By Attilio Freitas

In April, the National Monetary Council (CMN) issued Resolution No. 4,656/2018 (“Resolution”). Through this new regulatory body, the Central Bank sought to foster innovation capacity and, at the same time, strengthen and stimulate the participation of a certain type of financial institution in the credit market: companies (most often start-ups) of financial technology – the so-called “fintechs”. Here, market regulation was only a means. 

The Resolution created two new types of credit companies: the Direct Credit Company (“SCD”) and the Society for Loans between People (“SEP”). Both companies have limited activities: on the one hand, the SCD – regulated by articles 3 to 6 of the Resolution – is responsible for “carrying out loan, financing and credit rights acquisition operations exclusively through an electronic platform, using financial resources that have their sole origin in equity capital”; and, on the other hand, it is up to the SEP to “carrying out lending and financing operations between people exclusively through an electronic platform”.  

As you can see, the element that unites these institutions is exactly one of their characteristics as fintechs: carrying out its activities exclusively through an electronic platform. At the same time, what differentiates them is that while the SCD acts as a creditor in loan operations – in which it can only use its own capital –, the SEP acts as an intermediary – and cannot use its own capital, that is, the loan operation depends on another party that may act as a creditor (in other words, it is a facilitator of – and in – loan operations). peer-to-peer). 

Briefly, it is important to highlight that in addition to the activities described above, both companies are also permitted to carry out the following operations: (i) credit analysis for customers and third parties; (ii) collection of credit from customers and third parties; (iii) working with the insurance representative in the distribution of insurance related to their main activities; and (iv) issuing electronic currency.  

Furthermore, there is an important limitation in the SEP – which, in the words of the Central Bank itself, serves, for now, to test this type of financial institution, which, if it proves to be widely used, may be changed – which is that each creditor of a loan and financing operation cannot contract with the same debtor, in the same SEP, operations whose value exceeds R$15,000.00 (fifteen thousand reais).  

In light of this very brief analysis, presented above, we sought to show how the Central Bank designed the SCD and SEP regulations, aiming to boost the credit sector. Finally, based on this framework, we can begin to imagine the next steps and uses of these new financial institutions.