ASPECTS OF (IL)LEGALITY IN THE CHAINING OF RURAL CREDIT AND BANK CREDIT OPERATIONS

Abstract

The purpose of this article is to demonstrate the legal and illegal aspects of linking rural credit and bank credit operations. Agriculture and livestock farming have always been part of Brazilian reality, with rural credit being the financing agent for the expansion of these essential activities. In order to prevent misuse of financing, which is granted exclusively for rural activities, the legislature enacted the Rural Credit Law. Despite this, financial institutions intervene, using Bank Credit Notes (CCB) to renegotiate producers' defaults. In such cases, they mistakenly include amounts intended for personal debts together with debts arising from rural financing. This practice is inappropriate, as rural credit has lower interest rates and more beneficial payment terms than other types of credit. The methodology used is qualitative, based on bibliographic, documentary, and regulatory analysis, allowing for an understanding of the legal, economic, and environmental impacts of regulations on the agricultural sector. It is concluded that, in the context of rural credit, the use of the novation instrument requires caution, under penalty of distortion.