Brazil cenbank takes new step to boost lending

Tue Nov 25, 2008 3:03pm EST
SAO PAULO, Nov 25 (Reuters) - Brazil's central bank on Tuesday unveiled new measures easing reserve requirements in a bid to funnel cash to the country's national development bank, the latest in a series of steps aimed at increasing lending.
Under the new rule, banks can deduct up to 70 percent of reserve requirements on time deposits if they invest the funds in interbank deposit certificates issued by Brazil's National Development Bank, known as BNDES.
The central bank said the measure could free up 6.2 billion reais ($2.7 billion) for lending via BNDES, which is the primary source of credit for most Brazilian companies.
"This measure complements the actions the Central Bank has taken to improve the distribution of the national financial system's resources to small and medium-sized companies," the central bank said in a statement.
The measure will expire on Dec. 31, 2008, the bank said.
Finance Minister Guido Mantega said last week that the measure was in the works and that BNDES should use the additional funds to offer credit lines to exporters and provide working capital for companies struggling to raise cash.
Brazil's government has relaxed reserve requirements for banks several times in the past two months in an attempt to thaw credit markets, which have suffered as a result of the global financial crisis.
($1=2.326 reais)
(Reporting by Todd Benson, Editing by Chizu Nomiyama)