Brasília, 7/25/2003 (Agência Brasil - ABr) - The micro-financing (microcrédito) program announced by president Luiz Inacio Lula da Silva on June 25 got some regulatory norms yesterday during an extraordinary meeting of the Monetary Policy Committee (Copom). It was announced that banks will be allowed to set aside 2% of sight deposits for use in the program.
Low-income bank clients, with simplified accounts, regular accounts or a savings account that has a balance of R$1,000 are eligible to participate in the program, as well as people registered in government assistance programs.
According to minister of Finance, Antonio Palocci, loans will have a ceiling of R$500 for individuals, and R$1,000 for small businesses; the latter do not have to be formally registered. "You basically just have to be a person with a business idea," said the minister.
Loans will carry interest of up to 2% per month.
The Central Bank reports that as there was an average of R$55 billion in sight deposits in banks in May, that means that some R$1.1 billion should be available for the micro-financing program. Although bank participation is voluntary, Palocci said some private banks (Bradesco, Itaú, Unibanco, Santander/Banespa and ABN/Real) have expressed a desire to be part of the program. Federally-controlled banks, such as Banco do Brasil, Caixa Econômica Federal and Banco do Nordeste (BNB) will begin micro-financing in August.
"We are very optimistic about this program because it will make an enormous amount of financial resources available to small businesses run by people who simply do not have access to credit on the regular market where those who can least afford it have to pay the highest rates," explained Palocci. He added that often the people the program targets are those who need money for a little business in their own home, or for home repairs. "These very low-income people pay a very steep price when they need money," the minister said.
Palocci concluded by pointing out that the program will have a positive effect on the economy, although it will not involve huge sums or heat up the economy. One thing it will do is create jobs and generate income. "Brazil is a country where small businesses are highly labor intensive," he said. (AB)
