Resolution CMN No. 3224 on Mandatory Application Requirements for Rural Credit, Interbank Deposits Linked to Rural Credit (DIR), Pronaf Aptitude Declaration (DAP), and Proagro Deadlines

RESOLUTION NO. 003224

Dispenses with the mandatory application requirements for rural credit under the protection of mandatory resources (MCR 6-2) and rural savings (MCR 6-4), regarding Interbank Deposits Linked to Rural Credit (DIR), regarding the Aptitude Declaration for Pronaf (DAP) of Pronaf, and deadlines for Proagro.

THE CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law 4,595 of December 31, 1964, makes public that the MONETARY COUNCIL, in a session held on July 29, 2004, considering the provisions of Articles 4, item VI, of the aforementioned law, 4, 14, 15, item I, letter "l", and 21 of Law 4,829 of November 5, 1965, and 81, item III, and 87, § 1, of Law 8,171 of January 17, 1991,

RESOLVED:

Article 1. Establish that up to 35% (thirty-five percent) of the mandatory application resources of rural savings (MCR 6-4) may be applied, in the period from July 1, 2004 to June 30, 2005, in rural credit operations formalized according to the conditions defined for mandatory resources (MCR 6-2), whose balances will be computed by multiplying by the weighting factor 1.82 (one and eighty-two hundredths), for the purpose of verifying compliance with the mandatory application requirement of rural savings.

Article 2. The possibility of applying the weighting factor 2 (two) remains, until the date of settlement or maturity of operations contracted in the period from July 1, 2003 to June 30, 2004, under the protection of Article 2, § 2, of Resolution 3,103 of June 25, 2003, as amended by Resolution 3,145 of November 27, 2003.

Article 3. The schedule for achieving the minimum application percentage of resources captured in rural savings deposits (MCR 6-4) is altered, for institutions that already operated with the aforementioned capture modality on March 31, 2004:

I - 50% (fifty percent), from September 1, 2004;

II - 55% (fifty-five percent), from August 1, 2005;

III - 60% (sixty percent), from July 1, 2006;

IV - 65% (sixty-five percent), from July 1, 2007.

Article 4. The verification of compliance with the mandatory application requirements of mandatory resources (MCR 6-2) and rural savings (MCR 6-4) must, based on the respective daily average of the requirement and applications of the period, be carried out:

I - on the fifth business day of the month of September 2004, referring to the adjustment period from September 1, 2003 to August 31, 2004;

II - until the twentieth day of the month of August 2005, referring to the adjustment period from September 1, 2004 to July 31, 2005;

III - until the twentieth day of the month of July 2006, referring to the adjustment period from August 1, 2005 to June 30, 2006;

IV - until the twentieth day of the month of July of each year, from 2007, referring to the adjustment period from July 1 of the previous year to June 30 of the year in which compliance with the requirement is verified.

Article 5. A minimum of 8% (eight percent) of the mandatory resources (MCR 6-2) requirement must be applied in operations with farmers classified in groups "D" and "E" of the National Program for Strengthening Family Agriculture (Pronaf), observed that:

I - balances of renegotiated operations under the protection of Resolutions 2,238 of January 31, 1996, and 2,471 of February 26, 1998, are excluded from the calculation base of the 8% (eight percent) sub-requirement;

II - the application of resources from the sub-requirement referred to in this article must observe the following schedule:

a) 4% (four percent), minimum, in the period from September to November 2004;

b) 6% (six percent), minimum, in the period from December 2004 to February 2005;

c) 8% (eight percent), minimum, from March 2005;

III - for the purpose of compliance with the mandatory application requirement of mandatory resources (MCR 6-2), the value corresponding to the balance of operations contracted, from the date of entry into force of this resolution, with farmers from group "D" must be computed by multiplying by the weighting factor 2 (two) and with farmers from group "E", by multiplying by the factor of 1.5 (one and five tenths);

IV - the weighting factors cited in item III will not be computed for compliance with the 8% (eight percent) sub-requirement of Pronaf.

Article 6. The Interbank Deposit Linked to Rural Credit specific for compliance with the 8% (eight percent) sub-requirement of Pronaf (DIR - Pronaf) is instituted, in case the bank chooses not to apply partially or totally the resources due, observing the following conditions:

I - it must be made with a minimum term of eight months;

II - the depositing bank may apply the weighting factor of 1.8 (one and eight tenths) on the value corresponding to the balance of applications under the protection of resources from DIR - Pronaf, for the purpose of compliance with the requirement in mandatory resources (MCR 6-2);

III - the financial institution that captures DIR - Pronaf cannot appear as a depositor of this modality in the same verification period of compliance with the requirement;

IV - the limitation referred to in MCR 6-1-5 does not apply to DIR - Pronaf;

V - it must also be registered in the Common Register of Rural Operations (Recor), observing a term of up to 10 days for registration, counted from its realization.

Article 7. Exceptionally, for operations carried out under the protection of mandatory resources (MCR 6-2), the following adjustments must be observed in the operational rules of Pronaf:

I - granting of financing under the modality of rotational credit, under the protection of Pronaf, observing the following conditions:

a) purposes: agricultural and livestock operating expenses, thus considered according to the predominance of the destination of resources, based on a simplified budget covering the activities developed by the producer, admitting the inclusion of funds for meeting small expenses conceptualized as investment and maintenance of the beneficiary and his family, in the form of MCR 10-4-14;

b) term: maximum of two years, in harmony with the cycles of the assisted activities, which may be renewed;

c) disbursement or use: free movement of credit by the beneficiary, admitting use in a single installment and reuse;

d) amortizations during the operation: partial or total, at the beneficiary's discretion, by deposit;

II - simplification of procedures regarding the Aptitude Declaration for Pronaf (DAP), the financial institution must:

a) for the family farmer who presents a copy of the duly filled DAP, containing his classification in a group under the protection of Pronaf, continue the procedures for formalizing the respective credit operation;

b) for the family farmer who does not present the DAP form, but informs that it is registered in the database of the Family Agriculture Secretariat of the Ministry of Agrarian Development (MDA/SAF), containing his classification in a group under the protection of Pronaf, add the DAP identification number and continue the procedures for formalizing the respective credit operation;

c) for the family farmer who does not present the DAP, duly filled, nor has it registered in the MDA/SAF database, collect, so that procedures for formalizing the credit operation can continue:

1. specific declaration, under his responsibility, that meets the requirements for classification as a family farmer;

2. the data necessary for the identification of the group of access to credit operations under the protection of Pronaf.

Sole Paragraph. For the operation formalized in the form of item II, letter "c", MDA/SAF, from the registration of data in Recor, will provide for the issuance of the respective DAP.

Article 8. The percentage of mandatory resources (MCR 6-2) that must be applied to credits up to R$60,000.00 (sixty thousand reais) is raised from 20% (twenty percent) to 28% (twenty-eight percent), making adjustments in MCR 6-2.

Article 9. The following are the deadlines contained in the regulation of the Agricultural Activity Guarantee Program (Proagro):

I - from MCR 16-1-15: up to ten days;

II - from MCR 16-3-10: up to three days.

Article 10. Consequently, with a view to consolidating rural credit norms and the provisions contained in this resolution, the necessary sheets are attached to update sections of MCR, whose regulatory bases now become this normative.

Article 11. This resolution enters into force on the date of its publication.

ART. 12. ARTICLES 2 AND 3 OF RESOLUTION 3,188 OF MARCH 29, 2004, AND RESOLUTIONS 2,103 OF AUGUST 31, 1994, 2,181, OF JULY 20, 1995, 2,184, OF JULY 24, 1995, 2,273, OF APRIL 23, 1996, 2,294, OF JUNE 28, 1996, 2,321, OF OCTOBER 9, 1996, 2,370, OF APRIL 3, 1997, 2,403, OF JUNE 25, 1997, 2,422, OF SEPTEMBER 10, 1997, 2,427, OF OCTOBER 1, 1997, 2,495, OF MAY 7, 1998, 2,530, OF JULY 30, 1998, 2,557, OF SEPTEMBER 29, 1998, 3,037, OF OCTOBER 30, 2002, 3,062, OF JANUARY 30, 2003, 3,098, OF JUNE 25, 2003, 3,103, OF JUNE 25, 2003, 3,127, OF OCTOBER 30, 2003, AND 3,205, OF JUNE 22, 2004 ARE REVOKED.

Brasília, July 29, 2004

Henrique de Campos Meirelles
President

TITLE: RURAL CREDIT
CHAPTER: Basic Conditions - 2
SECTION: Supervision - 7

1 - Supervision of rural credit is mandatory.

2 - Supervision must be carried out:
a) in agricultural operating credit: at least once during the operation, before the time expected for the release of the last installment or up to 60 (sixty) days after the use of credit, in the case of release in a single installment; b) in other financing: up to 60 (sixty) days after each use, to prove the realization of works, services, or purchases.

3 - It is the responsibility of the supervisor to verify the correct application of budgetary resources, the development of financed activities, and the situation of guarantees, if any.

4 - In the event of the discovery of criminal offenses or tax fraud, the financial institution must communicate the facts to the Central Bank of Brazil, forwarding the documents proving the irregularities found, with a view to adopting the appropriate measures before the Public Ministry or tax authorities.

5 - Any omission or negligence in verifying the correct application of budgetary resources will subject the offender to regulatory sanctions.

6 - The result of the supervision must be recorded in a specific report, with the technical advisory at the portfolio level noting in a specific field or in an attached document, part of the report, the measures adopted by the agency to remedy any irregularities found.

7 - Supervision can be carried out by a member of the financial institution itself or by a natural or legal person specialized, through an agreement.

8 - Supervision is prohibited:
a) by a natural or legal person contracted directly by the borrower to provide him with technical assistance at the company level; b) by a company in which the borrower participates directly or indirectly.

9 - Sampling supervision is permitted for credits of value not exceeding R$60,000.00 (sixty thousand reais), without prejudice to indirect controls.

10 - Sampling consists of directly supervising at least 10% (ten percent) of the credits indicated in the previous item, approved in each agency in the last 12 (twelve) months.

11 - The central or regional body of the financial institution must select the credits for sampling under criteria of broad diversification of borrowers, purposes, and regions.

12 - Direct supervision of all credits in force approved to the same borrower is required, when the sum of their values exceeds R$60,000.00 (sixty thousand reais).

13 - It is the responsibility of the cooperative benefiting from credit for pass-through to supervise sub-loans, and the financier may also exercise it, if he deems it convenient.

14 - Measuring the crop or pasture is mandatory as part of supervision, when the area of a culture financed by the same financial institution exceeds 1,000 (one thousand) hectares on the same property, unless the financing is exclusively for the isolated purchase of agricultural pesticides and their application.

15 - The provision in the previous item does not prejudice the requirement for measurement resulting from a specific norm of the Agricultural Activity Guarantee Program (Proagro).

16 - Measurement must be carried out in sufficient time to determine the extent of the planted area.

17 - Proof of an area not exceeding 1,000 (one thousand) hectares must be carried out as part of normal supervision services, under routine methods.

18 - The Central Bank of Brazil may require measurement of crops or pastures whenever, in its judgment, the analysis of data from the Common Register of Rural Operations (Recor) indicates this convenience.

19 - Spreadsheets, maps, sketches, or similar documents, with characterization of reference points and proof of the methodology adopted in measurement, must be presented whenever the measured area exceeds 1,000 (one thousand) hectares.

20 - Measurement can be executed by a service provider company, a professional contracted specifically for the purpose, or from the financial institution's own staff.

21 - Measurement by a professional from the own staff of the pass-through cooperative is admissible, for the purpose of supervising sub-loans.

22 - Except in Proagro expert opinions, the measurement of crops or pastures constitutes a supervision service, with expenses borne by the financier.

23 - In the case of measurement requested by the Central Bank of Brazil, its cost must be shared among financial institutions, proportionally to the financed area in each.

