Bloomberg — Brazil’s lower house of congress approved Tuesday new rules for loan guarantees in an effort to decrease non-payment risks and reduce the cost of credit, a priority for President Luiz Inacio Lula da Silva’s administration.
Lawmakers voted in favor of the bill, which already won Senate approval and will now be signed into law by the president.
Lula’s government has sought to improve credit access as part of the leftist leader’s attempts to boost economic growth in the face of high interest rates. Finance Minister Fernando Haddad has pushed congress to finalize the loan rules, which alter regulations for how assets are used as collateral and also have the support of the country’s banking industry.
The new framework, a version of which initially passed the lower house under former President Jair Bolsonaro last year, will allow consumers to use the same asset — such as real estate — as collateral for multiple loans until its total value is reached. It also seeks to streamline the process of recovering assets in the event of default.
Brazil’s Senate on Monday approved a separate measure to cap the growth of credit card debt to 100% of its original amount, an attempt to rein in interest rates that currently average nearly 450%.
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