Resolution CMN No. 103 — Amends Operational Limits for Credit, Financing, and Mixed-Type Companies Regarding Consumer Credit Application and Conditions for Accepting Bills in Service Provision Operations

RESOLUTION NO. 000103

THE CENTRAL BANK OF BRAZIL, in accordance with the deliberation of the National Monetary Council, in a session held on 10.12.68, and in accordance with the provisions of arts. 4º, item VI, and 9º, of Law No. 4.595, of December 31, 1964, and art. 2º, item V, of Law No. 4.728, of July 14, 1965,

RESOLVES:

I - To readjust to 60% (sixty percent) until 31.12.1968, to 70% (seventy percent) until 31.3.69, to 80% (eighty percent) until 30.6.69, to 90% (ninety percent) until 30.9.69, and to 100% (one hundred percent) until 31.12.69, the minimum percentage that credit, financing, and mixed-type companies are obliged to apply in credit to the consumer or end user, calculated on the total of their acceptance operations, in the manner provided for by the regulations in force.

II - To allow credit, financing, and mixed-type companies to grant acceptances on exchange bills referring to service provision operations, provided that such operations present:

a) multiplicity of beneficiaries and limitation of financing based on the financial capacity of the financed party;

b) guarantee that offers protection for the liquidity of the operation, observing the regulations of Resolution No. 45, of 30.12.66;

c) co-obligation of the service-providing company(ies).

The operations referred to in this item will be considered as financing to the consumer or user of the service, for the purposes of item I, and may not, collectively, represent more than 5% (five percent) of the total applications of the financing company.

III - To prohibit operations that benefit real estate, agricultural, or individual (private) activities, except for financings directly granted to the consumer or end user or relating to the provision of services, mentioned in the preceding items I and II, observing the regulations of Resolution No. 45, of 30.12.66, and of this Resolution.

IV - To prohibit credit, financing, and mixed-type companies from constituting, administering, or managing MUTUAL FINANCING FUNDS, or "ACCEPTANCE" FUNDS, and, furthermore, from this date, the placement of new quotas of Funds that operate under the regime of partnership in a joint account, condominium, or any other forms, thus understood, for the purposes of this item, "a communion of resources destined for application in credit operations, based on commercial papers" (Circular No. 72, of 30.11.1962, of the extinct SUMOC).

The Funds referred to in this item will be obligatorily liquidated by December 31, 1969, with their liquidation operating progressively, so that, by 30.6.1969 and 30.9.1969, they have reduced their current values by 50% and 75%, respectively.

The provisions of this item apply equally to other public and private financial institutions.

V - To allow credit, financing, and mixed-type companies to keep in their portfolio exchange bills of their own acceptance, up to the amount of their realized capital, and provided that they refer to resources released to the financed party in advance, before the placement of these papers on the market.

VI - To prohibit, in any cases, the early repurchase, by credit, financing, and mixed-type companies, of securities of their acceptance or issuance.

VII - To prohibit credit, financing, and mixed-type companies from having immobilizations exceeding 30% of the amount of their realized capital and reserves. Included in this immobilization are the permanent participations in the capital of financial institutions and the others mentioned in art. 5º of Law No. 4.728, of July 14, 1965, which will be deducted for the calculation of the operational limit.

VIII - To revoke Resolution No. 77, of 23.11.1967, and Circular No. 81, of 2.8.1963, of the extinct SUMOC.

Rio de Janeiro-GB, December 10, 1968

CENTRAL BANK OF BRAZIL

Ernane Galvêas
President