Resolution CMN No. 2220 — Conditions and Procedures for Extending Rural Credit Debts under Law No. 9,138 of 1995

RESOLUTION NO. 002220

Dispenses with conditions and procedures to be observed in the formalization of debt extension operations originating from rural credit, as provided for in Law No. 9,138, of 11/29/95.

THE CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4,595, of 12/31/64, makes public that the NATIONAL MONETARY COUNCIL, in a session held on 11/29/95, considering the provisions of Article 10 of Law No. 9,138, of 11/29/95,

RESOLVES:

Article 1. Establish the following conditions and procedures to be observed in the formalization of debt extension operations originating from rural credit, as provided for in Law No. 9,138, of 11/29/95:

I - a single credit instrument with a guarantee mechanism based on product equivalence must be used - observing, where applicable, the criteria established in Article 3 of Resolution No. 2,100, of 08/24/94 - the beneficiary may opt, for this purpose, at the date of its formalization, for one or more of the following basic products included in the Minimum Price Guarantee Policy (PGPM): cotton, rice, beans, corn, wheat, and soy;

II - in the event that the beneficiary is engaged in other agricultural activities, relating to products not specified in the preceding item, their option, for equivalence purposes, is restricted to corn and/or soy;

III - for the purposes of extension, the total outstanding balance must be calculated based on the financial charges provided for in the original contracts for the operation while in normal course, up to the agreed maturity date. From the maturity of each operation, total financial charges will apply up to a maximum limit of 12% a.a. (twelve percent per year) plus the basic remuneration index of savings deposits, excluding, if applicable:

a) values related to the capitalization of interest in disagreement with the provisions of Decree-Law No. 167, of 02/14/67, or other legally established norm;

b) debts related to penalties, late fees, default interest, and legal fees attributable to the financial institution;

c) the difference between the amounts charged to borrowers as a supplement to the Agricultural Activity Guarantee Program (PROAGRO) and those legally authorized;

d) other debts, not related to basic financial charges, not provided for in the original contract;

IV - the revision of the calculation of financial charges by the lending institution, in a higher instance than the agency, is assured, when the beneficiary considers that the outstanding balance was determined in disagreement with the criteria defined in the preceding item. If the beneficiary's understanding persists, they may request, including through a trade association, the revision of the calculation to a committee specifically formed for this purpose, integrated by 3 (three) representatives of the farmers' trade associations, 3 (three) from the Federal Government, and 3 (three) from Banco do Brasil S.A., observing that:

a) the use of these prerogatives cannot result in a restrictive annotation against the beneficiary;

b) the revision must retrocede to the original operation when the outstanding balances eligible for extension result from operations whose resources were used to settle previous debts;

V - at the maturity of each installment of the extended debt, the beneficiary may, at their discretion:

a) make payment in cash, based on the value corresponding to the equivalent product units, determined according to the minimum price in effect on that date; or

b) deliver, in payment of their obligation, the quantity of product stipulated in the credit instrument, observing the provisions of Article 3 of Resolution No. 2,100, of 08/24/94, and the specific norms of the PGPM for Federal Government Acquisitions (AGF);

VI - in the event of a consolidated outstanding balance exceeding R$ 200,000.00 (two hundred thousand reais), the beneficiary has the right to extension up to that amount, provided they adjust the total outstanding balance of their debt with the creditor. The excess value will be freely renegotiated between the borrower and the lender, and may continue to fulfill the enforceability of the source backing the operation.

Article 2. The extension of debts includes:

I - cases of assumption of debts related to the transfer of rural property or with guarantee of aval in operations eligible for extension, prevailing for the isolated assumptor or set of assumptors the conditions applicable to the original debtor;

II - installments of Federal Government Loan with Sale Option (EGF/COV) repactuated in accordance with Resolutions Nos. 2,164 and 2,187, of 06/19/95 and 08/09/95, respectively.

Article 3. An Evaluation Committee will be constituted, composed of representatives from the Economic Monitoring and National Treasury Secretariats of the Ministry of Finance, the Agricultural Policy Secretariat of the Ministry of Agriculture, Supply and Agrarian Reform, and Planning and Evaluation of the Ministry of Planning and Budget, to monitor the implementation of the measures established in Law No. 9,138/95 and this Resolution, as well as to propose solutions for omitted cases.

Sole Paragraph. The Evaluation Committee may hold hearings with federal parliamentarians to address issues related to the debt extension process.

Article 4. The beneficiary must formally request the extension of their debts by 01/31/96, and the respective credit instrument must be formalized by 06/30/96, observing that:

I - borrowers who committed credit diversion are not beneficiaries of this measure;

II - the lender must require an express declaration regarding the existence or non-existence of operations covered by this measure in other financial institutions, subjecting the beneficiary to summary execution of the guarantees linked to the operation, as well as other sanctions provided for in rural credit norms, in the event of an incorrect declaration.

Article 5. Financial institutions may suspend the judicial collection of debts originating from rural credit, for a period of 90 (ninety) days, due to the respective request for extension, provided that credit diversion has not been configured.

Article 6. In the event that extension operations do not reach the amount of R$ 7,000,000,000.00 (seven billion reais), defined in Article 5, paragraph 9, of Law No. 9,138/95, the differential will be used to provide singular treatment to special situations of regional debt concentration.

Article 7. The deadline established in Article 1 of Resolution No. 2,207, of 11/03/95, is extended to 01/31/96.

Article 8. The Economic Monitoring and National Treasury Secretariats of the Ministry of Finance, and the Agricultural Policy Secretariat of the Ministry of Agriculture, Supply and Agrarian Reform, are authorized to jointly define the complementary measures necessary for the implementation of the provisions of this Resolution, the decisions of which will be disseminated to financial institutions by the Central Bank of Brazil.

Article 9. This Resolution enters into force on the date of its publication.

Brasília, December 6, 1995

Gustavo Jorge Laboissière Loyola
President