Resolution CMN No. 2238 — Conditions and Procedures for Formalizing Rural Credit Debt Extension Operations

RESOLUTION NO. 2238

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 November 29, 1995.

The CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes public that the MONETARY POLICY COUNCIL, in a session held on January 31, 1996, in view of the provisions of Article 10 of Law No. 9,138, of November 29, 1995,

RESOLVES:

Art. 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 November 29, 1995:

I - debts originating from rural credit are considered to be "outstanding" operations of working capital, investment, or marketing contracted until June 20, 1995, including those registered as "credit in liquidation," written off as "loss," or renegotiated, provided that:

a) they were formalized based on the legislation and regulations applicable to rural credit, excluding Federal Government Loans with Sale Option (EGF/COV), except as provided in item I of Article 2 of this Resolution;

b) they were carried out under the auspices of Law No. 7,827, of September 27, 1989 - Constitutional Financing Funds for the North, Northeast, and Center-West (FNO, FNE, and FCO);

c) they were carried out with resources from the Worker's Support Fund (FAT) and other resources operated by the National Bank for Economic and Social Development (BNDES);

d) they were carried out under the auspices of the Coffee Economy Defense Fund (FUNCAFÉ);

e) they involve operations reclassified from rural credit, excluding those resulting from misappropriation of credit or other fraudulent action by the debtor;

f) they involve the assumption of debts related to the operations mentioned in the preceding letters, formalized until November 30, 1995;

II - other operations eligible for inclusion in the extension process will be analyzed based on resource availability;

III - in the event that the 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 difference will be used to provide singular treatment to special situations of regional concentration of indebtedness;

IV - admit the use of more than one credit instrument, when it is not feasible to formalize the extension adjustments in a single contractual instrument;

V - in any case, the total outstanding balance subject to extension must be calculated based on November 30, 1995, the date of publication of Law No. 9,138/95 in the Official Gazette of the Union, regardless of the operation's maturity date;

VI - for the purpose of extending debts maturing until November 30, 1995, 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 maturity until November 30, 1995, total financial charges will apply up to a maximum limit of 12% per annum (twelve percent per year) plus the 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 February 14, 1967, or other legally established norms;

b) debts related to fines, late fees, default interest, and attorney's fees attributable to the financial institution;

c) the difference between the amounts charged to borrowers as an additional for 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;

VII - for the purpose of extending debts maturing or due after November 30, 1995, 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 deadline of November 30, 1995;

VIII - the revision of the calculation of financial charges by the lending institution is assured, in a tier higher than that of the branch, when the beneficiary considers that the outstanding balance was calculated in disagreement with the criteria defined in this regulation. If the beneficiary's understanding persists, they may request, including through a trade association, the revision of the calculation by a special commission formed for this purpose, integrated by 3 (three) representatives of farmers' trade associations, 3 (three) from the Federal Government, and 3 (three) from Banco do Brasil S.A., observed that:

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

b) the revision must revert to the original operation when the outstanding balances subject to extension result from operations whose resources were used to liquidate previous debts;

IX - in the event of a consolidated outstanding balance exceeding R$200,000.00 (two hundred thousand reais), the beneficiary has the right to extend up to that amount provided they adjust the balance of their debt with the creditor. The excess value will be freely renegotiated between the borrower and the lender, prohibited from being equalized by the National Treasury, and subject to the following conditions:

a) it may be used to meet the exigibility of the funding source that will back it;

b) it cannot commit more than 50% (fifty percent) of the exigibility of the respective financial institution, as provided in MCR 6-2;

X - in the case of operations contracted individually by spouses, the limit of R$200,000.00 (two hundred thousand reais) must be adopted for each of them, provided they are identified by their respective individual CPFs at the time of contracting;

XI - for the purpose of calculating the outstanding balance in cases of assumption of debts eligible for extension, the original contract is considered the assumption instrument, except in the case where the assumers are guarantors, in which case the credit instruments containing the guarantees prevail and the limit of R$200,000.00 (two hundred thousand reais) applies to each guarantor;

XII - rural credit cooperatives subject to an intervention or extrajudicial liquidation regime provided for in Law No. 6,024, of March 13, 1974, are authorized to settle debts arising from rural credit, by transferring them to the financial institutions that channeled the resources through contracts linked to them, processing the extension of the respective debts directly between the member and the channeling financial institution;

XIII - for the quantification of the debt to be extended, the composition of the active member roster existing in cooperatives or associations on June 20, 1995, must be considered.

