By Brazil Stock Guide – A federal court in Brazil has allowed Banco C6 Consignado to resume issuing payroll-deductible loans after overturning a suspension imposed by the country’s social security agency, the Instituto Nacional do Seguro Social (INSS). The regulator had blocked new loan registrations following an audit that identified alleged improper charges to pensioners, in a case that could involve reimbursements of up to R$ 300 million ($60 million).
The INSS — the government body responsible for administering pensions and retirement benefits in Brazil — had suspended the bank’s access to its system on March 17. The measure effectively prevented C6 from issuing new payroll loans, a widely used form of credit in which repayments are automatically deducted from salaries or pensions.
Why the regulator acted
The decision followed an audit by Brazil’s federal watchdog, the Controladoria-Geral da União (CGU), which found evidence of charges linked to “service packages” being deducted directly from pension payments. According to the INSS, these charges were not allowed under existing rules governing payroll lending.
C6 disputed the findings, stating that the packages included optional services — such as pharmacy discounts, telemedicine and funeral assistance — and were not tied to loan approval. The bank also said it had stopped offering such products in November 2025, before the regulatory action.
Court limits regulator’s reach
In a preliminary ruling, a federal judge in Brasília sided with the bank, finding that the INSS may have overstepped its authority by imposing an open-ended suspension linked to repayment demands.
The judge noted that Brazilian regulations allow only temporary restrictions on financial institutions, typically limited to defined periods. An indefinite suspension, he argued, could amount to a disproportionate restriction on the bank’s core business before the conclusion of the investigation.
C6 said in a statement that it will resume offering INSS payroll loans “in the coming days,” following the favorable court decision issued last week. The bank added that the ruling reinforces its position, after it had already publicly disagreed with the measures imposed by the INSS.
Market impact and scale
The case highlights the scale of Brazil’s payroll lending market, known locally as “consignado,” which is widely used by retirees, pensioners and public-sector employees. Because repayments are automatically deducted from income, the product is considered relatively low-risk and is a key source of revenue for lenders.
Local reports suggest the investigation may involve up to 320,000 contracts with signs of additional charges. Potential reimbursements could reach R$ 300 million, although C6 has not confirmed those figures, citing confidentiality.
C6 Bank was founded by former BTG Pactual executives Marcelo Kalim and Carlos Fonseca and has grown rapidly in recent years with backing from global investors. JPMorgan holding roughly 46% of the capital.
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