Brazil INSS consigned loan rules tightened, courts order refunds

New rules for INSS consigned loans took effect on 19 May 2026, lowering the global margin and setting a maximum of 40 % of the benefit that can be deducted for credit. Up to 5 % may be used for each of two card types, with the remaining margin available for personal loans. Contracts now require confirmation through the Meu INSS portal and facial‑biometric verification, and the repayment term was extended to a maximum of 108 installments. Starting 1 Jan 2027 the global margin will be reduced by two points each year, reaching 30 % and eventually eliminating the card margins.

The Ministry of Social Security is studying an automated formula to adjust the interest‑rate ceiling for these loans. The current cap is 1.85 % per month, and the proposed model would link the ceiling to a weighted average of the Selic and DI rates over two years, giving borrowers quicker relief when credit costs fall while allowing banks to raise rates when funding costs rise. The proposal is expected to be discussed by the CNPS before the end of July.

In a separate judicial ruling, the Superior Tribunal of Justice ordered banks to refund amounts improperly deducted from INSS beneficiaries when the loan contracts could not be proven valid. The court emphasized that a password alone does not satisfy legal requirements for illiterate borrowers, who need signatures, two witnesses, or other safeguards. Beneficiaries are advised to review their Meu INSS statements and request documentation from banks, with the option to file complaints with consumer‑protection agencies if necessary.