Brazil’s Micro Credit Program a Hit. Default: 1.2%.

Within the scope of a new credit program for productive activities, in Brazil, established through a Provisional Measure signed November 29, by President Luiz Inácio Lula da Silva, a total of up to US$ 217.8 million (600 million reais) will be available in loans.

Part of the funds will come from the Workers’ Assistance Fund (FAT, Fundo de Amparo ao Trabalhador), while the rest corresponds to the Brazilian Central Bank’s 2% mandatory transfer share of checking accounts.


The interest rates will vary from 2-4%, depending on the productive application. The program will start with an initial batch of around US$ 7.2 million (20 million reais).


Current micro-credit limits in both government and private banks range around US$ 363 (1,000 reais). They can reach US$ 1.8 thousand (5,000 reais) in the case of FAT funds, but, according to Executive advisor José Graziano, the National Monetary Commission (CMN) plans to introduce greater flexibility into these sums.


He explained that the Provisional Measure removes obstacles to the expansion of micro-credit in Brazil and that the borrowers will no longer need to offer real guarantees.


On the other hand, the loaning agency will be required to orient the application of the loan amounts and supervise the way they are applied.


The banks that hold funds in checking accounts will be able to pass them along to credit institutions, which will loan the money to the interested members of the low-income population.


The program is intended for urban residents, and it will have technical guidance, with the advantage of involving the entire financial system, Graziano affirmed.


The secretary of Solidary Economy of the Ministry of Labor, Paulo Singer, informed that President Lula was selected by the United Nations as one of the 11 world figures responsible for the diffusion of micro-credit, which has already benefitted 100 million people around the world this year. The award is the result of the UN’s declaration of 2005 as International Micro-Credit Year.


The Bank of the Northeast (BNB) is a pioneer in the concession of micro-credit in Brazil. Its loans in this area amount to 155 thousand clients, who make an average of three credit operations per year.


Up to now the BNB has totaled between 450 thousand and 500 thousand loans. The default rate has been 1.2%. 1,160 municipalities have been served.


Agência Brasil

Tags:

Ads

You May Also Like

Brazilian Foreign Minister Celso Amorim

Brazil and G20 Vow to Stand Ground Against US’s and EU’s Farm Subsidies

Developing countries are vowing to stand their ground on key principles in deadlocked world ...

Brazil Extradites to Argentina Operation Condor Suspect

The Brazilian government has extradited to Argentina a retired Uruguayan army colonel to face ...

Brazilian TAM Airline Reaches 58% of International and 51% of Domestic Markets

Brazil’s National Civil Aviation Agency (ANAC) announced that TAM Brazilian Airline registered 28.1% growth ...

A Brazilian Ant With a Christian Message for the Whole World

Smilingüido is an ant that lives with his friends in the anthill of the ...

Brazil to Send Aircraft Carrier to Help Tsunami Victims

Brazil’s government is studying the possibility of increasing its aid to the Asian and ...

67% of Brazilians Never Surfed the Internet, 54% Never Used a Computer

A study prepared by the Brazilian Internet Steering Committee released yesterday, November 8. shows ...

Progressive Rock & Jazz Fusion – A Short History

Progressive Rock is an elusive term applied to that type of rock music that ...

Brazil’s Industry Grows 5.5%, Rio Grande do Sul Shrinks

Brazil’s industrial production in May was up in 13 of the 14 regions analyzed ...

Half of Brazilians Favor (Unconstitutional) Third Mandate for President Lula

In Brazil public opinion is split almost in half on the re-election of Brazilian ...

An Invitation to Help Put and End to Impunity in Brazil

Newspaper readers throughout the Americas are being urged by the Inter American Press Association ...