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2025-09-18 20:10:20
Brazilian President Lula's "Loans for the People" program hits technical glitch, causing delinquency rates to soar. According to foreign media reports, Brazilian President Lula launched a program this year aimed at making special loans for low-income borrowers more affordable. However, contrary to expectations, these loans have become more expensive, and banks and the government are urgently scrambling to address the issue. Dubbed "Lula Loans" by one of Lula's closest allies, the program's core mechanism involves opening a government database containing private sector employee salary data to banks and fintech companies and providing lenders with "borrower unemployment protection"—reducing risk for lenders if a borrower loses their job. The program was promoted as a solution that would allow up to 50 million people to benefit from lower loan interest rates while reducing risk for banks. However, its implementation has been plagued by numerous technical issues: in some cases, loan repayments deducted from employee paychecks were mistakenly routed to other lenders; in other cases, banks were unable to identify the corresponding customers after receiving repayments. As a result, delinquency rates for loans under the program soared to 16% in August, forcing lenders to raise interest rates.
