Resolution CMN No. 31 - Norms for Banks to Receive Time Deposits and Make Loans with Monetary Correction Clauses

RESOLUTION NO. 000031

THE CENTRAL BANK OF THE REPUBLIC OF BRAZIL, in accordance with the deliberation of the National Monetary Council, in session on this date, and based on arts. 4, item VI, and 9 of Law No. 4.595, of December 31, 1964, and art. 28 of Law No. 4.728, of July 14, 1965, and art. 2 of Decree-Law No. 13, of July 18, 1966,

RESOLVES:

I - The banks authorized under item II may receive from individuals, up to the limit to be fixed, fixed-term deposits and make loans, both with a monetary correction clause, observing the norms of this Resolution.

II - The authorization referred to in the previous item will only be granted to banks that faithfully observe the legal and regulatory provisions in force.

III - The deposits referred to in item I will observe the following norms:

a) minimum term of 180 days;

b) they will not be movable during the contracted term, and can only be extended for a minimum term of 180 days;

c) the monetary correction clause (art. 28 of Law No. 4.728, of 1965) must indicate a maximum correction as a percentage of the deposited amount; or,

d) alternatively, the deposit may be contracted with monetary correction in a fixed amount, observing, in this case, the provisions of item VII;

e) the maximum interest that may be credited are the following:

from 6 to less than 9 months ...... 5% p.a.

from 9 to less than 12 months ...... 6% p.a.

from 12 months or more ...... 7% p.a.

IV - The deposits referred to in the previous item are not subject to the compulsory reserves provided for in art. 4, item XIV, of Law No. 4.595, of December 31, 1964.

V - Banks whose capital plus reserves exceeds Cr$10 billion, with prior authorization, may issue, in favor of their respective depositors, "Bank Deposit Certificates", registered, under the terms of art. 30 and its paragraphs of Law No. 4.728, of 1965, with no certificate having a value lower than Cr$1,000,000, nor be acquired by a financial institution.

VI - The banks authorized under item II may carry out loan operations with a monetary correction clause (art. 28 of Law No. 4.728, of July 14, 1965), observing the following conditions:

a) minimum term of 180 days;

b) the monetary correction clause will comply with the provisions of item III, items "c" and "d" of this Resolution;

c) interest and commissions will not exceed 12% p.a., with the collection of other charges prohibited, except for expenses, at their exact value;

d) the total of the loans referred to in this item may not exceed the amount of deposits referred to in item III.

VII - The nominal differences resulting from the monetary correction of the deposits and loans indicated in this Resolution do not constitute taxable income for the purposes of income tax (Law No. 4.728, art. 28, § 3rd), except in the case of fixed monetary correction (item III, "d"), if the contracted correction, plus the interest rate, is higher than the maximum percentage of correction resulting from the application of the correction coefficients fixed by the National Council of Economy. In this case, the excess of the correction will be considered interest, and will be subject to the incidence of income tax, except for deposits made until December 31, 1966, which are exempt from income tax (art. 2 of Decree-Law No. 13 of July 18, 1966).

VIII - Non-compliance with the provisions of this Resolution will subject the financial institution to the cancellation of authorization in accordance with item II, without prejudice to other sanctions provided by law.

Rio de Janeiro-GB, July 30, 1966

CENTRAL BANK OF THE REPUBLIC OF BRAZIL

Dênio Nogueira
President