Flow of financial support
Granting financial support is a vital process for the BNDES. Because of the main support modalities practiced by the Bank, this process is subdivided into: (a) granting financial support in direct operations (those over R$ 10 million, in which the credit risk is assumed by the BNDES) and indirect non-automatic operations (generally in operations over R$ 10 million, in which the credit risk is assumed, totally or partially, by the financial agents); and (b) granting financial support in automatic indirect operations (operations under R$ 10 million, in which the credit risk is assumed by financial agents).
The main components in the first process are: (a) analysis of operation consultations and eligibility; (b) analysis of operation projects; (c) contracting operations; and (d) monitoring and disbursing operation resources. The main components of the second process are: (a) analysis of operation consultations; (b) receiving, analyzing and approving operations; (c) approving resources for operations; and (d) monitoring operations.
Control of the process for granting financial support, in the cases of direct and indirect non-automatic operations, entails several of the organization’s members and instances. Requests for financial support are presented to the BNDES by means of formal consultations, forwarded to an organizational unit charged with analyzing and submitting them to the Credit and Eligibility Committee (CEC). This committee meets on a weekly basis to analyze the consultations received and deliberate on other credit issues. After the operation has been classified, it is sent to the department in the operational division, which is responsible for analyzing the project. The resulting report is submitted to the BNDES’ Board of Directors, which also meets on a weekly basis. If the deliberation is favorable to approve the operation, it is then contracted. The department in the operational division responsible for the operation releases resources according to the established schedule and periodically monitors its use. Payment of debts (interest and amortizations) is monitored until the debt is quitted.
The monitoring process influences the mitigation of credit risks in financing operations performed by the BNDES. Monitoring represents an important role in building the Bank’s relationship with its clients since it allows for greater sectorial knowledge regarding the companies and projects, enabling the identification of the need for new support mechanisms and processes. The next image summarizes the main steps in the process to grant financial support.
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The automatic indirect operations are submitted to operational procedures that encompass fewer players and instances from the organization than non-automatic direct and indirect operations. The demand for financial support from corporate entities and individuals is presented directly to the financial on-lending agents , who analyze and mold them under the defined terms for the chosen product.
The resulting financial support proposals are forwarded by the financial agents directly to the operational departments in the Indirect Operations Division (AOI), which is responsible for the product, and which analyzes, approves or rejects the proposals. The higher instances – the Deputy Managing and Managing Directors in the division – endorse approvals or return them to the previous instance. After they are approved, financial support proposals are contracted, becoming operations and the requested resources are disbursed. Due to the volume of non-automatic indirect operations and the characteristics related to this type of operation, the operational division proceeds to monitor the portfolio samples to confirm correct and effective application of resources. Similar to what occurs in non-automatic direct and indirect operations, payment of credits (interest and amortizations) is monitored until the debt is quitted.
Besides the direct and indirect modalities, financial support granted by the BNDES System may be classified based on the instruments used: fixed or variable-income. In the latter case, the BNDES System, through its integral subsidiary BNDESPAR, uses normal Capitals Market tools to promote growth and the strengthening of companies in various sectors in the economy, to disseminate the concept, to encourage corporate governance practices in the companies, and to stimulate the Brazilian capitals market.
1. Most Brazilian banks are part of this network of agents and, therefore, are accredited to operate with the BNDES financing lines. In indirect operations, the Bank transfers financial resources to commercial banks, both public and private, development agencies and co-operatives accredited by the BNDES, and these agents are responsible for analyzing, approving credit and defining guarantees. The operation’s risk is taken on by the financial agents who analyze the project. The clients usually go to institutions where they are already registered and/or have some type of banking relationship.