24 - The borrower may be required to reimburse expenses incurred with supervision or measurement of crops and pastures, in the case of:
a) supervision or measurement frustrated by his fault; b) extraordinary supervision or measurement, carried out due to irregularity of his conduct; c) supervision or measurement in which a reduction of more than 20% (twenty percent) in the planted area is proven, compared to that declared in the credit instrument.

25 - The Central Bank of Brazil is authorized to supervise rural credit operations carried out by financial institutions, including with borrowers, and the credit instrument must contain an explicit clause to this effect.

26 - The financial institution must designate a supervisor to conduct inspections at the rural property level, together with agents of the Central Bank of Brazil, without charge to the latter, whenever such designation is requested by the supervision of that Autarchy.

27 - The Central Bank of Brazil waives interest of 12% a.a. (twelve percent per year) and update based on the Reference Rate (TR) on collections required from financial institutions in administrative processes and similar, regarding rural credit, when its return occurs due to the provision of an appealed resource.

TITLE: RURAL CREDIT
CHAPTER: Operations - 3
SECTION: Accounting and Control - 5
------------------------------------------------------------------- 1 - Rural credit must have distinct registration in the financial institution's accounting, according to its characteristics.

2 - The accounting of the Advanced Post movement is linked to that of the agency to which it is subordinate.

3 - The disqualified operation must be excluded from the title "Rural Financing" when it loses the characteristics of rural credit.

4 - It is prohibited to account for the discount of commercial bills of exchange and other general credit titles in the title "Rural Financing", even if the predominant activity of the discounter is agro-pastoral.

5 - Rural credit financing granted must be registered in the Common Register of Rural Operations (Recor) system, which aims to:
a) conduct statistical surveys of rural credit; b) avoid parallelism of credit assistance; c) enable better monitoring of rural credit operations; d) enable better monitoring and control of operations classified under the Agricultural Activity Guarantee Program (Proagro).

6 - The information intended for operation registration in the Recor system is provided based on the data requested in document 5 of this manual, recorded according to the layout and technical specifications defined in the PDIC600 transaction of Sisbacen (System Acronym = COR; Document Code = 585; Layout Code = LCOR0001, LCOR0002, and LCOR0003). (*)

7 - The information must be sent via the PSTAW10 application, intended for the exchange of information between the Central Bank of Brazil and financial institutions, as provided for in Circular Letter 2847 of 13/4/1999, and Communication 7474 of 24/4/2000, available for download on the Autarchy's internet page at www.bcb.gov.br. () () 8 - The Recor system admits, at most, 50 (fifty) enterprises per credit instrument.

9 - The number-codes relating to the Recor tables are obtained in the PCOR910 transaction of Sisbacen, by accessing the following sub-transactions:
a) TCOR001, for the code of the beneficiary category of the credit; b) TCOR002, for the code of the program or credit line/source of resources; c) TCOR003, for the code of the enterprise; d) TCOR004, for the code of the activity/purpose.

10 - The codes relating to the municipality registration (Cadmu) are obtained in the PCIF700 transaction, option 2 - dependencies, followed by sub-option 7 - consultation to the municipality registration of Sisbacen.

11 - It is the responsibility of the Information Management Department of the Financial System (Defin), for the purposes of the Recor system:
a) include new enterprise codes upon written request from the financial institution; b) code newly created municipalities, based on information obtained by presenting a copy of the state law that created the municipality published in the State Official Gazette.

12 - Registration in Recor must be carried out within a maximum term of 10 (ten) days, counted from the date of signing the credit instrument, or from the adherence term to Proagro, in the case of non-financed enterprise. (*)

13 - If there is no contracting from the first to the last day of the month, the financial institution must communicate this fact to Defin by the 10th (ten) day of the following month.

14 - The financial institution that grants pass-through credit is responsible for registering sub-loans in Recor, as well as for the fidelity of the data sent by the cooperative. () () 15 - Modifications of Recor records, due to incorrect registration or alteration of contractual conditions, with or without formalization of an addendum, must be carried out by the financial institutions themselves using the layout defined in the PDIC600 transaction of Sisbacen (record type "c").

16 - The exclusion of any operation from Recor must be carried out solely by Defin, upon specific request from the financial institution, containing "Bacen Reference No.", "CNPJ/Agency/DV", and justification for the exclusion.

17 - Operation exclusion is admitted only in the case of improper registration, duplication of operation, or withdrawal of financing, verified before the release of the first installment of the credit.

18 - Modification of record in Recor is not applicable due to extension of the debt maturity term.

19 - The financial institution must maintain the rural financing dossier in the operating agency or in a centralizing unit, for the purpose of inspection by the Central Bank of Brazil.

20 - It is admitted that the original document relating to the operation be provisionally replaced in the dossier by a copy, in the event of its withdrawal for any measure by the financial institution.

21 - Documentation related to a settled rural loan, including a copy of the credit instrument and the registration form that served as the basis for approving the operation, must be kept at the operating agency or the centralizing unit for a period of 1 (one) year, for the purpose of possible inspection by the Central Bank of Brazil, without prejudice to other special provisions regarding this matter.

22 - The maintenance, in the form of microfilm, of documentation related to a settled rural loan is permitted, provided that the provisions of the current federal legislation on microfilming are observed, as well as those of Resolution 913, of 5/4/1984, which is covered by MNI 6-5.

23 - In discount operations, the retention of invoices linked to the credit is waived, and the financial institution is responsible for:
a) requiring the discounter to provide a detailed list of invoices; b) verifying and authenticating the list; c) stamping the invoices, characterizing their link to the credit, before returning them to the discounter.

24 - The failure to forward to the Central Bank of Brazil the information provided for in this section, within the established deadline, subjects the offender to regulatory penalties.

TITLE: RURAL CREDIT
CHAPTER: Resources - 6
SECTION: General Provisions - 1
------------------------------------------------------------------- 1 - Rural credit may be granted with resources:
a) controlled, thus considered:
I - the mandatory resource requirement, as provided for in section 6-2; II - Official Credit Operations under the supervision of the Ministry of Finance; III - rural savings, as provided for in section 6-4, of the Worker Protection Fund (FAT) and of the Off-Market Investment Fund, when applied in subsidized operations by the Union in the form of financial charge equalization; IV - others that may be specified by the National Monetary Council; b) non-controlled, thus considered:
I - the mandatory requirement and free rural savings, as provided for in section 6-4; II - from funds, programs, and specific lines; III - free.

2 - The financial institution must indicate in the credit instrument the source of the resources used in the financing, observing the classification of the previous item, registering the name of the fund, program, or specific line, if applicable.

3 - Financing supported by controlled resources of rural credit may be granted directly to rural producers or passed on through their cooperatives.

4 - The use of Interbank Deposit Linked to Rural Credit (DIR) is admitted as a complementary instrument for applications in the rural sector.

5 - The relevant regulation regarding interbank deposits applies to DIR, except regarding limits, which are subject only to the excess of applications by the depositary institution under the conditions established for mandatory resources.

6 - The use of Interbank Deposit Linked to Rural Credit specific for compliance with the 8% (eight percent) sub-requirement of the National Program for Strengthening Family Agriculture (Pronaf), known as DIR-Pronaf, as provided for in section 6-2, is admitted, if the bank chooses not to apply partially or totally the resources due, observing the following conditions: (*) a) it must be made with a minimum term of 8 (eight) months; b) the depositary bank may apply a weighting factor of 1.8 (one and eight tenths) on the value corresponding to the balance of applications supported by resources from DIR - Pronaf, for the purpose of fulfilling the mandatory resource requirement, as provided for in section 6-2; c) the financial institution that collects DIR-Pronaf cannot appear as a depositor of this modality in the same verification period for compliance with the requirement; d) DIR-Pronaf is not subject to the limit of excess of applications by the depositary institution established in the previous item; e) it must also be registered in the Common Register of Rural Operations (Recor), observing a period of up to 10 (ten) days for registration, counted from its realization.

7 - The transfer of debt supported by mandatory resources or Official Credit Operations is prohibited, except when:
a) it is essential for the recovery of credit or the preservation of the assisted enterprise; b) it results from the division of rural property, donation, inventory, judicial separation of spouses, or divorce; c) the assuming party is a company in which the original debtor participates predominantly.

8 - When the sole basis is the purpose of recovering credit or preserving the assisted enterprise, the debt transfer provided for in the previous item is subject to the interest rates being raised to the levels current for operations of equal nature and purpose at the date of its implementation.

9 - It is up to the financial institution, in any hypothesis and under specific justification, to decide on the request for debt transfer.

10 - The definition of norms, procedures, and operational conditions for the application of resources from regional financing constitutional funds is the responsibility of the financial institutions managing the resources.

11 - Regardless of the source of resources, their application in the agricultural sector is only considered rural credit when the norms established in this manual are observed, except as provided in the previous item.

12 - Rural insurance may be accepted as collateral for rural financing.

13 - Applications with resources managed by the National Bank for Economic and Social Development (BNDES), intended for financing agricultural and livestock activities and formalized with beneficiaries of rural credit through a contract or credit instrument provided for in Decree-Law 167, of 14/2/1967, are considered as rural credit, for all purposes.

TITLE: RURAL CREDIT
CHAPTER: Resources - 6
SECTION: Mandatory - 2
------------------------------------------------------------------- 1 - Mandatory resources are defined as those resulting from the requirement for applications in rural credit by financial institutions, as established in this section.

2 - Financial institutions are required to maintain 25% (twenty-five percent) of the daily average balance of accounting items for demand resources subject to compulsory collection in rural credit applications.

3 - At least 28% (twenty-eight percent) of mandatory resources must be applied in credits with a value up to R$60,000.00 (sixty thousand reais), admitted, for compliance with this percentage, to compute: (*) a) the balances of operations:
I - contracted under the National Program for Strengthening Family Agriculture (Pronaf), or the Rural Employment Generation Program (Proger Rural); II - intended for financing operating expenses for broiler poultry farming and swine farming operated under a partnership regime, provided for in item 3-2-9; b) the credits referred to in clause "a" of item 8.

4 - At least 8% (eight percent) of mandatory resources must be applied in operations with farmers classified in Groups "D" and "E" of Pronaf, observing: (*) a) that, for the calculation of the base for the 8% (eight percent) direction, the balances of renegotiated operations under Resolutions 2238, of 31/1/1996, and 2471, of 26/2/1998, are excluded; b) the following schedule and minimum percentages:
I - 4% (four percent), in the period from September to November 2004; II - 6% (six percent), in the period from December 2004 to February 2005; III - 8% (eight percent), from March 2005 onwards.

5 - Up to 5% (five percent) of mandatory resources, respecting the limit of R$10,000,000.00 (ten million reais), as provided for in item 3-4-3, may be applied in discount operations, as provided for in clause "b" of item 2 of section 3-4, and in agricultural operating credits, regardless of the values per borrower/producer established in item 3-2-5.

6 - The application of the resources provided for in the previous item in operating credits for processing or industrialization is prohibited.

7 - Investment banks, development banks, Caixa Economica Federal, the National Bank for Economic and Social Development (BNDES), credit cooperatives, and credit, financing, and investment companies are not subject to the mandatory requirement.

8 - Mandatory resources may also be applied in credits intended for:
a) cooperatives, for the purchase of inputs for supply to members, respecting the average limit of R$30,000.00 (thirty thousand reais) per active member and the supply cap of R$60,000.00 (sixty thousand reais) per beneficiary; b) advances to producers and their cooperatives, as pre-operating costs, observing the limits and other conditions established for operating credits or for the purchase of inputs for supply to members, as per section 5-2, depending on the case, observing that:
I - they must be transformed into agricultural operating, livestock operating, or input purchase for supply to members operations, depending on the case, within 90 (ninety) days, under penalty of disqualification from the list of rural financing from its origin; II - they do not require prior identification of the crop to which they are destined, except when, in the case of producers, of a value higher than R$60,000.00 (sixty thousand reais).

