Banks are overestimating default risk and the government intends to keep up pressure on banks to lower rates, the paper quoted Mantega as saying.

Average rates of 40 percent to 50 percent a year make no sense in an economy in which inflation is 4.5 percent to 5 percent a year, the minister told Globo.

"Workers are in more formal working environments and can prove their earning capacity, homes are becoming more stable and risk in the Brazilian economy is lower than in many advanced economies," Mantega told the newspaper. "It doesn't make any sense to charge excessively high interest rates."

Brazil's central bank cut the country's benchmark interest rate, long one of the world's highest, to 7.5 percent in September from 12.5 percent in July 2011. In the past 11 years, Brazil's average interest rate has been 14.72 percent.

The government has also been pushing banks to cut rates by forcing state-controlled Banco do Brasil SA and Caixa Economica Federal to cut their finance charges and banking fees.

Non-state banks such as Banco Bradesco SA, Itau Unibanco Holding SA and foreign banks such as Citigroup Inc. and Banco Santander SA have been quietly resisting the pressure.

Banks have argued that the government requirement that they make large compulsory deposits with the central bank in an effort to help control inflation reduces cash available for consumer credit and lower rates.

Financial institutions also blame high consumer default rates, a lack of credit databases and the government's large borrowing needs as factors that squeeze credit for consumers and keep rates high.

Mantega told Globo he is not convinced by the banks' arguments.

"The financial sector at times accuses us over the compulsory deposits, but if you look what weighs heavily, it's the projection they have for bad debt," Mantega told Globo. "They tend to overestimate bad debt. It's necessary to update these calculations for today, for a country that is more solid and credit that is more secure."

As part of efforts to push rates lower, the government is working to increase consumer knowledge of finance costs and charges and is requiring merchants and bankers to make their rates and charges clearer, the paper said, citing Mantega.

Annual consumer finance charges range from 8.99 percent a year to 603 percent a year, Mantega said.