By Luciano Fantin – This article deals with the changes introduced by the CMN on 3/26/20 in order to strengthen the credit market of fintechs, due to the pandemic caused by the coronavirus.
The National Monetary Council (CMN) issued, on 3/26/20, Resolution 4792. This rule changes Resolution 4656 of 4/26/18. It comes at the heart of the initiatives of the CMN and the Central Bank of Brazil (BCB) with a view to encouraging the credit market, in this moment of pandemic originated from COVID-19.
Res. 4656/18 regulated fintechs in Brazil, namely: the direct credit society (SCD) and the peer-to-peer loan society (SEP). In this article, our focus will be on SCD, which concentrates most of the news, which are also more relevant at this time.
In Brazil, we can identify the following categories of fintechs: payment, financial management, loan, investment, financing, insurance, debt negotiation, crypto and Distributed Ledger Technologies (DLTs), foreign exchange, and multiservices.
Just to remember, some of the main features of a SCD are:
- It is a financial institution and requires prior authorization from the BCB for its operation;
- Operations must be carried out exclusively through an electronic platform;
- It can only use its own capital to offer loans, financing and / or acquire credit rights;
- Notwithstanding the previous point, SCD may sell its credits to financial institutions, securitization companies (whose assets are intended exclusively for qualified investors), and also investment funds (whose quotas are intended exclusively for qualified investors). This last option, a novelty brought by Res. 4792/20, opened the scope of obtaining funding for SCD, since, previously, the sale could only be made to a Credit Rights Investment Funds (FIDC);
- In terms of funding, another novelty now brought by the recently published Resolution, says that SCDs will be able to finance their operations with resources from transfers from the National Bank for Economic and Social Development (BNDES), which increases the range of options for both the financial institution and its customers;
- Additionally, it can provide services, such as credit analysis for third parties, collection, insurance representation related to credit operations, issuance of electronic currency and issuance of post-paid payment instrument. This last service was included by Res. 4792/20 mentioned above, and it is a great novelty. It is a kind of “verticalization” of the operations of an SCD, which previously had to sign an agreement with a bank, or even a payment institution, for the purpose of issuing cards. With this release, business scalability is enhanced, as well as the offer of products and provision of services to the final consumer.
The moment is of a worrying and serious crisis. The CMN and BCB initiative can, however, be a good opportunity, both for SCDs and for consumers of financial products and services.