9 - Regarding the mandatory requirement provided for in this section, it must be observed that: (*) a) for the calculation of the daily average balance of accounting items for demand resources subject to compulsory collection and applications in rural credit, only business days are considered; b) the mandatory requirement calculation period starts on the first business day of the month immediately preceding the start of the adjustment period and ends on the last business day of the month immediately preceding the end of the respective adjustment period; c) the adjustment period is understood as the period in which the mandatory requirement calculated in the calculation period must be fulfilled; d) the adjustment period starts on the first business day of the month immediately following the start of the calculation period and ends on the last business day of the month immediately following the end of the calculation period; e) for compliance with the mandatory requirement, applications are computed by the daily average balance of the operations.

10 - The verification of compliance with the mandatory requirement for applications in rural credit must be carried out:
a) on the fifth business day of September 2004, referring to the period:
I - calculation, from 1/8/2003 to 31/7/2004;
II - adjustment, from 1/9/2003 to 31/8/2004; b) by the twentieth day of August 2005, referring to the period:
I - calculation, from 1/8/2004 to 30/6/2005;
II - adjustment, from 1/9/2004 to 31/7/2005; c) by the twentieth day of July 2006, referring to the period:
I - calculation, from 1/7/2005 to 31/5/2006;
II - adjustment, from 1/8/2005 to 30/6/2006; d) by the twentieth day of July of each year, from 2007 onwards, referring to the period:
I - calculation, from June 1 of the previous year to May 31 of the year in which compliance with the mandatory requirement is verified; II - adjustment, from July 1 of the previous year to June 30 of the year in which compliance with the mandatory requirement is verified.

11 - For the purpose of verifying compliance with the mandatory requirement, the value corresponding to the average of the daily balances of operations must be computed by multiplying them by the following weighting factors:
a) investment operations:
I - related to soil correction or recovery: 1.2 (one and two tenths); II - other operations: 1.1 (one and one tenth); b) operations under the Rural Employment and Income Generation Program (Proger Rural): 1.1 (one and one tenth); c) OPERATIONS UNDER PRONAF, CONTRACTED BY 3/8/2004: () I - Group "D": 1.45 (one and forty-five hundredths); II - Group "E": 1.15 (one and fifteen hundredths); d) OPERATIONS UNDER PRONAF, CONTRACTED AFTER 3/8/2004: () I - Group "D": 2 (two); II - Group "E": 1.5 (one and five tenths); e) operations under Interbank Deposit Linked to Rural Credit specific for Pronaf (DIR - Pronaf): 1.8 (one and eight tenths). (*)

12 - The following may also be computed for satisfaction of the mandatory requirement provided for in this section:
a) capitalized interest in rural credit operations carried out with resources from development programs, transferred by the National Treasury (TN), provided they are backed by resources from financial institutions; b) by the depositary financial institution, regardless of proof of the established directions, which are the responsibility of the depositary institution, the value of the Interbank Deposit Linked to Rural Credit (DIR), with a minimum term of 60 (sixty) days, its negotiation in the secondary market being prohibited, and DIR-Pronaf, specified in item 6-1-6; c) the balances of rural financing subject to subsidy via financial charge equalization by the TN, based on Law 8427, of 27/5/1992, amended by Law 9848, of 26/10/1999, through their exclusion from the calculation base of the equalization; d) the value of the monthly average of the daily balances of titles issued by the TN for the payment of debts of the Agricultural Activity Guarantee Program (Proagro), of the mandatory resources that backed the respective operations, excluding from the monthly average calculation the values of titles redeemed by the TN, freely traded in the market, and those used in the National Privatization Program (PND).

13 - The following cannot be computed for satisfaction of the mandatory requirement:
a) operations or installments of credit whose financial charges have been adjusted due to borrower default, from the day following the default; b) the weighting factors cited in clauses "c", "d", and "e" of item 11, for the 8% (eight percent) mandatory requirement of Pronaf. (*)

14 - It is permitted to pay to the Central Bank of Brazil a value based on the forecast of deficiency in the year, on the first business day of August, which will be retained until the first business day of September, without any remuneration, and will be computed for satisfaction of the mandatory requirement.

15 - The financial institution that incurs a deficiency in applications is subject to payment to the Central Bank of Brazil, on the date of verification:
a) the value of the calculated deficiency, which will be retained until the date of the subsequent verification, without any remuneration; or b) a fine of 40% (forty percent), calculated on the value of the calculated deficiency.

16 - It is up to the financial institution to initiate payment of the fine, as well as the initiation of payment of the calculated deficiency value, using a specific message from the Brazilian Payments System Message Catalog, on the due date, regardless of any notice or collection by the Central Bank of Brazil.

17 - The value to be paid must be informed by the financial institution to the Proagro Technical Group (GTPRO) of the Central Bank of Brazil, by 16:00 (fourteen hundred hours) on the day scheduled for payment, for the purpose of timely debit in the Bank Reserves account.

18 - Late payment of the fine will have an addition of the pecuniary sanctions provided for in this manual, from the date they were due until actual payment.

19 - The general norms of rural credit that do not conflict with the special provisions of this section apply to operations supported by mandatory resources.

TITLE: RURAL CREDIT
CHAPTER: Resources - 6
SECTION: Rural Savings - 4 (*)
------------------------------------------------------------------- 1 - Resources collected in rural savings deposits by Banco da Amazonia S.A., Banco do Brasil S.A., Banco do Nordeste do Brasil S.A., and cooperative banks, in accordance with the norms applicable to savings deposits of the Brazilian Savings and Loan System (SBPE), are subject to the following direction:
a) 20% (twenty percent), in mandatory deposit at the Central Bank of Brazil, without prejudice to compliance with the additional 10% deposit provided for in item 15; b) 40% (forty percent), becoming at least 65% (sixty-five percent) from 1/9/2004, observing the provisions of item 4:
I - in rural credit operations;
II - in the commercialization, processing, or industrialization of products of agricultural or livestock origin or inputs used in that activity; III - in the direct purchase, from its issuer, of Rural Product Certificates (CPR); c) the remainder in operations permitted to the aforementioned institutions, according to current regulation.

2 - Up to 35% (thirty-five percent) of the mandatory requirement for rural savings, as provided for in clause "b" of the previous item, may be applied, in the period from 1/7/2004 to 30/6/2005, in rural credit operations formalized under the conditions defined for mandatory resources, as provided for in section 6-2, whose balances must be computed by multiplying by the weighting factor 1.82 (one and eighty-two hundredths), for the purpose of verifying compliance with the mandatory requirement for application of rural savings.

3 - The provision of the previous item will be without prejudice to the possibility of applying the weighting factor 2 (two), until the date of settlement or maturity of operations contracted in the period from 1/7/2003 to 30/6/2004, under Article 2, § 2, of Resolution 3103, of 25/6/2003, with the wording given by Resolution 3145, of 27/11/2003.

4 - Regarding the provision of item 1, it must be observed:
a) at least 60% (sixty percent) of the mandatory requirement percentage established in clause "b" must be applied in rural credit operations or CPR, observing that, in the specific case of rural savings of Banco do Brasil S.A., the daily average balance of values applied in CPR cannot exceed R$1,000,000,000.00 (one billion reais) in each annual adjustment period; b) for institutions authorized as of 31/3/2004 to collect rural savings deposits, the following schedule for adaptation to the percentage provided for in clause "b":
I - 50% (fifty percent), from 1/9/2004;
II - 55% (fifty-five percent), from 1/8/2005;
III - 60% (sixty percent), from 1/7/2006;
IV - 65% (sixty-five percent), from 1/7/2007; c) cooperative banks must comply with the mandatory requirement for applications, with the alteration introduced for validity from 1/9/2004, after completing six months of collection of rural savings deposits.

5 - The contracting of correspondents by cooperative banks, for the purpose of collecting rural savings deposits, is limited to rural credit cooperatives and those with free admission of members.

6 - The financial institutions cited in item 1 must comply with the mandatory requirement, represented by the daily average balance of applications in the purposes and limits established in clause "b" of item 1, observing the periods provided for in item 7 and the following procedures:
a) only business days are considered in the calculation of the daily average balance of deposits and applications; b) the mandatory requirement calculation period starts on the first business day of the month immediately preceding the start of the adjustment period and ends on the last business day of the month immediately preceding the end of the adjustment period; c) the adjustment period is understood as the period in which the mandatory requirement calculated in the calculation period must be fulfilled; d) the adjustment period starts on the first business day of the month immediately following the start of the calculation period and ends on the last business day of the month immediately following the end of the calculation period; e) for compliance with the mandatory requirement, applications are computed by the daily average balance of the operations.

7 - The verification of compliance with the mandatory requirement for applications in rural credit must be carried out:
a) on the fifth business day of September 2004, referring to the period:
I - calculation, from 1/8/2003 to 31/7/2004;
II - adjustment, from 1/9/2003 to 31/8/2004; b) by the twentieth day of August 2005, referring to the period:
I - calculation, from 1/8/2004 to 30/6/2005;
II - adjustment, from 1/9/2004 to 31/7/2005; c) by the twentieth day of July 2006, referring to the period:
I - calculation, from 1/7/2005 to 31/5/2006;
II - adjustment, from 1/8/2005 to 30/6/2006; d) by the twentieth day of July of each year, from 2007 onwards, referring to the period:
I - calculation, from June 1 of the previous year to May 31 of the year in which compliance with the mandatory requirement is verified; II - adjustment, from July 1 of the previous year to June 30 of the year in which compliance with the mandatory requirement is verified.

8 - It is permitted to pay to the Central Bank of Brazil a value based on the forecast of deficiency in the periods cited in the previous item, on the first business day of the month preceding the month of verification of the mandatory requirement, which will be retained until the first business day of the month of the respective verification and will be computed for satisfaction of the mandatory requirement.

9 - The financial institution that incurs a deficiency in applications is subject to payment to the Central Bank of Brazil, on the date of verification:
a) of the value of the deficiency calculated, which will be retained until the date of the subsequent verification or until its recomposition is proven; or b) of a fine of 20% (twenty percent), calculated on the value of the deficiency calculated.

10 - The amounts paid to the Central Bank of Brazil, as a provision for deficiency or for calculated deficiency, are updated according to the basic remuneration of savings deposits.

11 - It is the responsibility of the financial institution to initiate the payment of the value of the calculated deficiency or the payment of the fine, by using a specific message from the Catalog of Messages of the Brazilian Payments System, on the due date, regardless of any notice or collection by the Central Bank of Brazil.

12 - The payment of the deficiency or the late payment of the fine is subject to the addition of the monetary sanctions provided for in this manual, from the date it is due until its effective execution.

13 - The amount to be paid must be reported by the financial institution to the Central Bank of Brazil in the form and conditions to be established by it.

14 - The financial institutions cited in item 1 may transfer resources from the exigibility referred to in item 1, letter "b", for application by other financial institutions. The transfer instrument must establish that the operations must be formalized with a clause for updating by the basic remuneration applied in the collection of savings deposits.

15 - The institutions cited in item 1 must pay to the Central Bank of Brazil an additional mandatory reserve of 10% (ten percent) on the resources collected in rural savings deposits, in current currency. The collected resources will be remunerated by the Selic Rate, as provided for in Circular 2900 of 6/24/1999, with the modification introduced by Circular 3119 of 4/18/2002.

16 - Rural operations with uncontrolled rural savings resources are subject to the special provisions established in section 6-3, for applications with free resources, without prejudice to the observance of legal provisions that determine their update by the basic remuneration applied in the collection of deposits.

17 - The general rules of rural credit that do not conflict with the special provisions contained in this section apply to operations carried out based on the resources referred to in this section.

TITLE: RURAL CREDIT
CHAPTER: Agricultural Activity Guarantee Program (Proagro)
SECTION: Preliminary Provisions - 1
------------------------------------------------------------------- 1 - The Agricultural Activity Guarantee Program (Proagro) has the following objectives:
a) exonerate the beneficiary from fulfilling financial obligations in rural credit operations for working capital, in the case of losses of revenues as a result of the causes provided for in this chapter; b) indemnify the beneficiary's own resources used in rural working capital, including in an unfunded enterprise, in the case of losses of revenues as a result of the causes provided for in this chapter; c) promote the use of technology, in accordance with the guidance recommended by research.

