Recently, the Government announced a reduction in the INSS payroll interest rate, from 2.14% to 1.7% am. Days after the announcement, several banking institutions decided to suspend offering the credit modality.

The new limit is 0.44 percentage points lower than the previous limit. The interest ceiling for payroll credit cards also showed the same drop, reducing from 3.06% to 2.62% am

The reduction in interest rates was approved by the CNPS (National Social Security Council) last Monday, the 13th. By 12 votes in favor and 3 against, the approval took place and should come into force when the normative instruction is published in the Union Gazette.

The CNPS only defines the interest ceiling. On the other hand, the definition of the rate is made by each financial institution. Thus, they may decide not to offer the credit modality if they understand that the new limit makes the product unfeasible.

In a note, after confirming the interest rate reduction, Febraban stated that “The interest levels set do not support the cost structure of the product“. In other words, it was already expected that financial institutions would suspend the credit modality.

Furthermore, it was also foreseen by the entity that:

Finally, Febraban justified that 42% of people who have INSS consignments “They are people who are negative at credit bureaus.” Therefore, the two modalities (credit and card) “are practically the only lines accessible to this most vulnerable public“. Therefore, due to the risk of the loan, reducing rates is not interesting for financial institutions.

The news of the suspension was reported by G1, and was confirmed by InfoMoney, which contacted Itaú Unibanco (ITUB4), Bradesco (BBDC4), Santander (SANB11), Banco do Brasil (BBAS3), Caixa Econômica Federal and the Banco Pan (BPAN4).

See below what the banks mentioned above responded to InfoMoney:

To the newspaper O Estado de S. Paulo, the following financial institutions also confirmed the suspension of credit:

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