Banks may use eSocial to offer loans to CLT employees

By Pedro Rafael Vilela - Reporter for Agência Brasil – The federal government will present a legislative proposal to expand the supply of payroll loans to the approximately 42 million workers with formal employment contracts (CLT) who work in the private sector and have difficulty accessing this financial service. The idea is to create a platform that allows banks and financial institutions to directly access the credit profile of workers with formal employment contracts through eSocial, the mandatory electronic system that unifies labor, social security and tax information of employers and employees throughout the country.

A payroll loan is a loan in which the installments are deducted directly from the debtor's salary or benefit. It is a type of credit that offers lower interest rates and is one of the most widely used in Brazil, especially by public servants and retirees and pensioners of the National Institute of Social Security (INSS).

The legislation that deals with payroll loans already allows workers with formal employment contracts to have access to this type of loan, deducted from their salary, but it requires the signing of agreements between companies and banks, which, in practice, makes it difficult for small and medium-sized companies, and many large companies as well, to adopt the model on a large scale.

"The domestic worker, the employee who serves a family, they have their registration, their contributions, but they don't have access to payroll-deducted loans. Or someone from a small business, a small shop, a bakery, a pharmacy. It's unlikely that an employee under the Simples [simplified business tax regime], an employee of a small business, will have access to payroll-deducted loans, because it requires a series of formalities between the company and the banks," explained Finance Minister Fernando Haddad, when announcing the proposal in an interview with journalists at the Planalto Palace.

According to the minister, the product will cause a "small revolution" in Brazilian credit. "You will be able to deduct payments through eSocial, which is something that every company today has to adhere to in order to collect what it owes to the worker in terms of social security contributions, severance pay fund [FGTS], income tax withheld at source, and so on. So, eSocial has become a vehicle that allows for private payroll-deducted loans," said Haddad.

The matter was discussed during a meeting attended by President Luiz Inácio Lula da Silva, Minister Haddad, Minister of Labor Luiz Marinho, as well as the directors of five of the largest public and private banks in the country: Banco do Brasil, Caixa Econômica Federal, Bradesco, Itaú and Santander.

"We will have the capacity to make it so that banks no longer need to make agreements with micro, small, medium and large companies. This is currently the major bottleneck in private credit. There are millions of employers, differentiated risks, differentiated sectors of the economy, and banks are unable to map the credit risk of workers. With centralized management through e-Social, connecting to banking applications, banks will be able to offer rates, they will be able to offer lines of credit, and workers will be able to access the new payroll loan," argued the CEO of the Brazilian Federation of Banks (Febraban), Isaac Sidney.

To enable the new type of payroll loan using eSocial, the government should issue a Provisional Measure (MP) sometime in February, according to the Minister of Labor and Employment (MTE), although an exact deadline has not been defined. Sending a bill is also not ruled out. "The decision on the legislative vehicle will be made by President Lula," he indicated.

Rules

The rules on the limits of the loan for employees under CLT should remain, such as the ceiling of 30% of the salary committed to the loan and the possibility of using 10% of the balance of the Severance Pay Guarantee Fund (FGTS) and the total fine received for dismissal without just cause to pay the debts, in the event of termination of employment.

According to the president of Febraban, the payroll of private sector workers under CLT is around R$113 billion, while the volume of payroll loans in this segment is only R$40 billion. The payroll of INSS retirees and public servants, which is around R$120 billion, results in a payroll loan offer of R$600 billion.

"We are estimating that these R$40 billion could triple, which means that this credit portfolio could reach around R$120 billion, R$130 billion, provided that we have access to this platform [eSocial] and that the banks' applications, the banks' channels, can also be vehicles for offering this product. It depends on the regulation that comes, and how much the banks will be able to integrate into this platform," pointed out Isaac Sidney.