2 - The financial resources of Proagro are:
a) those resulting from the participation of program beneficiaries, through the payment of a fee called additional charge; b) others that may be allocated to the program; c) those resulting from the remunerations provided for in this chapter; d) the revenues obtained from the application of the resources provided for in the preceding letters; e) those from the Union Budget allocated to the program.

3 - Proagro is administered by the Central Bank of Brazil, which is responsible for:
a) elaborating the rules applicable to the program, in articulation with the National Council of Agricultural Policy (CNPA), submitting them for approval by the National Monetary Council; b) publishing the approved rules; c) monitoring compliance with the rules by the agents of the program and applying the applicable penalties; d) managing the financial resources of the program, in accordance with the rules approved by the National Monetary Council; e) publishing the financial report of the program; f) elaborating and publishing, at the end of each fiscal year, a detailed report of the activities during the period; g) calculating the result of the program, at the end of each harvest, in the case of agricultural working capital, or of each calendar year, in the case of livestock working capital, with the option to alter, based on actuarial studies and calculations, the additional charge rates provided for each product, in order to establish the necessary balance between revenues and expenses of the eligible enterprise; h) alter the deadlines established for the payment of the additional charge; i) alter the remuneration due by the agent to the program, incident on the resources resulting from the additional charge; j) regulate, in articulation with the Ministry of Agriculture, Livestock and Supply, the conditions necessary for the classification of agricultural working capital conducted exclusively with the beneficiary's own resources; l) extend the deadline established for analysis and judgment of the coverage request, when an event causing losses occurs that results in an accumulation of coverage requests or resources in the agent's premises, provided that the justifications presented by the agent are considered plausible; m) provide information about the program to the Permanent Committee for Evaluation and Monitoring of Proagro; n) adopt the measures inherent to the administration of the program, including elaborating and publishing documents and normative instruments necessary for its operationalization.

4 - In calculating the results of the program, for the purposes of the preceding item, revenues and expenses of enterprises for which there has been an injection of Union resources cannot be considered.

5 - The agents of Proagro are financial institutions authorized to operate in rural credit.

6 - Without prejudice to the provisions of the preceding item, a rural credit cooperative must present to the Central Bank of Brazil a convention agreement signed with another financial institution allowing it to use the "Bank Reserves" account.

7 - The agents are subject to the Proagro rules when classifying operations in the program.

8 - Rural producers and their cooperatives may be beneficiaries of Proagro.

9 - The beneficiary is obligated to:
a) use technology capable of ensuring the achievement of the planned yields; b) deliver to the agent, at the time of formalizing the classification of the operation in Proagro, a sketch or map of the location of the area with characterization of reference points, where the crop will be implemented; c) deliver to the agent, at the time of formalizing the classification of the operation in Proagro, an analytical budget of the expenses expected for the enterprise; d) deliver to the agent, at the time of formalizing the classification of the operation in Proagro, the result of a soil chemical analysis, issued within 2 (two) years, and recommendation for the use of inputs, when the value of the enterprise to be classified is greater than R$17,000.00 (seventeen thousand reais); e) deliver to the agent the proof of purchase of inputs used in the enterprise, when the communication of loss occurrence is formalized; f) require that the technician or company responsible for providing technical assistance at the property level maintain permanent monitoring of the enterprise, issuing reports that allow the agent to know its evolution; g) deliver or have delivered to the agent the reports issued in accordance with the preceding letter, within 15 (fifteen) days from the visit of the technician to the enterprise; h) immediately communicate to the agent or, in the case of sub-lending operations, to its cooperative, the occurrence of any event causing losses, as well as any aggravation that ensues; i) adopt, after the occurrence of losses, all necessary practices to minimize damages and avoid the aggravation of losses; j) observe the other rules of the program and rural credit.

10 - Regarding the proof of purchase of inputs referred to in letter "e" of the preceding item:
a) the first copy of the invoice issued in accordance with current legislation or a copy authenticated by the agent, or the declaration issued by a public body responsible for supplying inputs to the beneficiary, is accepted as proof; b) its presentation is dispensed with in operations supported by the National Program for Strengthening Family Agriculture (Pronaf), the Special Program for Land Reform Credit (Procera), and the resources of the Constitutional Funds/"Terra Program", as provided for in Ministerial Ordinance 218 of 8/27/1992.

11 - The technical assistance reports must be specific for each stage of development of the enterprise, such as crop emergence, flowering, and harvest, and contain records on:
a) the adoption of the technology used, presenting detailed reasons in the case of the use of technology not initially planned; b) the quantification of inputs effectively applied to the enterprise; c) the expected production relative to that initially expected, presenting detailed reasons in the case of a reduction; d) the occurrence of events harmful to production or that make the continued application of the recommended technology unfeasible; e) other relevant occurrences, including eventual irregularities.

12 - Without prejudice to the observance of the general rules provided for in this manual, it is the responsibility of the agent to monitor each rural working capital credit operation classified in Proagro, in the case of an enterprise not linked to the provision of technical assistance at the property level, regardless of the amount supported.

13 - For the purposes of Proagro, it is considered:
a) an enterprise as the agricultural or livestock activity identified, cumulatively, by the registration number in the National Registry of Legal Entities (CNPJ) or Individual Taxpayer Registry (CPF) of the beneficiaries, the municipality code, and the code number in the Common Register of Rural Operations (Recor), provided for in the Central Bank Information System (Sisbacen); b) as a single enterprise the agricultural or livestock activity identified, cumulatively, by the same registration number in the CNPJ or CPF of the beneficiaries, the same municipality code, the same harvest or calendar year, the same Recor code number, and the same "Ref.Bacen No.", observing, in this case, the order of formation indicated in document 5 of this manual.

14 - For the purposes of Proagro:
a) the credit installments are subject to contractual earnings limited to the highest remuneration to which rural credit operations supported with mandatory resources are subject; b) the beneficiary's own resources are presumed to be applied proportionally to the credit installments corresponding, on the dates expected for release or, in the absence of dates, on the last day of the expected month, without prejudice to considering for such purposes the dates of the actual releases in the case of anticipation or postponement resulting from the recommendation of portfolio-level advisory services or property-level technical assistance.

15 - The operations classified in Proagro must be registered in the Recor within a maximum period of 10 (ten) days, counted from the date of signing the credit instrument, or from the term of adherence to Proagro, in the case of an unfunded enterprise. (*)

16 - In any case, the financial movement of the program, as provided for in this chapter, is conditioned on the operation being regularly registered in the Recor.

17 - Regardless of the rules defined within the scope of the Agricultural Zoning, the beneficiary may directly and freely contract the provision of technical assistance services at the property level, admitting, when funded, its inclusion in the analytical budget for the purposes of classification in the program, in accordance with letter "a" of item 16-2-10.

18 - The Proagro agent, in operations with adherence to the Program within the scope of the Agricultural Zoning, is obligated, in addition to the duties provided for in the regulation, to:
a) prove the emergence of plants in accordance with the provisions of the Agricultural Zoning, by sampling defined by the Ministry of Agriculture, Livestock and Supply; b) provide the Ministry of Agriculture, Livestock and Supply, Proagro Monitoring Service, with the basic information necessary for the monitoring of Proagro.

19 - With respect to the provisions of the preceding item, the following must be observed:
a) the Proagro financial agent must provide the Ministry of Agriculture, Livestock and Supply with the data:
I - contained in document 25 of this manual, divided into 3 (three) groups, referring to the operations classified in Proagro; II - referring to all Communications of Loss Occurrences, in the form of document 18 of this manual. b) the data must be provided electronically, according to the layout and technical specifications established by the Ministry of Agriculture, Livestock and Supply; c) it is the responsibility of the financial agent to request the new layouts from the aforementioned Ministry, which will be provided without any charge; d) the data of "Group 1", referring to the operations classified in Proagro:
I - must be recorded at the time of formalizing the operation; II - must be sent to the Ministry by the tenth business day of each month, containing records of all operations classified in Proagro in the immediately preceding month; e) for the purposes of the provisions of letter "a" of item 18:
I - the Ministry of Agriculture, Livestock and Supply has established that the proof of plant emergence must be carried out based on a sampling process, whose sample must be defined by a central or regional body of the Proagro agent, observing the minimum percentage of 10% (ten percent) of the total operations with a value classified in the program of up to R$60,000.00 (sixty thousand reais) and greater than R$60,000.00 (sixty thousand reais); II - the first inspection of the enterprise must be carried out immediately after the total emergence of plants, when the data of "Group 2" must be recorded; III - the second and final inspection of the enterprise must occur at the time of harvest, when the data of "Group 3" will be recorded; f) the data of "Group 2" and "Group 3" must be provided to the Ministry by the tenth business day of each month, containing the records of the immediately preceding month; g) the data related to Communications of Loss Occurrences must be provided within 3 (three) business days from the date of the respective loss communication.

20 - For operations supported by Pronaf:
a) the proof of plant emergence, as provided for in letter "a" of item 18, must be provided to the financial agent by the technical assistance and rural extension institution, operating in the municipality; b) the technical report must refer to meteorological phenomena and other occurrences that may have harmed the emergence of plants and the establishment of the crop.

TITLE: RURAL CREDIT
CHAPTER: Agricultural Activity Guarantee Program (Proagro)
SECTION: Classification - 2
------------------------------------------------------------------- 1 - Enterprises for rural working capital, linked or not to rural financing, conducted under strict observance of the rules of this manual, are eligible for classification in the Agricultural Activity Guarantee Program (Proagro).

2 - The classification of agricultural working capital is restricted, observing the provisions of item 5, to enterprises conducted in the area of coverage and under the conditions of the Agricultural Zoning published by the Ministry of Agriculture, Livestock and Supply.

3 - In rain-fed crop enterprises linked to the Agricultural Zoning, the supported cultivation form is only for non-consortium crops.

4 - The formalization of the classification of crops included in the Agricultural Zoning is conditioned on the contractual obligation to apply the technical recommendations regarding the Agricultural Zoning, including in the case of operations linked to the National Program for Strengthening Family Agriculture (Pronaf), the Special Program for Land Reform Credit (Procera), and Constitutional Funds/"Terra Program", as provided for in Interministerial Ordinance 218 of 8/27/1992.

5 - Crops not included in the Agricultural Zoning may be classified, regardless of location, provided they refer to operations contracted by beneficiaries of the programs cited in the preceding item.

6 - The classification of working capital operations for apple crops is conditioned on the presentation of an expert report, prepared before the formalization of the credit, attesting to the good phytosanitary and physiological state of the orchards.

7 - Respecting the Proagro risk limit, the total nominal value of the analytical budget of the enterprise is classified in the program, observed by the portfolio-level advisory services of the agent, the economic viability, and the principles of opportunity, sufficiency, and adequacy of the resources provided.

8 - For the purposes of the preceding item, the value of the inputs must be calculated as the beneficiary's own resources:
a) acquired previously and not financed when the main working capital credit was granted; b) of own production.

9 - The analytical budget must be prepared in current values without any increase for adjustment purposes.

10 - For the purposes of Proagro, it is admitted:
a) to include in the analytical budget the expenses with technical assistance, when contracted; b) to reallocate installments of the analytical budget, except for the fund destined for harvest, provided it is previously authorized by the portfolio-level advisory services of the agent.

11 - The classification of resources destined for the following is prohibited:
a) enterprise without the corresponding analytical budget; b) enterprise already classified in the same harvest or calendar year; c) purchase of inputs as working capital advance; d) working capital for processing or industrialization; e) working capital for any crop consorted with pasture; f) fishing activity; g) provision of mechanized services; h) enterprise implemented at an inappropriate time or location, under frequent risks of adverse events, as indicated by tradition, research, or experimentation; i) enterprise with 3 (three) deferred coverages relative to the 3 (three) last classifications.

