Note: The data are provided for informational purposes only and in some cases, the information may be incomplete, not fully accurate or out of date. For more information on how data are compiled, see "A Note About Sources." The date of the last update for each country is marked in the section "Country Indicators." We welcome updates and comments. Click here to write to us.
Brazil
Country Indicators
Information Last Updated
August 2003
Population (Millions)
186.4 [2005]
Population Density (per sq km)
22 [2005]
GNI per capita (US$)
3460 [2005]
GNI per capita (PPP US$)
8230 [2005]
Total Unemployment (% of labor force)
10 [2003]
Employment in Agriculture (% of total employment)
20 [2002]
Gross domestic saving (% of GDP)
-8 [2005]
% Population under $2/day (PPP)
22 [2003]
Depth of Financial Sector (M2/GDP)
27 [2005]
Exchange rate
1 USD : 2.940131 BRL, as of 25 February 2004
Ownership structure of banks (and financial institutions if available)
There are federal, state, private, and foreign owned banks, private banks with joint national and foreign ownership, and joint private/public banks.
Formal and Semi-Formal Sources of Microfinance
Microfinance institutions (Sociedades de Credito ao Microempreendedor (SCMs)), NGOs (Civil Society Organization with a Public Interest (OSCIPs)), credit cooperatives, development banks (e.g. Banco do Nordeste do Brazil’s CrediAmigo program)
Government-funded programs also exist to promote development of micro- and small enterprises. Consumer credit and supplier credit are also popular.
Banco Nacional de Desenvolvimento Econômico e Social (BNDES) offers government-backed financing to MFIs, SEBRAE (Brazilian Services to Support Micro and Small Enterprises) also provides financing to MFIs (SCMs). Central credit cooperatives are apex institutions owned by member credit cooperatives that, among other things, help to re-allocate surplus resources between cooperatives and seek lines of funding for member cooperatives.
Definitions of microfinance or microcredit
Providing financing and guarantees to individuals, with the aim of supporting professional, commercial, or industrial enterprises of small scale, and to organizations classified as microenterprises under applicable legislation. (Central Bank of Brazil Resolution no. 2874 of 2001, Art. 2)
Cooperative society; must specify that it is a credit cooperative
Licensing Requirements and Standards
Standards for ownership officers
Audit of Proposed Founders, Owners, Officers
Prohibited sources of funds
Banks
Banks and Credit Institutions
Financial statements required
Non-bank Financial Institutions
Microcredit Companies
Fit and proper test
Proof of financial capacity.
Can access public sector funds, donor funds, Civil Society Organization with a Public Interest (OSCIP) funds, private investor funds, lines of credit from foreign or domestic financial institutions, and funding from Brazilian Services to Support Micro and Small Enterprises (SEBRAE)
Cooperatives/Credit Unions
Credit Cooperatives
Fit and proper test
Non-profit institutions
Microcredit NGOs
Cannot borrow from other financial institutions
Capital and Reserves
Minimum capital
Minimum capital adequacy/gearing ratios
Loan loss provisioning, write-off
Reserves, Liquidity requirements
Banks
Development Banks
Entry capital provided in Central Bank notification of 29 Aug 2001
Non-bank Financial Institutions
Microcredit Companies
US $36,000 (105,843 BRL)
Maximum debt-to-liquid assets ratio is 5 times
Provisioning of 0.5% to 100% depending on classification
Cooperatives/Credit Unions
Credit Cooperatives
As of 2000, US $1,000 (2940 BRL) (up to US $100,000/294,000 BRL), will rise to US $21,000 (61,742 BRL) by 2005.
Prudential guidelines specified in Resolution No. 2771 of August 2000
No capital adequacy requirements; leverage requirements restrict credit cooperatives affiliated to a cooperative system to ten times liquid capital and independent cooperatives to five times liquid capital.
Prudential guidelines specified in Resolution No. 2771 of August 2000
Provisioning of 0.5% to 100% depending on classification
Prudential guidelines specified in Resolution No. 2771 of August 2000
No reserve requirements with the Central Bank of Brazil (BCB), although 90% of demand deposits and 25% of time deposits must be placed in liquid instruments. Central credit cooperatives need to meet the same requirements as commercial banks.
