterations of Law No. 4,390, of August 29, 1964, registered with the Central Bank of Brazil, except those carried out under the aegis of Resolutions Nos. 63, 64, 323 and 351, of 21.8.67, 23.8.67, 8.5.75 and 17.11.75, respectively.

3. The deposits under Resolution No. 432 shall be made by the borrowers of said external loans in their name, with a bank authorized to operate in foreign exchange, for onward transfer by the latter to the Central Bank of Brazil. The deposited amount shall be limited to the amount due to the external creditor, partial deposits being admitted. The value of each deposit shall not be less than US$20,000.00 or its equivalent in other currencies.

4. The deposits shall be made in the currency of the external loan, through foreign exchange purchase, at the then current exchange rate, carried out by the borrower with the authorized bank, chosen as depositary.

5. Deposits of this kind shall be centralized, by the depositing borrower, in a single banking establishment authorized to operate in foreign exchange. However, the depositor may, at his exclusive discretion, transfer the value of his deposits to another establishment authorized to operate in foreign exchange, provided that it is for their global amount, observing the other provisions regarding the movement of such deposits.

6. The registration of the deposits constituted in the manner of the preceding items shall be made with the foreign exchange sector, in Rio de Janeiro (RJ) or in São Paulo (SP), of the depositary bank, in an account in the name of the depositor, in which it will be identified, through specific breakdowns, the respective Registration Certificates issued by this Central Bank, referring to the external loan operations that give rise to the deposits. The centralization of such accounts in said locations will occur even if the foreign exchange operation for the constitution of the deposit is carried out with the foreign exchange department of the establishment, in another location.

WITHDRAWAL OF THE DEPOSIT

7. The amounts deposited in accordance with this Circular may be withdrawn in full or in installments not less than the equivalent of US$20,000.00, provided that at least 30 days have elapsed from the date of the last movement - by constitution or withdrawal of deposit - carried out on any of the breakdowns of the account opened in the name of the depositor, as provided in item 6 above.

8. The withdrawals of the deposits to which this refers shall be effected through the sale of foreign exchange of the respective value in foreign currency, carried out by the depositor to the depositary bank, at the then current exchange rate.

PAYMENT OF INTEREST TO DEPOSITORS

9. The balances shown in the accounts referred to in item 6 of this Circular shall earn interest, in favor of the depositors, for the respective terms of the deposits, at the same rate approved for the corresponding external loan operation, which was in force during the period of the deposit.

10. The payment of interest on the deposits, to which the previous item refers, shall be promoted with a lead time of 10 business days in relation to the due date of the interest installment due according to the scheme provided for the external loan or - if it occurs first - based on the date of the total withdrawal of the balance shown in the deposit account, referring to the same Registration Certificate. The payment of interest shall be effected, without contracting foreign exchange, through a credit made by the depositary bank to the current account of deposits in national currency, of the depositor.

11. The conversion to cruzeiros of the amount due by way of interest on the deposits shall be based on the sale exchange rate, for the currency of the deposit, in force on the date on which the payment of interest is to be effected, according to the provision in the previous item.

12. Respecting the regime agreed between the borrower (depositor) and the creditor of the external loan, the Central Bank of Brazil shall assume the burden of income tax on the interest produced according to item 9, supra, in cases where this burden is the responsibility of the borrower of the external loan or when, implicitly, it has been agreed that the same shall be added to the interest rate, in the manner provided in the Registration Certificate relating to the external loan.

RELATIONS OF DEPOSITORY BANKS WITH THE CENTRAL BANK OF BRAZIL

13. For an amount identical to the total of the deposits they have received on the day, through their departments authorized to operate in foreign exchange, according to the provisions of items 3 to 6, of this Circular, the depositary establishments shall carry out, in their name, on the same day, a deposit with this Central Bank. For this purpose, the banks shall effect to this Body - exclusively with the Regional Divisions of Foreign Exchange Operations of Rio de Janeiro (RJ) or of São Paulo (SP) - purchases of foreign exchange, at the then current cover rates, in the respective currencies of the deposits received from clients.

14. Likewise, for an amount identical to the total of the deposit withdrawals that have occurred on the day, through their departments authorized to operate in foreign exchange, according to the provisions of items 7 and 8 of this, the banks shall promote the withdrawal, with this Body, of the deposits of which they are holders, in the manner of the previous item. For this purpose, the banks shall effect to this Central Bank - exclusively with the Regional Foreign Exchange Divisions of Rio de Janeiro (RJ) or of São Paulo (SP) - sales of foreign exchange, at the then current transfer rates, in the respective currencies of the deposits withdrawn by clients.

15. The deposits of the banks with this Central Bank, made in the manner of item 13 supra, shall earn, in favor of the depositing establishments, for the period of the deposit, interest of value exactly equal to those that will apply to the corresponding deposits received by them from clients. The payment of such interest shall be made through a check, in national currency, issued by this Bank in favor of the depositing banking establishment.

GENERAL PROVISIONS

16. The contracting of foreign exchange for the constitution or withdrawal of deposits, under the conditions of this Circular, is independent of prior authorization from the Central Bank of Brazil.

17. In special cases where, the external loan having already entered, its registration with the Central Bank of Brazil has not yet been processed or where such condition is not required, this Body may receive, for examination, a request from the interested party, with a view to establishing a specific system for the deposit.

18. The settlement of foreign exchange contracts, celebrated for the realization or withdrawal of the deposits referred to herein, shall be promoted always on the same date of its contracting, without movement of bankers' accounts abroad.

19. The constitution of deposits in the manner of this Circular in no way alters the fulfillment, by the borrower, of the obligations arising from the external loan, which shall be normally satisfied according to the provision in the corresponding Registration Certificate issued by this Central Bank.

Brasília-DF, June 23, 1977

Fernão Carlos Botelho Bracher
Director