12 - The classification of more than one operation for the same enterprise, funded or not, is permitted, provided that the previous one is no longer subject to the risk of losses covered by the program.

13 - The classification of resources that increase the Proagro risk with the same beneficiary to more than R$150,000.00 (one hundred and fifty thousand reais) is also prohibited in any case.

14 - The Proagro risk is calculated by summing the nominal value classified in each operation.

15 - The validity of Proagro coverage:
a) in the agricultural working capital operation for temporary crops, begins with the transplanting or emergence of the plant in the definitive location and ends with the transfer of the product from its cultivation area; b) in the agricultural working capital operation for permanent crops, begins with the debit of the additional charge in the account linked to the operation and ends with the transfer of the product from its cultivation area; c) in the livestock working capital operation, begins with the debit of the additional charge in the account linked to the operation and ends with the transfer of the product from the property of origin.

16 - The classification is formalized by including a specific clause in the credit instrument, by which the beneficiary manifestly and unequivocally expresses its adherence to Proagro, specifying:
a) the enterprise; b) the total nominal value of the linked analytical budget, discriminating the credit portion and the beneficiary's own resources; c) the rate, base of incidence, and time of exigibility of the additional charge; d) the period of validity of Proagro coverage; e) that, in the case of agricultural working capital for temporary crops, the coverage of the program is limited to the resources corresponding to the area where there is transplanting or emergence of the plant in the definitive location; f) minimum and maximum coverage percentages; g) the receipt of a copy of the Proagro regulation, as per document 23 of this manual.

17 - The expression of interest to adhere to Proagro only generates rights with the program if the following conditions are met, cumulatively:
a) direct formalization in the credit instrument; b) debit of the additional charge in the account linked to the operation; c) occurrence of losses by covered cause, provided for in this chapter, during the validity of the program coverage.

18 - The analytical budget, signed by the beneficiary and the Proagro agent, must be attached to the credit instrument, forming an integral part for all legal and operational purposes.

19 - The classification cannot be formalized or revised by an amendment to the credit instrument.

20 - The option to use the "no-till" technique must be included in the contractual clause.

21 - Operations supported by Pronaf may be classified regardless of the existence of a budget, plan, or project.
(*) 22 - The publication of the list of municipalities authorized for the purposes of the Agricultural Zoning is the responsibility of the Ministry of Agriculture, Livestock and Supply.

TITLE: RURAL CREDIT
CHAPTER: Agricultural Activity Guarantee Program (Proagro)
- 16
SECTION: Additional - 3
------------------------------------------------------------------- 1 - The beneficiary who adheres to the Agricultural Activity Guarantee Program (Proagro) is obligated to pay a participation fee called additional fee, applied only once on the total nominal value of the analytical budget of the classified enterprise.

2 - The rates of the additional fee, except as provided in item 3, are as follows:
a) livestock farming: 1.2% (one and two-tenths percent); b) permanent crop farming:
I - sugarcane: 2.3% (two and three-tenths percent); II - coffee: 4.7% (four and seven-tenths percent); III - apple: 3.5% (three and five-tenths percent); IV - others: 3.5% (three and five-tenths percent); c) irrigated crop farming:
I - wheat: 2% (two percent);
II - other crops, including irrigated rice: rate of 1.7% (one and seven-tenths percent); d) rainfed crop farming, except as provided in the following clause:
I - cotton, corn, and soybeans: 3.9% (three and nine-tenths percent); II - rice and beans: 6.7% (six and seven-tenths percent); III - sorghum: 5.5% (five and five-tenths percent); IV - wheat: 5% (five percent); V - rye, barley, and triticale: 11.7% (eleven and seven-tenths percent):
VI - others: 9.4% (nine and four-tenths percent); e) crop farming using the "no-till" technique:
I - corn and soybeans: 2.9% (two and nine-tenths percent); II - beans: 5.7% (five and seven-tenths percent); III - rainfed wheat: 4% (four percent).

3 - In crop farming, both irrigated and rainfed, supported by the National Program for Strengthening Family Agriculture (Pronaf), Special Program for Credit for Agrarian Reform (Procera), and Constitutional Funds/"Programa da Terra", as provided in Interministerial Ordinance 218 of 8/27/1992, a single rate of 2% (two percent) must be observed, regardless of the rules applicable to the Agricultural Zoning and the "no-till" technique.

4 - The additional fee must be debited obligatorily in the account linked to the operation on the date of signing the credit instrument and recorded separately from other expenses.

5 - It is mandatory to capitalize the additional fee in the account linked to the operation if, at the time of signing the credit instrument, the beneficiary's financial resources are insufficient for its respective payment.

6 - It is the responsibility of the operating agency of the agent to debit the additional fee in the account linked to the operation, simultaneously providing:
a) the corresponding credit in the "Proagro Resources" account; b) the recording of the value in internal use sub-accounts.

7 - In credit operations for transfer to cooperative members, it is the responsibility of the production cooperative to debit the additional fee incident on each sub-loan, transferring it simultaneously to the respective Proagro agent, to adopt the measures provided for in the previous item.

8 - The resources collected as additional fees may be freely applied by the agents, who are subject to the payment of remuneration to Proagro, under the conditions established in this section.

9 - It is the responsibility of the Central Bank of Brazil, based on the data registered obligatorily in the Common Register of Rural Operations (Recor), to calculate the additional fee due in each enterprise, adding to that value, from the date of signing of the operation, the higher remuneration to which rural credit operations supported by mandatory resources are subject.

10 - The debiting of the additional fee values in the Bank Reserves account of each agent must be made within 3 (three) days from the date of registration of the operation in Recor. (*)

11 - Financial institutions, due to the Brazilian Payments System (SPB), must adopt the following procedures for the collection of values to the Central Bank of Brazil, relating to the Proagro additional fee and refunds of values paid by the same program:
a) daily verification of the values to be collected, registered to the debit of accounting rubric 6514.10.60-9, holder of the institution, by consulting the PCBC700 transaction - Balance/Statements Inquiry - Financial Institution, of the Central Bank Information System (Sisbacen); b) transfer, by the institutions themselves, of the calculated values, to be made, until 16:00 hours, Brasília time, by manual entry to the debit of the respective "Bank Reserves" accounts.

12 - With regard to the provisions of the previous item, it must be observed that:
a) the detail of the values can be obtained through the PGRO400 transaction - Proagro Refunds and Returns Inquiry - Financial Institutions, of Sisbacen; b) the settlement of values the responsibility of rural credit cooperatives must be carried out by the institution holding a "Bank Reserves" account with which the cooperative has an agreement; c) in accordance with the provisions of this manual, the values must be added, from the date scheduled for their respective settlement, daily interest calculated at a rate of 24% a.a. (twenty-four percent per year).

13 - It is the responsibility of the Central Bank of Brazil, regarding the additional fee, to apply the amount of collected resources in federal public debt securities or in securities issued by it.

14 - In the event of default of the additional fee, the higher remuneration to which rural credit operations supported by mandatory resources are subject is charged on the value in debit, and the effective interest rate is raised to 24% a.a. (twenty-four percent per year), from the characterization of the default.

15 - In any case of default of the additional fee:
a) the debit in the account linked to the operation can only be regularized until the day before the start of the event causing covered losses; b) Proagro is only responsible for coverage proportional to the value that is regularized on the day before the start of the event causing covered losses.

16 - The refund of the additional fee is due, without any increase to the nominal value collected:
a) in any case of improper classification, collection, or collection; b) in the case of the beneficiary's withdrawal before transplanting or the emergence of the plant in the permanent location; c) when there is total loss before transplanting or the emergence of the plant in the permanent location and the beneficiary formally withdraws from continuing the enterprise.

17 - The regularization of the additional fee resulting from the provisions of the previous item must be processed through:
a) adjustment of the relevant information, in Recor, of the Central Bank of Brazil, in the regulatory form; b) sending of document 17-1 to the Proagro Technical Management (GT-PRO) of the Central Bank of Brazil.

18 - Regardless of the rules defined within the scope of the Agricultural Zoning, the revenue of Proagro resulting from the collection of the additional fee must be destined, prioritarily, to the payment of coverage regarding resources own to the beneficiaries, classified in accordance with the current rules.

TITLE: RURAL CREDIT
CHAPTER: Agricultural Activity Guarantee Program (Proagro)
- 16
SECTION: Proof of Losses - 4
------------------------------------------------------------------- 1 - The communication of losses is made by the beneficiary using a standardized form, according to document 18 of this manual, delivered to the agent or, in the case of sub-loan operations, to its cooperative against receipt in the third copy.

2 - Within 3 (three) business days from the receipt of the communication of losses, the agent must request the proof of losses, observing the limitations established by the regional councils of the class, when applicable, to be carried out under its responsibility, with the objective of:
a) determining the causes and extent of the losses; b) identifying the items of the analytical budget not performed, totally or partially; c) estimating the production to be harvested after the technician's visit; d) verifying the technology used in the management of the enterprise.

3 - The following special procedures must be observed in the case of credit for transfer by a production cooperative:
a) the Proagro beneficiary must deliver the communication of losses to the cooperative, which must return the third copy to him, stamping a receipt in the appropriate field, intended for the use of the agent; b) the cooperative must fill out the standardized form (document 18), leaving blank the fields for the agent, according to filling instructions; c) it is also the responsibility of the cooperative, on the business day following the receipt of the communication of losses, to forward it to the agent, accompanied by the other information and documents necessary.

4 - Within 3 (three) business days from the request for proof of losses, the agent must inform the occurrence to the Central Bank of Brazil by electronic or magnetic means, based on a layout provided in the Central Bank Information System (Sisbacen).

5 - The Proagro agent, as responsible for the loss verification services, is liable for any damages caused to the beneficiary when:
a) the request for those services is made late; b) the proof of losses is carried out by a technician whose designation is expressly prohibited, as established in this chapter.

6 - For proof of losses, the agent must request the technician to measure the crop when:
a) the area subject to classification is greater than 200 ha. (two hundred hectares) and has not yet been measured as part of the inspection services; b) there are indications of area reduction.

7 - It is the responsibility of the Proagro agent, through technical assistance companies, qualified autonomous professionals, or its own staff or cooperative, to carry out the proof of losses.

8 - Where there is no adequate availability of qualified professionals, at the agent's discretion, proof of losses by its inspectors is admitted, provided they possess sufficient knowledge to perform the task.

9 - The carrying out of proof of losses is prohibited if the total classified resources are not greater than R$500.00 (five hundred reais), and the application of resources and compensable losses must be proven based on information available to the technical advisory at the agent's portfolio level.

10 - Proof of losses is prohibited:
a) by a technician, cooperative, or technical assistance company prohibited from providing services to Proagro; b) by the beneficiary themselves, cooperative, or technical assistance company in which they participate directly or indirectly; c) by the technician, cooperative, or technical assistance company that prepared the plan or project of the enterprise; d) by the technician, cooperative, or technical assistance company that provided technical assistance to the enterprise; e) by the technician, cooperative, or technical assistance company that inspected the enterprise.

11 - In the case of preparation of a plan or project, provision of technical assistance, and inspection of the enterprise, the prohibition referred to in the previous item applies exclusively to the technician responsible for those services, provided that in the locality there is no adequate availability of qualified professionals, at the agent's discretion.

12 - The request for proof of losses is made by the Proagro agent using a specific form, according to document 18 of this manual, to which the following must be attached:
a) the second copy of the communication of losses; b) a copy of the credit instrument, or a copy of the adherence term to Proagro, in the case of an enterprise not financed, amendments, complementary mentions, and annexes; c) analytical budget linked to the enterprise; d) route for locating the property; e) sketch or map of the location of the crop; f) data on the application of inputs; g) technology recommended for the enterprise, when linked to the provision of technical assistance at the property level; h) information on any irregularities verified during the operation; i) other information and documents necessary for the proof of losses.

