Caixa Announces Final Suspension of Payroll Loan to Auxílio Brasil | Economie

“For contracts already signed, nothing changes. Payment of installments continues automatically, through deduction on accrual, directly by the Ministry of Development, Social Aid, Family and Hunger Control (MDS),” the bank explained. In a press release.

Caixa Econômica Federal is not the only bank offering payroll loans to Auxílio Brasil beneficiaries. But, according to the Ministry of Citizenship, 80% of all recruitment has been done via Caixa, according to a balance sheet as of November 1st.

There are at least 11 other financial institutions authorized by the previous government to carry out loans – see list here.

In early January, the government announced that those in debt from the Auxílio Brasil Program would be included in the Desenrola Brasil programme, a campaign promise made by President Luiz Inacio Lula da Silva to solve the problem of Brazilians’ high level of indebtedness.

The Payroll Loan was made available to Auxílio Brasil recipients in early October. The maximum salary loan amount is set at 40% of the monthly amount for Auxílio Brasil. For the calculation, R$400 is taken into account, not the minimum monthly amount of R$600 paid to families. Thus, the installment value is R$160 at most.

An interest limit of 3.5% per month is set, but each financial institution can adopt a different rate, subject to this ceiling. In the case of Caixa, the bank set a rate of 3.45% per month.

If the benefit is cancelled, the loan will not be cancelled. That is, even if you no longer receive Brazilian aid, the beneficiary needs to arrange to pay the loan every month until the end of the contract term.

In a payroll loan, the deduction is made directly at the source. That is, during the contract period, the premium is deducted directly from the monthly amount to benefit.

When contracting, financial institutions must inform the beneficiary of the following conditions:

The offer of payroll loans through Auxílio Brasil has been criticized by professionals and entities for being harmful to low-income populations because program resources are usually used for basic survival expenses.

Taking out a payroll loan linked to Auxílio Brasil can be beneficial to someone who has an urgent and imperative need – but not to pay daily bills or to make unnecessary purchases. This is because the credit can jeopardize the beneficiary’s disposable income in the long term. Thus, money may be short for several months to cover basic expenses, such as food.

For Idec, the maximum interest rate set by the government, 3.5% per month, is offensive. “This is because it is much higher than that currently practiced for other types of payroll loans, such as those for retirees, retirees and civil servants,” says the entity. The institute even identified more than 2,000 consumer complaints at the start of the loan release.