Art. 2. The extension of debts includes:

I - installments of Federal Government Loans with Sale Option (EGF/COV), renegotiated in accordance with Resolutions No. 2,164 and 2,187, of June 19, 1995, and August 9, 1995, respectively;

II - cases of debtors who have abandoned agricultural activity.

Art. 3. The beneficiary must formally request the extension of their debts until February 29, 1996, and the respective credit instrument must be formalized until June 30, 1996, observed that:

I - borrowers who committed misappropriation of credit are not beneficiaries of the measure;

II - the creditor must require an express declaration regarding the existence or not of operations covered by the 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.

Art. 4. Financial institutions may suspend the judicial collection of debts originating from rural credit for a period of 90 (ninety) days, due to the respective extension request, provided that misappropriation of credit has not been configured.

Art. 5. The granting of a deadline, until June 30, 1996, is authorized, regardless of the formalization of an amendment to the credit instrument, for operations eligible for extension.

Art. 6. The following conditions must be observed regarding product equivalence:

I - the quantity of equivalent units in product, to be calculated at the time of debt extension, will correspond to the division of the total refinanced value, increased by an effective interest rate of 3% per annum (three percent per year), compounded annually, by the basic minimum prices of the products, according to Table I attached, except in the cases referred to in Article 13 of this regulation;

II - the settlement of the installments of the extended debt, when not made in cash, will only be carried out through Federal Government Acquisition (AGF) operations, direct, in accordance with the specific norms published by the National Supply Company (CONAB);

III - physical and/or financial compensations may occur in the settlement of the installments of the extended debt, based on the mandatory official classification of the products, observing the classification standards and instruments, as well as the premiums and discounts provided for in Table II attached;

IV - the credit instrument must contain a clause establishing that the equivalence is conditioned on the product being deposited in a licensed warehouse and with the deposit contract signed with CONAB;

V - in the settlement of the debt, via direct AGF, CONAB will be responsible for sending to the Secretariat of the National Treasury of the Ministry of Finance, until April 30 of each year, including 1996, the forecast of expenses related to the Minimum Price Guarantee Policy (PGPM) reimbursable to the borrower, for inclusion of the respective values in the Annual Budget Bill project of the following fiscal year;

VI - on the date of formalization of the extension, the borrower may opt for one or two of the following basic products integrated into the Minimum Price Guarantee Policy (PGPM): cotton, rice, corn, soybeans, and wheat, provided that the producer has explored the chosen products in the last three years;

VII - in the event that the borrower engages in other agricultural activities, related to products not specified in the previous item, their option, for equivalence purposes, is restricted to corn or soybeans.

Art. 7. At the maturity of each installment of the extended debt, the beneficiary may, at their discretion and observing the conditions of Article 6:

I - make payment in cash, based on the value corresponding to the equivalent units of product, calculated based on the minimum price in effect on that date; or

II - deliver, in payment of their obligation, the quantity of product stipulated in the credit instrument, observing the specific norms of the PGPM for Federal Government Acquisitions (AGF).

