- 7 -
Bank for approval. Upon approval by the Central Bank, the
exchange bank tendered the foreign currency to the foreign lender
and returned to the Brazilian borrower the Certificate of
Registration (stamped to reflect the interest and tax payment), a
stamped copy of the DARF, and a copy of the exchange contract.
Most often, the collecting bank and the exchange bank were
one and the same. In that situation, the collection of the
withholding tax and payment to the foreign lender were transacted
simultaneously.
Many of the Brazilian companies that needed working capital
were unable to provide foreign lenders with adequate financial
information or proper guaranties to obtain a loan. As a result,
the Central Bank issued Resolution 63, which permitted certain
Brazilian banks (borrowing banks) to borrow funds from abroad for
the specific purpose of re-lending (repassing) the corresponding
borrowed funds in Brazilian currency to Brazilian companies
(repass borrowers). The loan between the foreign lender and the
borrowing bank (repass loan) was independent of the loan between
the borrowing bank and the repass borrower. The foreign lender
had no legal relationship with the repass borrower and normally
did not know the repass borrower’s identity.
Except for the term of the repass loan, Resolution 63
required all financial conditions between the borrowing bank and
the repass borrower to be the same as those between the foreign
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011