Regulatory Alerts2020-06-10 | Circular 4026Circular No. 4026 — Amends Circular No. 3,809 of August 25, 2016 Regarding Risk Mitigation Instruments for Credit Risk-Weighted Assets
The Board of Directors of the Central Bank of Brazil issued Circular No. 4026 to amend Circular No. 3,809 by introducing Article 27-A, which mandates a 12% Probability of Default (PD) factor for credit operations under the Pronampe program. This specific PD factor is strictly limited to financial institution portfolios composed exclusively of operations guaranteed by the Guarantee Fund for Micro and Small Business Operations (FGO), provided the FGO covers 85% of the portfolio and absorbs all initial losses up to that threshold. The regulation entered into force on the date of its publication.
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