Featured Product

    BCB Amends Rules on Credit Risk Approach and Open Banking

    July 29, 2021

    The Central Bank of Brazil (BCB) published Resolution 121 to amends Circular No. 3,644, of March 4, 2013, regarding the procedure for calculating the capital requirement of exposures subject to credit risk under the standardized approach. BCB also published Resolution 114 and Resolution 117 on the implementation of open banking. All of these resolutions enter into force on the date of their publication, which is July 29, 2021 for Resolution 121, July 14, 2021 for Resolution 114 and July 21, 2021 for Resolution 117.

    The change addressed in Resolution 121 on the capital requirements for the standardized approach to credit risk concerns the treatment of the risk-weighting factor applied to credits arising from temporary differences that may generate presumed credit under the Credit Incentive Program (PEC), created by Provisional Measure No. 1,057 dated July 06, 2021. The PEC aims to promote the performance of credit operations by BCB-authorized institutions, except credit cooperatives and consortium administrators, with micro entrepreneurs individuals, micro-enterprises, small businesses and rural producers, with annual gross revenue, calculated in the calendar year 2020, of up to BRL 4.8 million; in the case of a legal entity incorporated in 2020 or 2021, this limit will be proportional to the months in which it was active, respectively, in 2020 or 2021, or measured according to the criteria and policies of financial institutions, considering the invoicing equivalent to the period of twelve months. Provisional Measure No. 1,057, of 2021, determines that the aforementioned operations of credit must be contracted by December 31, 2021. It also clarifies that these operations will not be guaranteed by the federal government or by a public entity and that the credit risk is fully of the granting institutions (and that will not have any kind of contribution of public resources or interest rate equalization by the federal government). Financial institutions that adhere to the PEC as grantors of the credit operations may determine presumed credit, until December 31, 2026, in total amount limited to the lower of

    • the gross book balance of credit operations granted under the PEC and the Working Capital Program for Business Preservation (CGPE), referred to in Provisional Measure No. 992, of July 16, 2020; and
    • the accounting balance of credits arising from temporary differences. From this amount, the values ​​of the Vote 168/2021–BCB, of July 27, 2021

    Resolution 114 on open banking updates the timeline for implementation of open banking. The update relates to the postponement, to August 13, 2021 (from July 15, 2021), of the beginning of the implementation of the application programming interfaces (APIs) for sharing customer registration and transactional data as well as the mechanism for handling and resolving disputes between institutions participating in the scope of the governance structure of open banking. Resolution 114 amends Resolution 109 dated June 24, 2021, which updated the schedules of submission of convention and implementation of the sharing of data and services of the scope of open banking and replaced the terms defined in Articles 47 and 55 of the Joint Resolution No. 1 of May 04, 2020. BCB also published Resolution 117, which amends Resolution 32 establishing the technical requirements and operational procedures for the implementation of the "Open Financial System" in the country.


    Related Links (in Portuguese)

    Keywords: Americas, Brazil, Banking, Basel, Regulatory Capital, Standardized Approach, Credit Risk, Resolution 121, Open Banking, API, BCB

    Featured Experts
    Related Articles

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582