Brazil: Lula wants an interest rate ceiling of 1.97% per month for loans to retirees

President Luiz Inácio Lula da Silva proposed on Tuesday (28) that the government set at 1.97% per month the ceiling of the consigned loan interest for retirees and pensioners of the INSS (National Social Security Institute).

The suggestion occurred during a meeting this morning at the Alvorada Palace.

Now, the percentage defined by Lula must be approved by the National Council of Social Security (CNPS).

A collegiate of the organ will meet this afternoon to decide on accepting the new rate.

CRISIS OVER PAYROLL LOAN INTEREST RATES

The payroll loan interest rates crisis began with the CNPS decision to lower the ceiling from 2.14% to 1.70% monthly.

The body is chaired by the Minister of Social Security, Carlos Lupi.

Although this is a prerogative of the Council, the measure was taken without consulting the Treasury’s technical area.

Nor did it have the approval of the Chief of Staff Minister, Rui Costa.

While the legitimacy of the interest rate reduction was still being discussed internally at the Esplanade of Ministries, banks reacted to the measure.

They determined the temporary suspension of the modality.

Public banks, such as Caixa Econômica Federal and Banco do Brasil, and private banks, such as Itaú Unibanco, joined the freezing of loans.

The financial institutions argued that the 1.7% level set by the CNPS makes the operation unfeasible since it makes the institutions’ profit margin negative.

The Council is responsible for defining the limit of the interest that can be charged on this line of credit.

However, the rate is up to each financial institution.

Last week, Lula classified as “good” the CNPS initiative to lower the interest ceiling.

Still, he criticized the attitude of Minister Carlos Lupi to implement the measure without first negotiating with private banks and having its announcement agreed with the Civil House.

With information from Revista Oeste