Art. 8. Establish, to guarantee the extension and equalization of such operations, the following characteristics and conditions regarding the public securities referred to in Article 6 of the aforementioned Law No. 9,138/95:

I - the securities must be issued for the total value of the debts effectively extended, consolidated based on November 30, 1995, and in the case of FAT and PIS/PASEP, for the equalizable value, limited to the amount of R$7,000,000,000.00 (seven billion reais);

II - the securities must be issued, after the celebration of a contract between the financial institutions and the National Treasury, and registered in the Central Custody and Financial Settlement of Securities (CETIP), observing that:

a) the issuance must be carried out in 4 (four) installments of up to 25% (twenty-five percent) of the extended amount, with face value on November 30, 1995, obeying the following schedule:

1. first installment: monthly, until September 15, 1996, respecting the limit of R$1,750,000,000.00 (one billion, seven hundred and fifty million reais);

2. second installment: January 5, 1998;

3. third installment: January 5, 2000;

4. fourth installment: January 5, 2002;

b) in the event that the renegotiated values are below the limit of R$7,000,000,000.00 (seven billion reais), the installments subsequent to the first will be adjusted to the new amount;

III - characteristics of the securities:

a) term and amortization method: the maturity terms of the securities to be issued by the National Treasury must be adjusted in such a way as to ensure that, in redemptions, the same proportion of the principal due is observed, on the respective dates of the extended operations;

b) remuneration: respecting the corresponding funding source and its remuneration, as detailed below:

Funding Source	Remuneration
MCR 6-2	16% p.a. (*)
DER and Savings Account
a) banks with average operations up to R$70,000.00
1. from Nov 30, 1995 to Oct 31, 1997	IRP + (6.17% p.a. + 5.16% p.a.)
2. from Nov 1, 1997 onwards	IRP + (6.17% p.a. + 4.00% p.a.)
b) banks with average operations above R$70,000.00	IRP + (6.17% p.a. + 2.00% p.a.)
Free Resources	TMS + 2% p.a.
Off-Market Applications Fund	TMS + 2% p.a.
FAT and PIS/PASEP	(TJLP + 2% p.a.) - (variation of minimum price + 3% p.a.)

Obs.: IRP = TR or another remuneration index for savings that replaces it;

TMS = Average Rate of the Special Settlement and Custody System (SELIC);

(*) MCR 6-2 = to be renegotiated annually, according to the rate established for this funding source;

c) modality: negotiable, may be counted for the purpose of meeting the exigibility of application of the respective funding sources in rural financing, in which case it will not be necessary to constitute a provision. The pending value of issuance, duly updated, will also meet the cited exigibility;

d) the amount provided for the first issuance will be subdivided into two series:

1. first: corresponding to 3% (three percent) of the total to be securitized, to cover administrative and tax expenses that will be borne by the financial institutions, with a term identical to that of the extended operations and payment in monthly and successive installments, starting from the date of their issuance;

2. second: relating to the remaining balance, under the conditions referred to in the letters of this item III.

Art. 9. Operations carried out with FAT and PIS/PASEP resources will be subject to equalization that preserves the real value of the lent capital.

Art. 10. Extended debts, linked to fund resources and Official Credit Operations, will not be subject to the issuance of securities and will be maintained in the assets of financial institutions, ensuring the payment of the remuneration currently in force by the allocator.

Art. 11. When the payment of the debts mentioned in Articles 9 and 10 above occurs through the delivery of the product, the reimbursement to the channeling institution will take place after the release, by the National Treasury, of resources for Federal Government Acquisition (AGF), with financial institutions responsible for sending to the STN until April 30 of each year, including 1996, the forecast of the values necessary for inclusion in the Budget Bill project of the following fiscal year.

Art. 12. In the event of early settlement, the value due will be discounted by the effective rate of 3% per annum (three percent per year), during the period between the date of early payment and the maturity date of the installment, with the corresponding resources transferred immediately to the channeling institution or to the National Treasury, observing, when applicable, the provisions of the previous article.

Art. 13. Regarding operations already renegotiated with an equivalence clause, the contracted product equivalence will prevail, for the purpose of extension, with the quantity of product increased by the value corresponding to the effective interest rate of 3% per annum (three percent per year), compounded annually, from November 30, 1995. The issuance of securities by the National Treasury will cover the outstanding balance, on November 30, 1995, of the renegotiated operation in accordance with Resolution No. 2,164/95.

