By Marcela Ayres and Paula Laier
BRASILIA/SAO PAULO, Aug 28 (Reuters) - Brazil's central bank is studying measures to curb the rising debt burden of the country's consumers but plans first to implement limits on lenders rather than a cap on household debt service backed by the IMF, two people familiar with the matter said this week.
Speaking on condition of anonymity because the discussions are private, the sources said policymakers are increasingly concerned about the widespread availability of costly
credit products, weak transparency requirements and insufficient financial education, a combination they believe has fueled excessive lending to already indebted borrowers.
Brazil's ratio of household debt service to income excluding mortgages, which stood at 25.7% at the end of last year, continued rising in 2026, reaching a record 26.6% in June, central bank data released on Friday showed.
One of the sources said that central bank policymakers broadly agreed with the International Monetary Fund, which said in July that Brazil's record household debt load argued for regulatory steps to lower risks across the system.
But restricting individuals' loan eligibility with a maximum debt service to income ratio, a cap recommended by the IMF, was not authorities' preferred first step, the source said, without explaining the reasoning.
Following this week's meeting of its Financial Stability Committee, the central bank said it was preparing measures to mitigate risks stemming from growth in high-cost household debt, while strengthening the sustainability of credit growth.
Citi analysts said this message suggested a shift in focus. Rather than concentrating solely on the pace of credit growth, policymakers now appear increasingly concerned with lending standards and the deterioration in credit quality.
Details on the specific steps the central bank is considering have not emerged, and the central bank declined to comment.
In a research note, BTG Pactual said the central bank could look first to lender measures such as higher capital and reserve requirements, steeper risk weights, changes to the IOF financial transactions tax and the introduction of a positive-neutral countercyclical capital buffer (CCyB).
The central bank this week kept the CCyB at 0%, although it has signaled since last year that it is considering raising the requirement.
A positive buffer would require banks to build additional capital cushions in normal times, helping absorb losses if defaults rise.
This move could also modestly restrain credit growth by increasing funding costs and encouraging lenders to tighten underwriting standards.
The IMF has also argued that stronger consumer protection rules, including enhanced safeguards against predatory lending and greater lender responsibility, could help ensure credit remains affordable and suitable for borrowers.
Officials have previously singled out revolving credit-card balances and unsecured personal loans as areas of concern.
More than half of Brazilians who use credit cards, or 52.8 million people, carry revolving balances, which can carry up to 15.1% interest a month, or interest-bearing installment loans.
The increase in consumer leverage underscores mounting strains on household finances despite rising incomes and historically low unemployment, reinforcing concerns that years of rapid credit expansion and high borrowing costs are eroding consumers' purchasing power.
(Reporting by Marcela Ayres in Brasilia and Paula Arend Laier in Sao Paulo; editing by Manuela Andreoni and Cynthia Osterman)
