Feb. 10 (Bloomberg) -- Brazil is excluding small and mid-sized banks that aren’t focused on credit from an initiative to provide them with additional funding.
Under rules published today, lenders must maintain credit or leasing equivalent to at least 20 percent of assets to be eligible for funding from bigger banks through a temporary reserve requirement program announced in December. Policy makers are encouraging bigger lenders to use a portion of their reserves requirements to buy loan portfolios and bonds from small- and mid-sized banks.
Starting Feb. 24, big banks will earn no interest on as much as 27 percent of their reserve requirements on time deposits. The funds can be used to buy loans or bonds from financial institutions with equity below 2.2 billion reais ($1.3 billion). That threshold will gradually grow to 36 percent in August. The relief program ends June 2014, according to an e-mailed statement today.
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