The National Monetary Council (Conselho Monetario Nacional – “CMN”) edited Resolution No. 4,792, of March 26, 2020 (“Resolution 4,792/2020”), through which:

I. Amended Resolution No. 4,656, of April 26, 2018;

II. Authorized credit fintechs formed as Direct Credit Companies (Sociedades de Crédito Direto – “SCD”) to issue credit cards;

III. Expanded the scope of funds to which the SDC and the creditors of the Loan Companies between People (Sociedades de Empréstimo entre Pessoas – “SEP”) can assign their portfolio and

IV. Authorized the corporate control of credit fintechs (SCD and SEP) to be held indirectly by investment funds.

The measure aims to mitigate the effects of the COVID-19 pandemic on the Brazilian economy, as credit fintechs are an important credit granting channel because, due to the capillarity of their electronic platforms, they reach customers with less access to financial services, such as small and medium-sized businesses. SCD transactions may be financed with resources from transfers from the National Bank for Economic and Social Development (Banco Nacional de Desenvolvimento Econômico e Social – “BNDES”).

As of May, SCD’s and SEP’s credits may be assigned to other types of funds, in addition to Credit Rights Investment Funds (Fundos de Investimentos em Direitos Creditórios – “FIDC”), keeping the limitation on the allocation of quotas to qualified investors.

Finally, CMN authorized the investment funds, specifically the private equity ones, to hold the corporate control in credit fintechs indirectly, that is, through a legal entity located in Brazil and provided that such entity has the exclusive corporate purpose of corporate participation in financial institutions.

Resolution 4,792/2020 will come into effect as of May 4, 2020. Access this resolution here.The National Monetary Council (Conselho Monetario Nacional – “CMN”) edited Resolution No. 4,792, of March 26, 2020 (“Resolution 4,792/2020”), through which:

I. Amended Resolution No. 4,656, of April 26, 2018;

II. Authorized credit fintechs formed as Direct Credit Companies (Sociedades de Crédito Direto – “SCD”) to issue credit cards;

III. Expanded the scope of funds to which the SDC and the creditors of the Loan Companies between People (Sociedades de Empréstimo entre Pessoas – “SEP”) can assign their portfolio and

IV. Authorized the corporate control of credit fintechs (SCD and SEP) to be held indirectly by investment funds.

The measure aims to mitigate the effects of the COVID-19 pandemic on the Brazilian economy, as credit fintechs are an important credit granting channel because, due to the capillarity of their electronic platforms, they reach customers with less access to financial services, such as small and medium-sized businesses. SCD transactions may be financed with resources from transfers from the National Bank for Economic and Social Development (Banco Nacional de Desenvolvimento Econômico e Social – “BNDES”).

As of May, SCD’s and SEP’s credits may be assigned to other types of funds, in addition to Credit Rights Investment Funds (Fundos de Investimentos em Direitos Creditórios – “FIDC”), keeping the limitation on the allocation of quotas to qualified investors.

Finally, CMN authorized the investment funds, specifically the private equity ones, to hold the corporate control in credit fintechs indirectly, that is, through a legal entity located in Brazil and provided that such entity has the exclusive corporate purpose of corporate participation in financial institutions.

Resolution 4,792/2020 will come into effect as of May 4, 2020. Access this resolution here.