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Many Auxílio Brasil beneficiaries took out payroll-deductible loans between the last few months of 2022 and the beginning of the current year. This type of loan was introduced on October 10 of the previous year and was warmly received in the first few weeks.
However, certain aspects of payroll-deductible loans, such as high interest rates and the income requirement for customers, sparked heated debates. In this context, the granting of credit was suspended in Brazil, and this situation persists.
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STF is close to allowing payroll-deductible loans
Read also: Bolsa Família: New loan options available through Caixa Tem
The Federal Supreme Court (STF) obtained a majority of votes to authorize the contracting of payroll-deductible loans. This means that recipients of social benefits could resume taking out this type of loan. However, the trial was interrupted and has no set date to resume.
Minister Alexandre de Moraes requested a halt to the case, citing the need for more time to assess the situation as a whole. Therefore, Bolsa Família beneficiaries, which replaced Auxílio Brasil, will have to wait a little longer for permission to take out payroll-deducted loans.
Why were payroll-deducted loan applications suspended?
The Democratic Labour Party (PDT) requested the suspension of payroll-deducted loans for beneficiaries of social programs in October of last year, precisely when this type of loan began operating in the country.
In summary, the party argued that payroll-deducted credit could intensify over-indebtedness among the poorest population. In addition, beneficiaries of social programs, who are already vulnerable, would have their income affected even further.
The PDT's action also challenged the increase in the income limit for formally employed workers and INSS beneficiaries. Previously, payroll-deducted credit could account for up to 35% of the income of these groups, but payroll-deducted loans began to account for up to 45% of their earnings.
Follow the STF ministers' vote on the matter
Reporting Justice Nunes Marques defended rejecting the action. He argued that the changes to the rules on payroll-deducted loans were in accordance with the Constitution.
See the justices who followed the reporting justice and voted against the action:
- Cármen Lúcia;
- Dias Toffoli;
- Gilmar Medes;
- Luiz Edson Fachin;
- Luiz Fux.
Nunes Marques explained that the Federal Constitution does not contain “any legal limitation that justifies declaring expanded access to payroll-deducted credit unconstitutional”. In addition, he stated that the “new limits on the deductible margin are not incompatible with constitutional principles”.
The reporting justice argued that the PDT, “when discussing the harm to borrowers’ financial reorganization, seems to assume that individuals or families derive no benefit whatsoever from taking out credit, when, in fact, they obtain immediate liquidity to pay off debts, spend on urgent expenses, or invest in a plan that has continually been postponed”.
Although most of the justices argued for rejecting the PDT’s request, there is still no date for the resumption of payroll-deducted loan agreements in the country.
Changes to the Bolsa Família payroll loan
With Bolsa Família replacing Auxílio Brasil, the terms for taking out payroll loans have undergone some changes. The most notable is the change in the name of the loan type, which was previously called the Auxílio Brasil loan and is now the Bolsa Família loan.
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Regarding the changes that directly affect users, the main one was the payroll-deductible margin allocated to the benefit. The new Bolsa Família payroll loan cannot exceed the limit of 5% of the income of borrowing users.
Another rule establishes a new interest rate limit for payroll loans, now set at 2.5% per month. The contracted amount must also be repaid in 6 monthly installments.
See the comparison between the loan types in 2022 and 2023:
| Payroll-Deducted Loan | ||
| Rules | Auxílio Brasil (2022) | Bolsa Família (2023) |
| Payroll-deductible margin | 40% | 5% |
| Interest rate cap | 3.5% per month | 2.5% per month |
| Number of installments | 24 installments | 6 installments |
How to apply for credit through Bolsa Família?
Read also: Restructuring of Bolsa Família? Understand the changes with the current MP
At the moment, the Bolsa Família payroll loan is suspended. However, beneficiaries of the social program have an alternative for obtaining credit. This is the Progredir Program, which provides microcredit to people enrolled in the Single Registry (CadÚnico).
Users interested in taking out the credit should go to a Caixa Econômica branch to check their eligibility for the credit. If the answer is positive, bank employees will inform them of the terms of the contract.
