Resolution CMN No. 1502 — Authorizes Commercial Banks to Accept Bills of Exchange Issued in Connection with Credit Operations Secured by Warrants

RESOLUTION NO. 001502

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, in a session held on July 27, 1988, having regard to the provisions of Article 4, item VI, of the aforementioned Law, and Article 14 of Law No. 4,728, of July 14, 1965,

HAS DECIDED:

I - To authorize commercial banks to accept bills of exchange issued in connection with credit operations secured by "warrants".

II - The bills of exchange and the credit operations referred to in the previous item shall have a minimum maturity of 60 (sixty) and a maximum of 180 (one hundred and eighty) days.

III - The "warrants" referred to in item I of this Resolution must be accompanied by their respective deposit receipts, remain in the possession of the accepting bank until the settlement of the operation, and may not be issued by storage companies linked, directly or indirectly, to the credit borrower.

IV - The bank acceptances mentioned in item I of this Resolution are restricted to operations related to the storage of agricultural products, and the bills of exchange must be registered and traded exclusively at the Central Custody and Financial Settlement Center for Securities - CETIP.

V - The value of the credit granted in the manner of item I of this Resolution may not exceed 80% (eighty percent) of the value of the goods represented by the pledged "warrants", based on minimum or guaranteed prices.

VI - The bank acceptance operations governed by this Resolution are subject to the following limits:

a) the total of operations linked to acceptances, with the same client, may not represent more than 5% (five percent) of the net worth of the accepting bank;

b) the total of own acceptances may not exceed the value of the net worth of the accepting bank;

c) the balance of credit operations secured by "warrants" may not be lower than the balance of the commercial bank's own acceptances.

VII - The commercial bank's acceptances of bills of exchange are considered for the purpose of the indebtedness limit provided for in Resolution No. 1,003, of May 2, 1985.

VIII - The Central Bank, after agreements with the National Treasury Secretariat (STN), is authorized to:

a) create a special line of financial assistance to accredited commercial banks, intended to provide liquidity to the bills of exchange referred to in item I of this Resolution;

b) fix the financial charges, deadlines, operational limits, and penalties of the program referred to in the preceding clause;

c) define the agricultural products and the areas of coverage that will be the subject of the operations provided for in this Resolution;

d) alter the deadlines and limits established in this Resolution;

e) define, for the purpose of the provisions of item III of this Resolution, the concept of a linked company;

f) adopt any other measures deemed necessary for the execution of the provisions of this Resolution.

IX - This Resolution enters into force on the date of its publication, rescinding Resolution No. 1,398, of September 22, 1987.

Brasília-DF, July 28, 1988

Elmo de Araujo Camões
President