Resolution CMN No. 15 — Reduction of Interest Rates on Bank Deposits to Obtain Reduction of Operational Expenses of Banks and Cost of Money for the Borrower

RESOLUTION NO. 000015

THE CENTRAL BANK OF THE REPUBLIC OF BRAZIL, in accordance with the deliberation of the Monetary Council, in session on January 26, 1966, in accordance with the provisions of Articles 4, items VI, IX, and XII, and 9 of Law No. 4,595, of December 31, 1964, and Decree-Law No. 1, of November 13, 1965,

DECIDES:

I - Banks and Banking Houses must subordinate their deposit accounts to the following groupings:

A - DEMAND DEPOSITS

a) without limit

b) popular, with limit (up to Cr$5,000,000)

B - TIME DEPOSITS

a) With Prior Notice (from 30 to 120 days)

b) Fixed Term (from 6 months or more)

II - No interest shall be credited on demand deposits without limit, under any circumstances.

III - Popular demand deposits may only be maintained by natural persons or charitable, religious, scientific, educational, and cultural, benevolent, or recreational institutions. Interest may be credited on their accounts at a maximum rate of 3% per annum, calculated on daily balances not exceeding Cr$5,000,000. No interest may be credited on amounts exceeding this limit.

IV - Prior notice or fixed-term deposits may earn previously agreed-upon interest, with strict observance of the following maximum rates:

• Prior Notice deposits, from 30 to 60 days - 3% p.a.

• Prior Notice deposits, from 61 to 90 days - 4% p.a.

• Prior Notice deposits, from 91 to 120 days - 5% p.a.

• Fixed-term deposits, from 6 months or more - 6% p.a.

• Fixed-term deposits, from 12 months or more - 8% p.a.

V - The terms in prior notice accounts will be counted from the date of registration of the document by which the establishment acknowledges receipt of the notice, passed through a carbon copy.

VI. Any acceptance of withdrawals before the agreed term has expired, or without observing the prior notice, will prevent the crediting of any interest to the respective depositors on the withdrawn portion.

VII - Establishments that admit partial withdrawals or closures of "time" accounts in a number deemed excessive will be subject, for six months, to compulsory deposits at the rate current for demand deposits, on the total of the deposits they maintain.

VIII - In fixed-term accounts, it is mandatory to reserve in the balance sheet the provisions corresponding to the completed semesters for interest to be credited at subsequent maturities.

IX - The collection of deposits at home and the offering or granting to depositors of bonuses, premiums, or advantages of any nature that signify an indirect increase in the interest rate are expressly prohibited.

X - For the purposes provided for in this Resolution, Federal and State Savings Banks will proceed to classify their deposit accounts according to the norms contained herein, observed as follows, from this date:

a) they may not accept new deposits, in existing accounts, from legal entities, except those opened in the name of charitable, religious, scientific, educational, and cultural, benevolent, or recreational institutions;

b) accounts that, existing in Federal or State Savings Banks on the date of this Resolution, contravene what is hereby established, will be closed by December 31, 1966, with notice to the Central Bank;

c) Federal Savings Banks may, for a period longer than that provided in item "b" above, continue receiving deposits from public law entities, federal, until the Monetary Council decides otherwise;

d) State Savings Banks are authorized to maintain deposits from public law entities, state, of the respective federated Units;

e) popular demand deposit accounts, since they can only be operated via passbooks, may have interest agreed upon and credited of up to 4% p.a.; and

f) they may accept time deposits from natural persons, observing the terms and interest fixed in item IV.

XI - Credit Cooperatives and Credit Sections of mixed Cooperatives may not:

a) receive deposits that are not demand and from members;

b) credit interest to depositors; and

c) fail to distribute, among their members, any surplus determined in semi-annual balance sheets drawn up on June 30 and December 31 of each year, in accordance with current legislation.

XII - Financial Institutions that reduce the cost of money (interest and commissions) for the borrower by one and a half percentage points quarterly, starting from the maximum rate of 24% per year, will enjoy, while doing so, the advantage referred to in item XIII, remaining this incentive until that cost reaches a level considered reasonable by the Monetary Council, in light of the prevailing economic situation.

XIII - Banks that reduce the cost of money in the manner provided for in item XII may apply entirely to National Treasury Adjustable Obligations the new deposits due from February 5, 1966, until these applications, added to those admitted by Resolution No. 5, of August 26, 1965, reach 40% of the total compulsory deposits required.

XIV - For discounted or pledged titles and for simple collection titles liquidated after maturity, banks are permitted to charge the drawee, or whoever replaces him, a "retention commission," calculated on the days of delay and on the same proportional bases of interest and commissions charged to the assignor in the original operation.

XV - Retention of a portion of the net proceeds of active operations for the purpose of causing a direct or indirect increase in interest rates will not be admitted.

XVI - Compulsory deposits of establishments that fail to comply with the norms of this Resolution will be increased by 10%, on the total of their deposits, and for a period of 6 months, without prejudice to the penalties provided for in Law No. 4,595, of December 31, 1964.

XVII - An identical measure will be applied to establishments that benefit from the provisions of item XIII without having promoted the effective reduction of their operational rates on the scale provided therein.

XVIII - This Resolution enters into force on the date of its publication, and Financial Institutions must comply with its provisions by February 28, 1966, except regarding Savings Banks, for the period marked in letter "b", of item X.

XIX - Instructions Nos. 191, of December 22, 1959, and 265, of February 20, 1964, of the extinct Superintendence of Currency and Credit, and other provisions to the contrary, are revoked.

Rio de Janeiro-RJ, January 28, 1966

CENTRAL BANK OF THE REPUBLIC OF BRAZIL

Dênio Nogueira
President