Febraban: setting the payroll ceiling at an unfeasible level harms INSS beneficiaries

The Brazilian Federation of Banks (Febraban) states that the recent reductions in the interest ceiling on payroll loans intended for INSS retirees and pensioners have reduced the offer of lines to higher risk groups, especially those of older age. This Thursday, the 11th, the National Social Security Council (CNPS) reduced the maximum rate that banks can charge customers in this modality from 1.80% to 1.76% per month, just over a month after the cut previous.

“The Brazilian Federation of Banks (Febraban) understands that setting the interest ceiling at an economically unfeasible level, as has been the case, causes losses to INSS beneficiaries who are at greater risk, in the case of older retirees with lower incomes”, he states. the entity, in a note.

According to Febraban, the payroll has been used by the INSS public to pay outstanding debts, medical expenses, bills and to buy food. With the reduction in supply, customers have resorted to more expensive lines of credit, especially those who are negative, the entity continues.

Also according to Febraban, the drop in the supply of INSS payroll loans by banks happened because with the reductions in the interest ceiling since last year, the rates no longer covered the costs of the line. In addition to funding costs, most banks offer payroll loans through banking correspondents, who are remunerated via commissions, which increases the cost of the offer.

The Minister of Social Security, Carlos Lupi, has argued that the reductions are possible thanks to the cut in the Selic rate, which in 2023 fell from 13.75% to 11.75% per year. The banks state that a direct relationship cannot be drawn: as the average loan term is two years, it is necessary to analyze future interest rates for the same term, which remain at levels above 10%.

“Febraban will continue to seek to demonstrate that, in practice, the reductions in the interest ceiling, as they have been occurring, are having a harmful effect on the most vulnerable section of this INSS public, who need credit under more accessible conditions”, concludes the entity.

In December last year, Febraban sent a letter to Social Security complaining about the lack of dialogue on payroll interest reductions. At the time, he mentioned data from the Central Bank that showed a 30% drop in the monthly average of INSS payroll concessions since March 2023.