Art. 14. In the formalization of the extension operation, the creditor agent of the operation will assign the respective credit to the National Treasury, with the financial institution, in the assignment contract, acting as guarantor, expressly and irrevocably authorizing the Central Bank of Brazil to debit its Bank Reserves account to effectuate the coverage of said guarantee, in favor of the National Treasury, when requested by it.

Art. 15. It is the responsibility of financial institutions to provide information to the Ministry of Finance:

I - by the 10th business day of each month, regarding the volumes refinanced in the previous month, detailing the operations with data on:

a) funding source;

b) product option;

c) refinancing scheme option (term/grace period);

d) borrower (CPF or CGC and operation number);

e) initial balance of the extended operation;

f) equalizable value in the first month, in the case of FAT and PIS/PASEP;

II - certificates of good and regular application of resources;

III - authorization for debit in the Bank Reserves account of any differences found due to errors in the provision of information and/or calculation of negative equalization, if any.

Art. 16. The National Treasury Secretariat (STN), based on the information received, will take the necessary measures for the issuance of securities as well as adopt the budgetary measures necessary to comply with the provisions of Law 9,138/95.

Art. 17. An Evaluation Commission will be constituted, composed of representatives from the Economic Monitoring and National Treasury Secretariats of the Ministry of Finance, Agricultural Policy of the Ministry of Agriculture, Livestock and Supply, 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 propose solutions for omitted cases.

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

Art. 18. The Economic Monitoring and National Treasury Secretariats of the Ministry of Finance, and Agricultural Policy of the Ministry of Agriculture, Livestock and Supply, are authorized to jointly define the complementary measures necessary for the implementation of the provisions of this Resolution, to achieve its objectives, with the pertinent instructions to be disseminated to financial institutions by the Central Bank of Brazil.

Art. 19. This Resolution enters into force on the date of its publication.

Art. 20. Resolutions No. 2,207, of November 3, 1995, and No. 2,220, of December 6, 1995, are revoked.

Brasília, January 31, 1996

Gustavo Jorge Laboissière Loyola
President

TABLE I

BASIC MINIMUM PRICES

BENEFICIARIES - ALL

PRODUCT - Area of Coverage	PRICE (R$/kg)
Cotton in Lint - Brazil	1.4674
Irrigated Rice - Brazil	0.2004

Rain-fed Rice:

South, Southeast, Northeast and Center-West, except Mato Grosso	0.1475
North, except Tocantins	0.1344
Mato Grosso and Tocantins	0.1424

Corn (Types 1, 2 and 3):

North and Northeast, except south of Bahia	0.1160
South, Southeast, south of Bahia and Center-West, except Mato Grosso	0.1000
Mato Grosso and Tocantins	0.0950
Acre and Rondônia	0.0900

---

Soy:
-------------------------------------------------------------- South, Southeast and Center-West, except | Mato Grosso | 0.1357 ----------------------------------------|---------------------- Northeast, Mato Grosso, Pará and Tocantins | 0.1289 ----------------------------------------|---------------------- Acre and Rondônia | 0.1220 ----------------------------------------|---------------------- Wheat - Brazil | 0.1190 ---------------------------------------------------------------

                          TABLE II

                      PREMIUMS AND DISCOUNTS

            A - COTTON IN LINT - HARVEST 1995/96

         SCOPE: All states of the Federation

                    BENEFICIARIES - ALL  

-------------------------------------------------------------- TYPES | CLASSES

----------------------------------------------------
26/28	28/30	30/32	32/34
-------------------------------------------------------------- 4	1.1945	1.1145	0.9198

                          TABLE II

                      PREMIUMS AND DISCOUNTS

                  B - RICE - HARVEST 1995/96

                   I - CLASS: LONG FINE

         SCOPE: All states of the Federation

                    BENEFICIARIES - ALL  

----------------------------------------------------------- GRAINS WHOLE | TYPES

------------------------------------
1	2	3, 4 and 5
----------------------------------------------------------- 23	27	1.9132