13 - For proof of losses, the technician must inspect the enterprise, making at least:
a) 1 (one) visit to the property, within 3 (three) business days from the agent's request, in the case of partial loss due to an event occurring during the harvesting phase or in the case of total loss; b) 2 (two) visits to the property, the first within 3 (three) business days from the agent's request, and another at the scheduled time for the start of harvesting, in the case of partial loss due to an event prior to the harvesting phase.

14 - It is the responsibility of the technician in charge of the proof of losses:
a) immediately return the request for proof of losses to the agent, against receipt, when unable to perform it; b) carry out the measurement of the crops, when requested by the agent, with the responsibility for contracting specialized services and choosing the methodology to be used resting with him; c) record his conclusions in a proof of losses report, prepared according to document 19 of this manual, requiring, in the case of crop measurement, a sketch with characterization of the reference points or planimetric map and a document proving the methodology adopted.

15 - It is also the responsibility of the person in charge of the proof of losses to expressly manifest on:
a) technology used in the enterprise, including regarding the indicators of the Agricultural Zoning; b) losses due to un-covered causes; c) final production; d) quality of the product and its relationship with the covered causes, with the responsibility for contracting specialized product classification services, if indispensable to satisfy this requirement.

16 - The proof of losses report must be delivered to the agent, against receipt, observing the following:
a) in the case of partial loss due to an event prior to the harvesting phase, the first part of the report must be delivered within 10 (ten) business days from the first visit, with a receipt on the back of the 2 (two) copies; b) in any case, upon completion of the service, the concluded report (second part or integral report) must be delivered within 10 (ten) business days from the single or final visit, with a receipt in the appropriate field of the 2 (two) copies.

17 - In the case of losses due to frost, the concluded proof of losses reports regarding the wheat crop, as provided in clauses "c" of item 14 and "b" of item 16, must be prepared only during the period scheduled for harvesting, when the losses must be effectively verified and dimensioned, regardless of the harvest, the location of the enterprise, and the period of occurrence of the event.

18 - In the case of partial losses, the agent is obliged to monitor the development of the enterprise from the communication of losses until harvesting, through its inspection.

19 - It is the responsibility of the agent to release the area affected by adverse events, when it proves that the value of the expected production is insufficient to cover the expenses of the subsequent stages of the exploitation.

20 - In the case of total loss, the agent is obliged to inspect the enterprise before releasing the area.

21 - The agent may request the completion of the report or even the service performed, when deemed necessary for the decision on the coverage request.

22 - As administrator of the program, the Central Bank of Brazil may, regardless of the conclusions of the technical assistance, inspection, or proof of losses services, designate technicians to verify the results of the supported enterprise.

23 - For the purposes of the previous item, the designated technician has the same attributes defined in this chapter for the person in charge of the proof of losses.

24 - In operations supported by the National Program for Strengthening Family Agriculture (Pronaf), Special Program for Credit for Agrarian Reform (Procera), and Constitutional Funds/"Programa da Terra", as provided in Interministerial Ordinance 218 of 8/27/1992, classified in Proagro, individual proof of losses is dispensed with:
a) in an operation with a value of up to R$1,000.00 (one thousand reais); b) in an operation with a value greater than R$1,000.00 (one thousand reais), limited to the maximum financing value for operating costs admitted by Pronaf or Procera, when the occurrence of climatic adversity is verified in most of the enterprises classified in the respective operating agency.

25 - In the cases provided for in the previous item, the application of resources and compensable losses must be proven based on information available to the technical advisory at the portfolio level or in data provided by technical assistance, in the case of operations linked to the provision of such services, admitting that the value of the coverage may correspond to the average loss index of the region informed by technical assistance.

TITLE: RURAL CREDIT
CHAPTER: Agricultural Activity Guarantee Program (Proagro)
- 16
SECTION: Coverage - 5
------------------------------------------------------------------- 1 - The coverage request is formalized in the communication of losses form itself, according to document 18 of this manual.

2 - The causes of coverage of the Agricultural Activity Guarantee Program (Proagro) are:
a) fortuitous natural phenomena and their direct and indirect consequences; and disease or pest without a widespread method of combat, control, or prophylaxis, technically and economically feasible, according to the express manifestation of the person in charge of the proof of losses services or technical assistance; b) in the operating costs of rainfed crops of cotton, rice, beans, corn, soybeans, sorghum, and those cultivated by beneficiaries of the National Program for Strengthening Family Agriculture (Pronaf), Special Program for Credit for Agrarian Reform (Procera), and Constitutional Funds/"Programa da Terra", as provided in Interministerial Ordinance 218 of 8/27/1992, not included in the Agricultural Zoning, regardless of the location, the losses resulting from the following adverse events: hail, drought, water spout, gale, and those generated by fungal disease or pest without a widespread method of combat, control, or prophylaxis; c) in the operating costs of rainfed wheat crops, the losses resulting from the following adverse events: frost, hail, water spout, gale, rain during the harvesting phase of the crop, provided the conditions established in item 3 are observed, and those generated by fungal disease or pest without a widespread method of combat, control, or prophylaxis; d) in the operating costs of irrigated crops throughout the national territory, when classification is admitted, the losses resulting from hail, water spout, gale, fungal disease or pest without a widespread method of combat, control, or prophylaxis, and, in the case of wheat crops, rain during the harvesting phase of the crop, provided the conditions established in item 3 are observed; e) in the operating costs of apples, the losses resulting from frost, hail, water spout, gale, and fungal disease or pest without a widespread method of combat, control, or prophylaxis.

3 - Losses caused by the event of rain during the harvesting phase of wheat crops, irrigated or rainfed, throughout the national territory, are eligible for coverage by Proagro, provided that, during a period of 5 (five) consecutive days, accumulated precipitation exceeds 50 mm (fifty millimeters).

4 - The coverage of losses resulting from the water spout event begins from the debit of the program's additional fee in the account linked to the operation, must be subject to individual proof of losses, and is disregarded in the calculation of the average loss index in the region for the purposes of program coverage.

5 - Proagro does not cover losses:
a) resulting from:
I - an event that occurred outside the validity period of the program's coverage defined in this chapter; II - crop fire; III - erosion; IV - late planting; V - lack of adequate practices for controlling endemic pests and diseases in the enterprise; VI - nutritional deficiencies causing loss of quality or production, identified by the symptoms presented; VII - cultivation of the same crop for more than 3 (three) years in the same area, without proper soil conservation and fertilization practices; VIII - any other cause not covered in the previous item, including inadequate technology; IX - stem canker (Diaporthe phaseolorum f. sp. meridionalis; Phomopsis phaseoli f. sp. meridionalis) and cyst nematode (Heterodera glycines) in soybean crops, planted with varieties considered susceptible by official research, regardless of the type of technology used in the enterprise; b) regarding:
I - enterprise items subject to mandatory insurance; II - enterprise items covered by optional insurance or producer mutual; III - enterprise whose crop was intercropped or consorted with another not provided for in the credit instrument or in the Proagro adherence term, in the case of non-financed activity; IV - enterprise conducted without observance of the norms applicable to rural credit and Proagro.

6 - The right to partial or total coverage is rescinded by untimely notification of losses, understood as that which does not allow:
a) determining the causes and extent of the losses; b) identifying the items of the analytical budget not carried out, totally or partially; c) assessing the technology used in the management of the enterprise.

7 - Coverage must be summarily denied when:
a) the clause of enrollment is not included in the credit instrument; b) improper enrollment is verified; c) production was calculated based on remaining ranges of already harvested crops; d) it is verified that the enterprise's failure resulted exclusively from the use of inadequate technology or an event not covered by Proagro; e) partial or total diversion of production is proven; f) the beneficiary presents a false or altered document regarding the covered enterprise; g) the beneficiary fails to deliver to the agent, in the regulated manner, the result of a chemical soil analysis, the recommendation for the use of inputs, and, in the case of an enterprise linked to technical assistance at the property level, the reports issued by the technician in charge of those services.

8 - The beneficiary may express withdrawal of the coverage request before the agent's decision.

9 - The basis for calculating coverage consists of:
a) the credit used and the beneficiary's corresponding own resources, up to the enrolled value; b) the beneficiary's own resources, proven to have been applied in substitution for installments of the enrolled credit and not disbursed; c) the beneficiary's own resources, enrolled and applied in a non-financed enterprise; d) the remuneration incident on the credit installments used, calculated up to the date of coverage, observing the provisions in section 16-1.

10 - Enrolled and applied resources after the event causing losses only integrate the basis for calculating coverage when their use:
a) contributed to preventing the worsening of losses; b) was intended for the payment of previous expenses executed according to the scheduled plan; c) was intended for expenses actually realized with the harvest, under technical justification.

11 - The coverage limit is determined by deducting from the basis of calculation:
a) the total value of losses due to non-covered causes; b) resources not applied in the enterprise, including those corresponding to the area where there was no transplanting or plant emergence in the definitive location, adding to the credit installments the remuneration provided in section 16-1; c) the total value of revenues produced by the enterprise.

12 - For the purposes of Proagro, resources corresponding to inputs acquired, whose receipts have not been delivered to the agent in the regulated manner, are not considered applied in the enterprise.

13 - The nominal value corresponding to the inputs must be determined by the agent based on the analytical budget linked to the enterprise.

14 - The value of revenues and non-covered losses, for the purpose of deducting from the basis of coverage calculation, must be assessed by the operating agency of the agent, on the date of the decision on the first-instance coverage request, based on the highest of the following parameters:
a) minimum price or, in its absence, the price considered when enrolling the operation in the program; b) market price; c) the price indicated on the first copy of the invoice representing the sale, if presented by the date of the agent's decision on the coverage request, for the commercialized portion.

15 - For the purposes of the provision in the previous item:
a) in identifying the price, including in the case of commercialized production, the quality of the product indicated by the technician responsible for proving losses must be taken into consideration; b) if there is no loss of product quality, the price indicated on the first copy of the invoice, for the commercialized portion, prevails, provided it is not lower than the price considered when enrolling the operation in the program; c) in the case of loss of product quality due to a covered cause, provided the fact is expressly recorded in the loss verification report, the price admitted when enrolling the operation in the program is not considered.

16 - For the purpose of calculating harvested area production before loss verification, the production considered for enrollment purposes or the actually obtained production, if higher, is used.

17 - In calculating the values of non-covered losses and production harvested before the first loss verification visit, the product must be considered with quality compatible with that considered at the time of enrolling the operation, regardless of the indication of the technician responsible for loss verification.

18 - In the case of crops whose harvest is carried out in stages (picking, sorting, etc.), the percentage of production of each stage must be taken into consideration, according to the regional parameters admitted for the respective crop.

19 - For the purpose of calculating revenues from an enterprise referring to cotton seed production, the product must be considered to have a yield of 34% (thirty-four percent) lint and 61% (sixty-one percent) seed.

20 - If the beneficiary has not adopted all necessary precautions to minimize losses in their operation, the agent must deduct from the basis of coverage calculation the amount corresponding to the resulting damages.

21 - If an area larger than the enrolled enterprise is planted, the agent must consider:
a) the production of the area considered for enrollment purposes, if it is possible to distinguish its yield and identify its respective location based on the sketch or location map delivered to the agent in the regulated manner; b) the production of the entire planted area, if the conditions of the previous item are not met.

22 - Proagro coverage corresponds to a minimum of 70% (seventy percent) and a maximum of 100% (one hundred percent) of the coverage limit, per enrolled enterprise.

23 - The minimum coverage percentage applies to the beneficiary who, observing the history of the 36 (thirty-six) months prior to the date of adherence to Proagro, with all agents:
a) has not enrolled the same enterprise; b) has coverage approval in their favor regarding the last enrollment of the same enterprise, even if they have not received the respective indemnity.

24 - Respecting the maximum percentage of 100% (one hundred percent), the minimum coverage percentage is increased by 10 (ten) percentage points, as a bonus, for each enrollment of the same enterprise that did not have a coverage request approved, in the 36 (thirty-six) months prior to the date of adherence to Proagro, with all agents.