Prudential guidelines specified in Resolution No. 2771 of August 2000
Loans can not be made to management, relatives, and shareholders holding more than 10% of equity.
Non-bank Financial Institutions
Microcredit Companies
Permitted: Loans, guarantees to individuals and organizations. Can invest in financial markets within limits stipulated in license.
Prohibited: Issuing debt, deposit-taking, consumer loans, mortgage loans, participating in the interbank deposit market, insurance services, and publicly issuing securities
Can open “Micro-Credit Service Points” (branches) with full flexibility; detailed notice to regulators required.
Not subject to Usury Law
Maximum loan size = US $3,600 per client
Cannot own shares in any financial institution or other entity licensed by Central Bank of Brazil (BCB)
Cooperatives/Credit Unions
Credit Cooperatives
All cooperatives can offer demand and term deposits for members, loans, obtain loans and grants from domestic or foreign financial institutions, including concessional loans, offer collection and custody services, and partner with other financial institutions to gain access to the payment system.
Cooperatives affiliated with a central cooperative or cooperative bank can also issue credit cards and letters of credit, provide insurance products, and access public sector funding.
Prohibited: foreign exchange, leasing, factoring, or housing finance.
Not subject to Usury Law
Max exposure to a single member cannot exceed 25% of liquid capital, 20% max to an affiliate of a central cooperative, 10% to a member of an affiliated cooperative and 5% per member of an unaffiliated cooperative.
Non-profit institutions
Microcredit NGOs
Permitted: Loans, check-cashing. Can access public sector funds, donor funds, and private investor funds.
Prohibited: Deposit-taking, insurance and pawn services, housing loans, credit cards
Not subject to Usury Law; but NGOs not registered as microcredit NGOs (OSCIPs) subject to 12% per annum ceiling.
Reporting and Supervision
Supervision Method
Disclosure and reporting requirements
Depositor protection mechanisms (e.g., deposit insurance or lender of last resort)
Banks
Development Banks
Off-site inspection of financial statements, benchmarking institutions against their peers. On-site evaluations of risk management practices, reviews of financial reports, and analysis of capital adequacy and provisioning.
Balance sheets must be submitted bi-annually
Non-bank Financial Institutions
Microcredit Companies
Audited financial statements not required.
Microfinance institutions (SCMs) and branches must report credit data to Central System of Credit Risk
No deposit guarantees
Cooperatives/Credit Unions
Credit Cooperatives
Credit cooperatives are officially supervised by the Central Bank of Brazil (BCB), but supervision is increasingly being delegated to the two main cooperative networks, Sicoob and Sicredit. Each offer differing supervisory methods.
Balance sheets must be submitted bi-annually
No deposit guarantees
Non-profit institutions
Microcredit NGOs
External audits required, but only in order to access public sector funding. Not subject to any other supervision.
Tax Treatment
Taxes on Income
Taxes on Transactions
Other
General Applicability
General Applicability
Corporate income tax rate (2005): 15%; Income surtax: 10% on profits exceeding US$81,600 (BRL 240,000) (annually); Individual income tax rate: 27.5%; Capital gains are taxed as income. [All information in this section from Deloitte 2005.]
VAT: 18% (Standard). Interstate transactions tax: 7% or 12%.
Dividends 0%; Interest 15%; Royalties 15%.
MFI-specific
MFI-specific
Microfinance institutions (SCMs) and all financial institutions subject to heavy taxes; microcredit NGOs (OSCIPs) and credit cooperatives are tax-exempt.
Microfinance institutions (SCMs) and all financial institutions subject to financial transactions’ tax of 1.05% per transaction.Credit cooperatives are exempt from financial transactions’ tax.
Other Relevant Business Legislation
Credit Rating and Reporting Requirements: Formatting requirements (e.g., CGAP, GAAP, or other international standards)
General Applicability
General Applicability
All financial statements must follow a detailed chart of accounts provided by Brazil’s Accounting Plan of National Financial System Institutions (Cosif).