                          TABLE II

                      PREMIUMS AND DISCOUNTS

                  B - RICE - HARVEST 1995/96

                     II - CLASS: LONG

SCOPE: South, Southeast, Northeast and Center-West, except Mato Grosso

                    BENEFICIARIES - ALL  

-------------------------------------------------------------- GRAINS WHOLE | TYPES

--------------------------------------
1 and 2	3	4 and 5
-------------------------------------------------------------- 23	27	1.1954

                          TABLE II

                      PREMIUMS AND DISCOUNTS

                  B - RICE - HARVEST 1995/96

                 III - CLASS: MEDIUM AND SHORT

SCOPE: South, Southeast, Northeast and Center-West, except Mato Grosso

                    BENEFICIARIES - ALL  

-------------------------------------------------------------- GRAINS WHOLE | TYPES

---------------------------------------
1 and 2	3	4 and 5
-------------------------------------------------------------- 23	27	1.1954

                          TABLE II

                      PREMIUMS AND DISCOUNTS

                  B - RICE - HARVEST 1995/96

                     IV - CLASS: LONG

       SCOPE: States of Mato Grosso and Tocantins

                    BENEFICIARIES - ALL  

-------------------------------------------------------------- GRAINS WHOLE | TYPES

---------------------------------------
1 and 2	3	4 and 5
-------------------------------------------------------------- 23	27	1.1949

                          TABLE II

                      PREMIUMS AND DISCOUNTS

                  B - RICE - HARVEST 1995/96

                  V - CLASS: MEDIUM AND SHORT

       SCOPE: States of Mato Grosso and Tocantins

                    BENEFICIARIES - ALL  

------------------------------------------------------------- GRAINS WHOLE | TYPES

--------------------------------------
1 and 2	3	4 and 5
------------------------------------------------------------- 23	27	1.1949

                          TABLE II

                      PREMIUMS AND DISCOUNTS

                  B - RICE - HARVEST 1995/96

                     VI - CLASS: LONG

            SCOPE: North, except Tocantins

                    BENEFICIARIES - ALL  

------------------------------------------------------------- GRAINS WHOLE | TYPES

--------------------------------------
1 and 2	3	4 and 5
------------------------------------------------------------- 23	27	1.1949

                          TABLE II

                      PREMIUMS AND DISCOUNTS

                 B - RICE - HARVEST 1995/96

                VII - CLASS: MEDIUM AND SHORT

           SCOPE: North, except Tocantins

                   BENEFICIARIES - ALL  

------------------------------------------------------------- GRAINS WHOLE | TYPES

--------------------------------------
1 and 2	3	4 and 5
------------------------------------------------------------- 23	27	1.1949

                         TABLE II

                     PREMIUMS AND DISCOUNTS

                 C - CORN - HARVEST 1995/96

---

   THE MINIMUM PRICE OF CORN DOES NOT UNDERGO PREMIUMS OR DISCOUNTS -------------------------------------------------------------

                 D - SOY - HARVEST 1995/96

---

     THE MINIMUM PRICE OF SOY DOES NOT UNDERGO PREMIUMS OR DISCOUNTS -------------------------------------------------------------

                  E - WHEAT - HARVEST 1995 ------------------------------------------ |           CLASSES - NET Kg ----------------------|------------------------------------------ PH       | TYPE |  COMMON    | INTERMEDIATE | SUPERIOR OR  
           |      |           |               | IMPROVER  

----------------------------------------------------------------- FROM 78 | 1 | 0.9520 | 0.9520 | 0.8264 FROM 75 TO 77.99 | 2 | 1.0000()| 1.0000() | 0.8686 FROM 72 TO 74.99 | 3 | 1.1121 | 1.1121 | 1.1121 -----------------------------------------------------------------

NOTE: To obtain the value in current currency in the country, divide the minimum price (*) by the index indicated for each type and class.

====================================================================

OBS: Re-transmitted due to the suppression of the expression "or other deliberate action" in arts. 3, item I, and 4.

NOTE: To obtain the value in current currency in the country, divide the minimum price (*) by the index indicated for each type and class.

====================================================================

OBS: Re-transmitted due to the suppression of the expression "or other deliberate action" in arts. 3, item I, and 4.