25 - Operations are subject to indemnification of up to 100% (one hundred percent) of the program's coverage limit, regardless of any bonus referred to in item 23, provided that the beneficiary uses the "no-till" technique, and the option for said technique must be included in a contractual clause.

26 - For the purposes of the provision in item 23, only enrollments occurring after the last coverage approval are considered.

27 - For the definition of the coverage percentage and the granting of the bonus provided in this chapter, coverage approvals resulting from the review or appeal of the initial decision are not considered.

28 - The agent must exhaust all necessary diligence for the analysis and judgment of the coverage request, deciding it within a maximum period of 15 (fifteen) business days from the receipt of the concluded loss verification report, drafting a summary of the judgment, according to document 20 of this manual.

29 - The request for information indispensable to the resolution of the coverage request suspends the period indicated in the previous item, the counting of which restarts on the date the agent receives the requested information.

30 - Within a period of 5 (five) business days from its decision, the agent must communicate it to the beneficiary, informing them of the reasons for total or partial denial, if applicable, and notifying them of the possibility to appeal to the Special Commission for Appeals (CER).

31 - For the purposes of Proagro, indemnifiable financial charges must be computed, from the date of resource application, according to the utilization schedule provided in the analytical budget, regardless of the time of actual credit disbursement.

32 - The Proagro revenue from the collection of the additional fee must be used, primarily, for the payment of coverage regarding beneficiaries' own resources, enrolled in accordance with current rules.

33 - The operating agency must provide to the Municipal Council for Sustainable Rural Development and, in its absence, to the State Council for Sustainable Rural Development, every two months, a list containing exclusively the name of the borrower and the respective product object of coverage under Proagro.

34 - For operations with a Proagro adherence clause, a graphic account, or variation, must be maintained, destined exclusively for the registration of values computable in the coverage calculation, observing that:
a) in cases where the presentation of an analytical budget is required, the entries must be made observing the resource utilization schedule, regardless, in cases of early disbursement, of the date of actual disbursement; b) the institution must transfer from the graphic account, or variation, with appreciation to the date of the original entry, all values that may lose, for any reason, the condition of being considered in the coverage calculation; c) a copy of the graphic account, or variation, with the updated balance on the base date, must be attached to the coverage process.

TITLE: RURAL CREDIT
CHAPTER: Program for the Guarantee of Agricultural Activity (Proagro)
- 16
SECTION: Special Commission for Appeals (CER) - 6
------------------------------------------------------------------- 1 - The beneficiary has the right to appeal to the Special Commission for Appeals (CER), when they consider themselves prejudiced by the decision of the agent of the Program for the Guarantee of Agricultural Activity (Proagro) regarding coverage.

2 - To file an appeal, the beneficiary has the right to view the process with the agent, directly or through a proxy, and it is lawful to provide them with copies of documents or certificates.

3 - The provision in the previous item does not obligate the agent to display information that must be considered bank secrecy.

4 - The period for filing the appeal is 30 (thirty) days, counted from the date the beneficiary becomes aware of the agent's decision.

5 - The appeal must consist of a petition signed by the beneficiary or by a proxy with special powers, stating:
a) name and qualification of the petitioner; b) indication of the agent and the operating branch; c) prefix and number of the operation with the agent; d) date, value, maturity, and purpose of the operation, discriminating the part of credit and covered own resources; e) number and date of the agent's correspondence, communicating the decision on the coverage; f) request, with its specifications; g) grounds for the request and evidence.

6 - The appeal is delivered to the agent, who is responsible for:
a) stamping it with the date of receipt, for regulatory purposes; b) reexamining its denying decision, if new facts are presented, or reviewing it, in the case of errors; c) justifying its position, when maintaining the denial, drafting a conclusive opinion.

7 - If the denial is maintained, the agent must forward the appeal to the CER, observing a period of 10 (ten) business days from its receipt, attaching a conclusive opinion and copies of the following documents:
a) study of the operation, if any; b) credit instrument and its addendums, or in the case of a non-financed enterprise, the Proagro adherence term, additional mentions, and annexes; c) inspection and technical assistance reports; d) notification of losses and request for loss verification; e) loss verification report; f) crop measurement report, if any; g) statement of the linked account; h) extra-account breakdown, separating the entries related to the enterprise, in the case of joint financing; i) summary of the judgment of the coverage request (document 20); j) agent's correspondence, communicating to the beneficiary the decision on the coverage request, with receipt and date of awareness; l) other proofs necessary for the examination of the appeal, at the agent's discretion.

8 - The CER may require other documents or information it deems necessary for the instruction of the process.

9 - It is up to the CER to decide on the appeal observing the legislation and regulatory norms applicable to the program.

10 - Within a period of 5 (five) business days after becoming aware of the CER's decision, the agent must communicate it to the beneficiary, informing them of the reasons for the new denial, if applicable.

11 - In the case of a granted appeal, the new coverage value is determined, recalculating on the date of the agent's decision, taking into consideration the new parameters and values resulting from the acceptance of the appeal.

12 - For the purposes of the provision in the previous item, if it concerns an operation whose initially calculated coverage value was requested to the Central Bank of Brazil, the following procedures must be observed:
a) deduct from the new coverage value, resulting from the recalculation, the original coverage value determined on the date of the agent's decision; b) the value determined in the manner of the previous item, if positive, constitutes complementary coverage imputable to Proagro, and, if negative, must be returned to the program, as an undue payment, subject to regulatory additions.

TITLE: RURAL CREDIT
CHAPTER: Program for the Guarantee of Agricultural Activity (Proagro)
- 16
SECTION: Expenses - 7
------------------------------------------------------------------- 1 - The Program for the Guarantee of Agricultural Activity (Proagro) is only liable for the expenses listed below and others that may be established by the National Monetary Council:
a) remuneration for loss verification services; b) remuneration of the program agent; c) coverage.

2 - The Proagro agent is entitled to remuneration corresponding to 10% (ten percent) of the program's additional fee, in operations with Proagro adherence within the Agricultural Zoning, to cover operational expenses related to the obligations established in items 16-1-18 and 19.

3 - Expenses for loss verification comprise:
a) technician's remuneration; b) laboratory analysis, topographic service, or similar expenses, when necessary for diagnosis or assessment of losses; c) expenses for crop measurement required by Proagro, observing the specific tariffs provided in this manual; d) product classification expenses.

4 - For all purposes of the program, services requested by the Central Bank of Brazil regarding the assessment of results of a covered enterprise are equated to loss verification.

5 - Respecting the maximum of 0.5% (five tenths of a percent) and the minimum of 0.06% (six hundredths of a percent) of the program's risk limit, the remuneration of the technician responsible for loss verification is due at the rate of 1% (one percent) of the total value disbursed for the enterprise, credit and corresponding own resources, on the date of delivery of the concluded loss verification report.

6 - A deduction must be made from the remuneration of the technician responsible for loss verification, as a pecuniary sanction, the value corresponding to 1% (one percent) per business day of delay regarding the deadlines fixed for carrying out loss verification services, as well as for delivering the respective reports to the agent.

7 - It is the agent's responsibility to pay the expenses due for loss verification, through debit to the account linked to the operation, observing the following:
a) the remuneration of the technician responsible for loss verification must be paid in full within a period of 5 (five) business days from the delivery of the concluded report; b) the other expenses that make up the loss verification must be paid within a period of 5 (five) business days from the presentation of the respective service invoices or equivalent documents, however, the agent is prohibited from accepting any expense before the delivery of the first part of the loss verification report; c) in the case of payment for measurement expenses, the agent must require, in addition to the documents cited in the previous item, a sketch with the characterization of the reference points and a document proving the methodology used; d) it is mandatory to capitalize expenses in the linked account, recording them separately from other expenses.

8 - If the agent verifies irregularity in the filling out of the loss verification report or in expense receipts, the period provided in the previous item is suspended, the counting of which restarts on the date when the technician completes the necessary regularization.

9 - If the coverage request is withdrawn without the technician having carried out the last regulatory visit, the basis for calculating their remuneration is determined on the date of formalizing the withdrawal, which must be paid within a period of 5 (five) business days, and the delivery of the second part of the loss verification report is unnecessary.

10 - In the event of non-observance of the deadline established for payment of loss verification expenses, the agent is obliged to pay the technician, as a pecuniary sanction, the higher remuneration to which rural credit operations covered with mandatory resources are subject, with the effective interest rate increased to 24% a.a. (twenty-four percent per annum), incident on the overdue installment, from the first day subsequent to the expiration of the deadline.

11 - The product of pecuniary sanctions resulting from the provision in the previous item does not integrate the expenses for loss verification, but constitutes a burden on the agent, and its debit to the account linked to the operation is prohibited.

12 - The beneficiary bears the burden of expenses for:
a) loss verification, when fraud or bad faith is found in the notification of losses; b) loss verification, in the case of denial of the coverage request due to untimely notification of losses, according to the definition provided in this chapter; c) crop measurement, whenever there is a reduction greater than 20% (twenty percent) of the planned area.

13 - The loss verification expenses imputable to Proagro are reimbursed by the Central Bank of Brazil after the decision on the coverage request by the agent.

14 - After the decision on the coverage request, it is the agent's responsibility to:
a) transfer the financing installments related to the expenses imputable to the program from the account linked to the operation to a specific account regarding Proagro to be received, continuing to satisfy the requirements for application in rural credit; b) control the indemnifiable installments of the beneficiary's own resources in a specific compensation account.

15 - Within a maximum period of 5 (five) business days from the decision on the coverage request, it is incumbent upon the agent to request the Central Bank of Brazil to release the resources necessary for the reimbursement of expenses for loss verification and for the payment of Proagro coverages, both calculated as of the date of said decision, using the information from document 20 of this manual.

16 - The request for resources referred to in the previous item must be made electronically or magnetically, based on a layout containing the items of document 21 of this manual, provided for in Sisbacen.

17 - It is incumbent upon the Central Bank of Brazil to calculate the values related to the request for resources for expenses attributable to Proagro and to release them by posting to the "Bank Reserves" account of each agent.

18 - In the calculation of the values referred to in the previous item, the credit installments are increased by remuneration, as provided in the initial section of this chapter, calculated from the date of the agent's coverage decision until the date of the effective release of resources.

19 - It is incumbent upon the Proagro agent to indemnify the beneficiary's own resource installments within a period of up to 5 (five) business days from the posting in the "Bank Reserves" account, observing the following conditions:
a) the corresponding values must be increased by the remuneration provided for in section 16-1, at the expense of the Proagro agent, from the date of posting in the "Bank Reserves" account until the date of effective indemnification; b) failure to observe the deadline established in this item subjects the Proagro agent to pay the beneficiary, as a monetary sanction, the higher remuneration to which rural credit operations backed by mandatory resources are subject, with the effective interest rate raised to 24% p.a. (twenty-four percent per annum), applicable to the overdue installment, from the first day following the expiration of the deadline.

20 - The Central Bank of Brazil may challenge the payment of expenses resulting from a decision that is manifestly illegal or contrary to the program's regulations, by means of collection via the Brazilian Payments System (SPB), to debit the corresponding value in the "Bank Reserves" account of each agent.

21 - The agent is responsible for expenses paid improperly.

22 - In the event of any improper payment, its return by the agent is subject to monetary sanctions corresponding to the higher remuneration to which rural credit operations backed by mandatory resources are subject, with the effective interest rate raised to 24% p.a. (twenty-four percent per annum), applicable to the outstanding value from the date of the credit in the "Bank Reserves" account.

23 - In reimbursement requests and return of coverage and other expenses referred to in this section, the following must be considered:
a) as the base date for coverage, the date on which the indemnification request study was carried out, within a period of up to 15 (fifteen) days counted from the receipt of the concluded expert report; b) all values calculated as a result of examination, re-examination, or review of a coverage request, in any instance, calculated on the respective base date.

