Brazil Central Bank Prepares Consumer Debt Crackdown with Stricter Lending Rules

Brazil's central bank is preparing a package of measures to curb rising household indebtedness, including stricter disclosure requirements for lenders and potential limits on unsecured credit based on borrower income, according to two people involved in the discussions. The measures are expected to be rolled out gradually, with any increase in capital requirements unlikely to feature in an initial package. The central bank has already signaled plans to tighten oversight of unsecured credit, including credit card lending, and has examined international frameworks including Singapore's model, which caps unsecured debt at two to four months of income for lower- and middle-income earners. One proposal under consideration would require lenders to conduct more rigorous assessments of borrowers' financial circumstances before extending credit. Authorities are also weighing stronger disclosure rules to give consumers clearer information about loan terms before signing contracts. The review follows record consumer indebtedness in Latin America's largest economy, with household finances emerging as a central issue in Brazil's presidential campaign.