CMN Resolution No. 3507 — Special Credit Line Designated as Agricultural Receivables Financing (FRA)

RESOLUTION NO. 003507

Dispenses on a special credit line designated as Agricultural Receivables Financing (FRA), intended to finance the settlement of debts of rural producers or their cooperatives with suppliers of agricultural inputs and revokes Resolution No. 3,457, of 2007.

THE CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes public that the MONETARY COUNCIL NATIONAL, in a session held on October 25, 2007, considering the provisions of Article 4, item VI, of the aforementioned law, Articles 4 and 14 of Law No. 4,829, of November 5, 1965, and Article 9 of Law No. 11,524, of September 24, 2007,

RESOLVES:

Article 1. The special credit line designated as Agricultural Receivables Financing (FRA), instituted by Resolution No. 3,457, of June 1, 2007, shall henceforth be subject to the following conditions:

I - purpose: to finance the settlement of debts of rural producers and their cooperatives with suppliers of agricultural inputs related to the 2004/2005 and 2005/2006 harvests;

II - source of resources: mandatory (MCR 6-2) and rural savings (MCR 6-4);

III - amount financeable by the FRA: R$2,200,000,000.00 (two billion and two hundred million reais);

IV - credit limit per beneficiary: up to 100% (one hundred percent) of the value of their debts covered under item I;

V - contracting period: until December 28, 2007;

VI - repayment: in up to four annual installments, with due dates until May 31, 2009, 2010, 2011, and 2012, respectively;

VII - financial charges: Long-Term Interest Rate (TJLP) plus the effective interest rate of 5% p.a. (five percent per year);

VIII - operating agent: Banco do Brasil S.A.;

IX - guarantees: those normally admitted in rural credit operations, with the possibility of including in the contracting pledge of the 2008/2009 to 2011/2012 harvests.

Article 2. For the granting of financing under the FRA, the operating financial institution may, to guarantee the contracted financings, constitute a liquidity fund composed of resources originating from a non-refundable adherence fee, observing the following conditions:

I - the contracting of financings by rural producers and their cooperatives is conditioned upon the payment of an adherence fee, in favor of the liquidity fund, corresponding to 10% (ten percent) of the updated value of the debt maintained with suppliers;

II - the payment of debts to suppliers is conditioned upon the payment of an adherence fee, by them, in favor of the liquidity fund, corresponding to 20% (twenty percent) of the updated value of the credit;

III - the operating financial institution shall receive the adherence fees referred to in items I and II, at the time of releasing the financing, debited from the supplier's bank account;

IV - the operating financial institution is entitled to remuneration corresponding to up to 4% (four percent) of the value of the contracted financings to cover origination, structuring, and distribution costs of the operations, and may share these resources, at its discretion, with private investors;

V - a default bonus must be constituted due to the rural producer or their cooperative, the payment of which, limited to 50% (fifty percent) of the respective adherence fee, will be conditioned upon the existence of a remaining balance of the liquidity fund upon its liquidation;

VI - the resources of the liquidity fund shall be invested in an investment fund managed by the respective financial institution to operationalize the mechanism for covering default of the operations, with the earnings reverted in favor of the liquidity fund.

§ 1. The investment fund must have, as unitholders, private investors who are not the rural producers and their cooperatives beneficiaries of the FRA, observing, in the case of public distribution of its units, the rules of the Securities and Exchange Commission (CVM).

§ 2. Financial institutions may finance the participation referred to in item I, in favor of the liquidity fund.

Article 3. In cases of default of the contracted operations, the resources of the guarantee shall be used, observing the following order:

I - from the liquidity fund;

II - from the Guarantee Fund for Financing - FGF, as provided in Article 4 of Law No. 11,524, of September 24, 2007, in the manner to be established in its statute or regulation, once the resources referred to in item I are exhausted, respecting the ceiling of 15% (fifteen percent) of the total value of the contracted financings, adjusted by the TJLP until the date of the actual payment of the value subject to default;

III - from private investors, who, after exhausting the resources referred to in items I and II, will bear the outstanding balance of the defaulted financings.

Article 4. Upon receipt of defaulted debts, the destination of the respective values, after deducting collection expenses, shall be in the reverse order of the assumption of debts as indicated in Article 3, namely:

I - to private investors, in case of activation of their guarantee;

II - to the FGF, in case of activation of its guarantee;

III - to the liquidity fund.

Article 5. Upon liquidation of the liquidity fund and having financial availability:

I - payment must be made to rural producers and their cooperatives as provided in Article 2, item V;

II - after the payment referred to in item I, the remaining resources shall be distributed among private investors, the FGF, and the FRA financial institution, in a proportion defined contractually between the parties, observing the provisions in the statute or regulation of the FGF.

Article 6. The mandatory resources (MCR 6-2) and rural savings (MCR 6-4), made available for the FRA, are limited to R$2,200,000,000.00 (two billion and two hundred million reais), adjusted by the TJLP from the date of contracting, and must be reduced in the same proportion and periodicity established by the repayment schedule of the contracted operations.

Article 7. The weighting factor incident on the daily average balance of applications made in the FRA until December 31, 2007, with resources from the rural savings requirement (MCR 6-4), shall be 2.49 (two whole and forty-nine hundredths).

§ 1. The weighting factor referred to in the caput may be reviewed semi-annually, considering the evolution of variations in the TJLP, the Selic rate, and the Reference Rate (TR), as well as the average profitability of the operating financial institution.

§ 2. The Union, through the National Treasury Secretariat (STN), may equalize interest rates under the conditions previously established in a portaria of the Ministry of Finance.

Article 8. The mandatory resources (MCR 6-2) passed on by other financial institutions to the FRA operating bank, in the form of Interfinancial Deposit Linked to Rural Credit (DIR Especial) specific, or those originating from the operator's own rural requirement, are subject to:

I - a maximum cost of 6.5% p.a. (six whole and five tenths percent per year) borne by the depositary institution;

II - until June 30, 2008, to a weighting factor of 0.63 (sixty-three hundredths) to be applied by the depositing bank and the FRA operating bank, in the case of own resources, on the daily average balance of the resources involved, for the purpose of fulfilling respective requirements;

III - to a minimum term of twelve months, which may be extended.

Sole paragraph. The weighting factor referred to in item II may be reviewed annually, considering the evolution of variations in the TJLP and the Selic rate.

Article 9. With authorization from the Ministry of Finance, reclassification of the financing source of operations carried out with mandatory resources (MCR 6-2) and rural savings (MCR 6-4) is permitted, observing the minimum term established in Article 8, item III.

Article 10. The Central Bank of Brazil is authorized to adopt the measures necessary to comply with the provisions of this resolution.

Article 11. This resolution enters into force on the date of its publication.

Article 12. Resolution No. 3,457, of June 1, 2007, is hereby revoked.

Brasília, November 1, 2007.

Henrique de Campos Meirelles
President