TITLE: RURAL CREDIT
CHAPTER: Agricultural Activity Guarantee Program (Proagro)
- 16
SECTION: Non-Financed Activity - 8
------------------------------------------------------------------- 1 - Agricultural funding for an unfunded enterprise may be classified under the Agricultural Activity Guarantee Program (Proagro), observing the provisions of this section.

2 - The classification cannot be formalized:
a) after planting has begun; b) with a rural producers' cooperative, unless it acts as an agent of the program, in the capacity of a credit cooperative.

3 - The classification is limited to the analytical budget, prepared in current values, without any increase for inflationary forecasts.

4 - Technical assistance to the classified enterprise is mandatory, allowing, for the purpose of the previous item, to aggregate to the analytical budget the pertinent expenses.

5 - Technical assistance costs are freely adjusted between the producer and the service provider, but, for classification purposes, are limited to 2% (two percent) of the budget.

6 - It is prohibited to classify an enterprise:
a) for which rural credit classified under the program has already been granted; b) that has already been the object of total or partial classification in the same or another agent of the program.

7 - The classification is formalized through an adherence term signed by the producer and countersigned by the agent, in which the producer unequivocally manifests adherence to Proagro, specifying the enterprise, its location, the classified value, and the additional rate due, as well as declaring full knowledge of the program's regulations, the conditions of which it accepts.

8 - The analytical budget signed by the technical assistance provider, the producer, and the agent must be attached to the adherence term, becoming an integral part of it for all legal and operational purposes.

9 - The classification cannot be revised after the adherence term, except for the linking of own resources used in the replanting of a classified crop.

10 - The adherence term only produces effect, generating rights to coverage, after the emergence of planting and payment of the additional due, in accordance with items 11 to 22.

11 - If for any reason there is total or partial failure in the emergence of planting, only the portion of classified resources proportional to the production expectation quantified by technical assistance is considered linked to the program and, as such, subject to coverage.

12 - For the purpose of the provision in the previous item, it is incumbent upon the producer:
a) to deliver to the agent communication regarding the emergence of planting, accompanied by a report signed by the technical assistance provider, observing the provision in the following item; b) in the same communication, inform the agent if it has interest in replanting, when recommended by technical assistance.

13 - The technical assistance report must inform the health conditions of the crop, any planting failure, the expected production after emergence, and whether there is a recommendation for replanting.

14 - Upon receiving the communication regarding the emergence of planting, it is incumbent upon the agent:
a) to calculate and inform the producer of the amount of resources that remain linked to the program; b) to require the producer to pay the additional amount, which must be effected on the same date, applicable only to the amount of resources that remain linked to the program; c) to arrange for the inspection of the enterprise within a period of 15 (fifteen) days.

15 - Replanting recommended by technical assistance, if classified under the program, revives the initial classification, annulling the dislinking due to failure in the emergence of the first planting.

16 - For the purpose of the provision in the previous item, the adherence term must be amended, updating the initially classified value and adding to it the amount of resources necessary for replanting, observing the following item.

17 - The amount of resources for replanting must be quantified in a budget signed by the technical assistance provider, the producer, and the agent, prepared in current values, without any increase for inflationary forecasts, such document becoming an integral part of the adherence term for all legal and operational purposes.

18 - The amendment to the adherence term only produces effect, generating rights to coverage, after the emergence of replanting and payment of the additional due, in accordance with items 19 to 22.

19 - If for any reason there is total or partial failure in the emergence of replanting, only the portion of classified resources proportional to the final production expectation quantified by technical assistance is considered linked to the program and, as such, subject to coverage.

20 - For the purpose of the provision in the previous item, it is incumbent upon the producer to communicate to the agent the emergence of replanting, attaching to its communication a report signed by the technical assistance provider, in which the latter informs the health conditions of the crop, any replanting failure, and the expected production after emergence.

21 - Upon receiving the communication regarding the emergence of replanting, it is incumbent upon the agent:
a) to calculate and inform the producer of the amount of resources that remain linked to the program; b) to require the producer to complete the payment of the additional amount, which must be effected on the same date, observing the following item; c) to arrange for the inspection of the enterprise within a period of 15 (fifteen) days.

22 - The additional amount provided for in the previous item applies to the amount of resources that remain linked to the program, after deducting the nominal value of the installment on which additional amount has already been applied upon the emergence of the first planting.

23 - The base for calculating coverage and the base for incidence of remuneration for loss verification services is the amount of resources on which the additional amount has been applied.

24 - Without prejudice to other specific provisions of this chapter, it is prohibited to verify losses by the same technician who prepared the plan or project for the classified enterprise.

25 - It is incumbent upon the agent to pay the expenses due for loss verification, by debit to the producer's current account.

26 - On the nominal value of the initially classified resources and those provided for replanting, the agent is entitled to remuneration freely adjusted with the producer, in a percentage not exceeding 2.5% (two and a half percent), as an administration fee, due by the producer at the time of each classification, regardless of any subsequent dislinking resulting from failure in the emergence of planting or replanting.

27 - Documentation related to the enterprise subject to program coverage must be kept in the agent's archive for a period of 5 (five) years from the coverage, with the first year in the operating agency, for the purpose of inspection by the Central Bank of Brazil.

28 - As administrator of the program, the Central Bank of Brazil may, at any time and at its exclusive discretion, prohibit the agent from new classifications of non-financed activity, if it considers its performance in any of the attributions conferred upon it in this chapter to be unsatisfactory.

29 - The other rules of the program apply to the classified enterprise, when applicable and not conflicting with the provisions of this section, understanding "producer" as "borrower" and "agent" as "financier", used in the other sections of this chapter.

30 - The following are the complementary conditions to be observed for classification in Proagro of non-financed activities, related to enterprises linked to the Food Acquisition Program, instituted by article 19 of Law 10696, of 2/7/2003:
a) the same provisions established in the Proagro regulation defined for beneficiaries of the National Program for Strengthening Family Agriculture (Pronaf) apply; b) adherence to Proagro, limited to the simplified budget for the enterprise, may be formalized:
I - individually, up to the value of R$2,500.00 (two thousand and five hundred reais), per family, by including a specific clause in the Rural Product Note (CPR) itself; II - collectively, through cooperatives, informal groups, and producers' associations, which meet the Pronaf conditions, by contract or inclusion of a specific clause in the CPR itself, where it contemplates, in addition to the adherence term to the program, the solidarity of the beneficiaries; c) the amount of risk assumed by Proagro in classifications made by cooperatives, informal groups, and producers' associations, must correspond to the sum of the individual values of each cooperative member, associate, or participant, respecting the limit of R$2,500.00 (two thousand and five hundred reais) per family, these entities not being considered as unique beneficiaries for the purpose of the limitation provided for in item 16-2-13; d) the coverage limit in collective adherences, considering the set of classified crops, must be calculated by deducting from the base, to the extent applicable, the sum of the values provided for in item 16-5-11, namely:
I - losses caused by causes not covered by Proagro; II - resources not applied in the enterprise, including those corresponding to the area where there was no transplanting or emergence of the plant in the definitive location; III - revenues produced by the enterprise.

31 - Adherence to Proagro, in the collective form provided for in the previous item, is restricted to family producers who develop the same enterprise (agricultural activity), in the same municipality.

TITLE: RURAL CREDIT
CHAPTER: Agricultural Activity Guarantee Program (Proagro)
- 16
SECTION: Impediment of Appraisers - 9
------------------------------------------------------------------- 1 - As administrator of the Agricultural Activity Guarantee Program (Proagro), the Central Bank of Brazil may, at its discretion, impede from providing services to the program the technician or company that:
a) has caused damage to the beneficiary or to Proagro; b) has demonstrated unsatisfactory performance in services provided for Proagro; c) is in debt with Proagro.

2 - Upon verification of any of the situations pointed out in the previous item, the agent must:
a) within 10 (ten) subsequent days, address an interrogation to the involved party, granting a period of 30 (thirty) days to provide explanations and present a defense; b) interrogate, in the form of the previous letter, the directors and partners with management power, in the case of a legal entity; c) forward the entire process to the Central Bank of Brazil, within 10 (ten) days of the expiration of the deadline granted for the defense, informing the number of its Individual Taxpayer Registry (CPF) or National Registry of Legal Entities (CNPJ).

3 - The interrogation mentioned in the previous item is carried out, at the agent's discretion:
a) by receipt, collected in the agent's premises; b) by postal mail, with Acknowledgment of Receipt (AR), with express indication that it aims to interrogate the recipient; c) by a person designated by the agent; d) through the titles and documents registry office.

4 - The process must contain the following documents:
a) copy of the interrogation letter, duly receipted or accompanied by the respective AR; b) in the event of refusal to receive the interrogation, a declaration to that effect signed by the person in charge by the agent to carry out the interrogation, attested by 2 (two) witnesses, or a declaration by the employee in charge by the titles and documents registry office; c) response to the interrogation, if presented; d) copy of the interrogated party's registration form; e) copy of inspection and technical assistance reports and loss verification reports; f) copy of documents characterizing the irregularities; g) conclusive opinion of the agent regarding the occurrence.

5 - The facts and evidence must be specified in the interrogation, with precision and clarity.

6 - The agent must forward the process to the Central Bank of Brazil, so that interrogation by public notice is promoted, when the location where the involved party is found is unknown, uncertain, or inaccessible.

7 - Upon communication of irregularities, it is incumbent upon the Central Bank of Brazil, if it considers the justifications presented to be unsatisfactory:
a) to determine the impediment of access of the delinquent to the provision of services to Proagro; b) to communicate the facts to the Public Ministry, when a criminal offense is configured; c) to communicate the occurrence to the Regional Council in which the technician is registered.

8 - In view of the impediment to provide services to Proagro, the agent must note the occurrence in the registration form of the impeded person and of the technical assistance companies in which it participates directly or indirectly, as administrator, partner with management power, controller, shareholder, or majority shareholder, considering them equally impeded.

9 - The impediment originating from a link with an impeded natural person only subsists while the link and the original impediment persist.

10 - An appeal lies against the decision of impediment to the National Monetary Council, its acceptance with suspensive effect being prohibited.

11 - The Central Bank of Brazil may suspend the impediment when an incurable procedural defect is found, capable of rendering the impediment decision null and void.

12 - The request for suspension of the impediment is delivered to the agent, who must forward it to the Central Bank of Brazil, with a conclusive opinion, specifying, if favorable to the request, the reasons that motivate the revision of the impediment.

13 - The impediment and the lifting of the impediment are published by the Financial Management Department of the Financial System (Defin) of the Central Bank of Brazil, by means of a communication published in the Official Gazette of the Union.

TITLE: RURAL CREDIT
CHAPTER: Agricultural Activity Guarantee Program (Proagro)
- 16
SECTION: Final Provisions - 10
------------------------------------------------------------------- 1 - Regardless of the result of the decision on the coverage request, documentation related to the operation must be kept in the archive for a period of 5 (five) years from the last administrative decision, with the first 2 (two) years in the operating agency of the agent, for the purpose of inspection by the Central Bank of Brazil.

2 - The burden of interest incidence ceases for the beneficiary and for the Agricultural Activity Guarantee Program (Proagro):
a) during the period in which the agent is in default regarding the deadlines fixed for it to inform the occurrence of loss communication to the Central Bank of Brazil, process and judge the coverage request, request reimbursement of expenses and release of resources destined to coverages attributable to the program, as well as forward the resource to the Special Resources Commission (CER); b) from the communication of partial losses until the decision on the coverage request, when the agent fails to monitor the development of the respective enterprise.

3 - Without prejudice to the application of the specific norms of this manual, it is mandatory to extend by a period of up to 120 (one hundred and twenty) days the original maturity of the rural credit operation, pending administrative measures within the program, provided that:
a) it is proceeding normally; b) the communication of losses and the appeal to the CER, when applicable, have been presented timely.

----------------------------------------------------------------- OBS. RETRANSMITTED TO CORRECT ART. 12 AND INCLUSION OF DATES IN MCR 6-2-11, "C" AND "D".