Follow on Google News

Source: www.cnnbrasil.com.br | By Matheus Prado of CNN Brasil Business in São Paulo*

Before the window of historically low interest rates could really be taken advantage of by the population, the Central Bank had to change its monetary policy

In April 2019, President Jair Bolsonaro sanctioned Complementary Law 166/2019, making adhesion to the Positive data became automatic. In other words, the entire population began to have their financial commitments collected by the credit bureaus (unless they asked not to be part of the process), which in turn calculates each consumer's score, a kind of good-paying index.

At the time, the movement was seen as revolutionary by the Database Managers (GBD), They hoped to improve and cheapen the supply of credit in the country, as well as injecting up to R$ 1.3 trillion into the market. “The register came into force in 2013, but it didn't add much value. We had 8 million records between individuals and companies,” says Dirceu Gardel Filho, CEO of Boa Vista Serviços. The company runs the sector together with Serasa Experian, Quod and SPC Brasil.

“Today we have already passed the 140 million mark.” Along these lines, eight years after the first version of the law and two years after its structural change, a report by the Central Bank The August-December 2020 figures show that there has been a reduction in the average interest rate paid by Brazilian consumers. From August to December 2020, rates fell by 10.4% for the population with a criminal record and by 15.9% for the 25% with the highest change in credit score.

“This drop is equivalent to 31 p.p., when considering the average interest rate of 299% per year observed in this sample of operations. However, this reduction reached the equivalent of 40 p.p. when considering the average rate of 257% for this specific group, for borrowers whose difference between credit scores with and without the inclusion of data from the Positive Registry was greater,” the text says.

In other words, there are positive signs about the first two years of the Positive Registry in force. However, due to a number of factors, it is difficult to measure the extent of its success so far. The Central Bank's own report indicates the first of these: the pandemic of the new coronavirus, since the closure of the economy has caused the credit market to behave in a way that can't necessarily be replicated.

High rates

A second point, pointed out by economists interviewed by CNN Brasil Business, is the reference value of the rates analyzed. “In fact, the average cost has become lower for those on the Positive Register. But in this case we're talking about overdrafts and credit cards, which have very high rates. It mitigates the problem, but it still doesn't solve it,” says Henrique Castro, professor of finance at FGV EESP.

Ione Amorim, economist and coordinator of Idec's financial services program, corroborates the sentiment and even points to other changes that may have helped the drop in values.

The temporary control of credit card interest rates due to the pandemic and the Central Bank's rules: one that limited revolving credit and another that created an interest ceiling of a “modest” 151.8% per year for overdrafts, may have helped to close this account, according to the expert.

“As we've had to introduce these containment measures, it's difficult to pinpoint who is responsible for these results. In my view, the challenge remains the same: to educate people to know how to use the service to their advantage,” he says.

Lack of data

In the material made available on the subject, the Central Bank also states that the database is still “incomplete”. This is because the service still lacks data from companies providing water, sewage, electricity, gas and telecommunications services, which would be essential for including an unbanked portion of the population in the list of good payers.

Elias Sfeir, president of the National Association of Credit Bureaus, says that the process has hit a few snags. “Each sector has its own technological maturity, but most have already started to move towards adapting to the process. The telcos, for example, have already started sending us the data, but we're having more difficulty with the sanitation sector,” he says.

According to the municipality, companies that provide services such as water and electricity have faced difficulties in organizing the data. In addition, there is a cost involved in sending it. The Central Bank also cites the “disregard of the importance and benefits of the positive register for society”. As there is no penalty for companies, the sending of information is deficient.

Gardel Filho, from Boa Vista, is more adamant. “There is a lack of will and commitment. We understand that there is a cost and we're trying to build a bridge with the companies, but they need to be willing and comply with the regulations,” he says.

Open Banking

With the Central Bank's modernization agenda moving forward, the Positive Registry will now share the spotlight, in terms of data, with Open Banking, which is due to be implemented in 2021 (the second phase is scheduled for July 15). For Thaís Cíntia Cárnio, a banking specialist and professor of International Economic Relations and Financial Market Law at Mackenzie, the process may confuse some consumers.

Ricardo Thomaziello, CDO of Quod, believes that the services are complementary and will create a healthier environment for consumers. “It's an excellent prospect, because the Positive Registry and Open Banking talk to each other. If an institution gets information from the consumer and adds it to its credit score, it will have a much greater potential reach,” he says.

Monetary Policy

Before the window of historically low interest rates could actually be taken advantage of by the population, the Central Bank had to change its monetary policy in order to contain the advance of inflation. If Copom confirms a 0.75% p.p. increase in the Selic rate this Wednesday (16), it will be the third consecutive move of the same degree, raising the basic rate to 4.5% per year.

For Castro, from FGV, the successive increase in interest rates could end up eroding the benefit achieved in 2020. Thomaziello, from Quod, believes that the high level of competition in the market will be enough to prevent interest rates from rising wildly again. “With the country coming out of the pandemic, credit will be important to stimulate the economy.”

Future

Despite the question marks, the feeling, at least on the part of the bureaus, is that the window of opportunity has only been postponed. Sfeir, from ANBC, says that the priority is to ensure that the ratio between credit and GDP continues to grow in the country.

According to the executive, the figure, which stood at 53.6% in April, could reach around 59% by 2023 once the country picks up again. In European countries and the United States, this figure is over 100%.

Regarding the R$ 1.3 trillion, the players in the sector say that the economy must recover first, but that the figure is still on the horizon. Serasa Experian and SPC Brasil were contacted by the report, but had not commented by the time of writing.

*With information from Estadão Conteúdo

ANBC Press Relations

Regina Pimenta: (11) 98136.6835 regina@pimenta.com

Ana Carolina Rodrigues: (11) 98674.0348 anacarolina@pimenta.com