The Central Bank of Brazil (BCB) announced that the National Monetary Council (CMN) approved Resolution 4,970, which regulates authorization process for the operation of financial institutions and will be effective from July 01, 2022. In a separate update, BCB published the "Normative Instruction," which establishes the procedures for "sending" information on the social, environmental, and climate risks of exposures in credit operations and securities and enters into force on July 01, 2022. The instructions highlight that the remittance of information needs to be through the document provided in the Annex of the Instructions while the information is to be reported every six months. Additionally, BCB announced that a project selected to be part of the first cycle of the regulatory sandbox has passed through the “Lift Lab” for the development of innovative product prototypes. The project is a platform for the issuance and trading of credit securities, especially Bank Credit Notes (CCBs), related to the real estate sector, developed by "INCO Investimentos".
In yet another development, BCB announced that it authorized 74 credit fintech companies to operate in Brazil, out of which 64 have been classified as "Direct Credit Societies" (SCD) and 10 have been classified as "Personal Loan Societies" (SEP). Direct Credit Societies carry out credit operations with their own resources and are authorized to provide additional services to other financial and non-financial institutions, such as analysis and collection of credit for third parties, issuing of e-money and credit card and insurance resale. Personal Loan Societies (SEP) enable peer-to-peer lending transactions, whereby funds received from creditors are directed directly to debtors, after negotiation on an electronic platform.
Related Links (in Portuguese)
- Normative Instruction
- Notification on Resolution 4,970
- Resolution 4,970
- Notification on Regulatory Sandbox and Lift Lab
- Notification on Credit Fintech Companies
Keywords: Americas, Brazil, Banking, Securities, Fintech, Credit Risk, Lending, Regulatory Sandbox, Regtech, ESG, Climate Change Risk, Disclosures, P2P Lending, BCB
Hasan leads Moody’s Analytics ESG methodology development. He is expert on carbon transition, nature related risks and is a guest lecturer at ESSEC Business school on sustainable finance.
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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