Resolution CMN No. 5006 — Provisions on the Agricultural Credit Letter (LCA)

RESOLUTION CMN NO. 5,006, OF MARCH 24, 2022

Provides for the Agricultural Credit Letter (LCA).

The Central Bank of Brazil, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes it known that the National Monetary Council, in a session held on March 24, 2022, based on Articles 4, item VIII, of the aforementioned Law, and Article 49 of Law No. 11,076, of December 30, 2004,

RESOLVES:

Art. 1 This Resolution provides for the Agricultural Credit Letter (LCA).

Art. 2 The minimum maturity period for the LCA is:

I - twelve months, when updated by a price index; (Amended, effective 2/2/2024, by Resolution CMN No. 5,119, of 1/2/2024.)

II - six months, when not updated by a price index. (Amended by Resolution CMN No. 5,215, of 22/5/2025.)

§ 1 The issuing institution is prohibited from:

I - repurchasing or redeeming, in whole or in part, the LCA before the minimum periods established in the caput; and

II - making payment of the values related to the update by price index, accrued since issuance, in the event of repurchase by the issuing institution, or redemption, in whole or in part, before the agreed maturity date.

§ 2 The prohibition mentioned in item I of § 1 also applies to repurchases made by institutions affiliated with the issuing institution of the LCA. (Amended, effective 1/8/2025, by Resolution CMN No. 5,215, of 22/5/2025.)

§ 3 The prohibition on LCA repurchase referred to in item I of § 1 and § 2 does not apply to operations carried out for the purpose of intermediation. (Included, effective 1/8/2025, by Resolution CMN No. 5,215, of 22/5/2025.)

§ 4 In the event of an extension of the LCA, the new maturity date of the instrument must be equal to or greater than the minimum periods established in the caput, considering the extension date as the start date for counting the new maturity period. (Included, effective 1/8/2025, by Resolution CMN No. 5,215, of 22/5/2025.)

§ 5 The provisions of §§ 1, 2, and 3 apply to the LCA subject to extension. (Included, effective 1/8/2025, by Resolution CMN No. 5,215, of 22/5/2025.)

Art. 2-A The issuance of LCA backed by the following credit rights is prohibited: (Included, effective 2/2/2024, by Resolution CMN No. 5,119, of 1/2/2024.)

I - advances on foreign exchange operations; (Included, effective 2/2/2024, by Resolution CMN No. 5,119, of 1/2/2024.)

II - export credits, including certificates, promissory notes, or notes representing them; (Included, effective 2/2/2024, by Resolution CMN No. 5,119, of 1/2/2024.)

III - receivable certificates, including agricultural receivable certificates; and (Included, effective 2/2/2024, by Resolution CMN No. 5,119, of 1/2/2024.)

IV - debentures. (Included, effective 2/2/2024, by Resolution CMN No. 5,119, of 1/2/2024.)

§ 1 The LCA issued until February 1, 2024, with backing in the credit rights mentioned in the items of the caput may be maintained until its maturity date, with any type of extension prohibited. (Included, effective 2/2/2024, by Resolution CMN No. 5,119, of 1/2/2024.)

§ 2 The credit rights referred to in the caput, used as backing for LCA issued until February 1, 2024, may remain in this condition until the LCA's maturity date, with their substitution by credit rights of the same kind permitted. (Included, effective 2/2/2024, by Resolution CMN No. 5,119, of 1/2/2024.)

Art. 2-B The LCA issued from February 2, 2024, must observe the following conditions regarding the participation of rural credit operations among the credit rights used as backing: (Included, effective 2/2/2024, by Resolution CMN No. 5,119, of 1/2/2024.)

I - LCA issued between February 2, 2024, and June 30, 2024: up to 75% (seventy-five percent) of the credit rights used as backing for issuance may be composed of rural credit operations financed with controlled resources as referred to in the Rural Credit Manual – MCR 6-1-2; (Included, effective 2/2/2024, by Resolution CMN No. 5,119, of 1/2/2024.)

II - LCA issued between July 1, 2024, and June 30, 2025: up to 50% (fifty percent) of the credit rights used as backing for issuance may be composed of rural credit operations financed with controlled resources as referred to in MCR 6-1-2. (Included, effective 2/2/2024, by Resolution CMN No. 5,119, of 1/2/2024.)

§ 1 The use of credit rights originating from rural credit operations financed with controlled resources as referred to in MCR 6-1-2 as backing for LCA issued from July 1, 2025, is prohibited. (Included, effective 2/2/2024, by Resolution CMN No. 5,119, of 1/2/2024.)

§ 2 For the purposes of compliance with the caput, the operations regarding the backing must be computed by their respective gross book value, determined according to the criteria established in the Accounting Standard of Institutions Regulated by the Central Bank of Brazil (Cosif), without deduction for loss provisions and without addition of amounts to be released. (Included, effective 2/2/2024, by Resolution CMN No. 5,119, of 1/2/2024.)

Art. 2-C The updated nominal value of LCAs issued may not exceed the gross book value of the credit rights linked to them, determined according to the criteria established in the Accounting Standard of Institutions Regulated by the Central Bank of Brazil – Cosif, without deduction for loss provisions and without addition of amounts to be released. (Included, effective 1/8/2025, by Resolution CMN No. 5,215, of 22/5/2025.)

Art. 2-D The LCA cannot be linked to credit rights written off as losses. (Included, effective 1/8/2025, by Resolution CMN No. 5,215, of 22/5/2025.)

Art. 3 The Central Bank of Brazil, in accordance with its legal competencies, will adopt the necessary measures for the execution of the provisions of this Resolution.

Art. 4 The following are revoked:

I - Resolution No. 4,296, of December 20, 2013; and

II - Article 5 of Resolution No. 4,410, of May 28, 2015.

Art. 5 This Resolution enters into force on May 2, 2022.

Roberto de Oliveira Campos Neto
President of the Central Bank of Brazil