Febraban takes position of softening debt collection during flooding

Thursday, January 13, 2011

Taking up its standard playbook, Brazilian banking association Febraban has recommended that its member institutions show a soft stance on slow debt payments in regions most impacted by bouts of major flooding in recent days.

Febraban said in a statement that banks should work with municipalities and public utilities to create a process to have formal exemptions from late payments and shutoffs. But the group noted that tax collection would fall on government entities.

The floods, caused by record-high rainfall in the course of only a day or so, began causing destruction in Sao Paulo state on Tuesday (Jan 11), killing more than a dozen residents, and have continued in Rio de Janeiro, where damage and loss of life was more extensive.

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The national death toll as of Thursday was more than 400, as the government's national defense force and its parent ministry, the national integration ministry, received 700mn reais (US$419mn) in additional funds to take on the disaster.