SAO PAULO, June 10 (Reuters) - Brazilian digital lender

Inter&Co views Brazil's new payroll-deductible loans

for private sector workers with optimism, but has so far adopted

a cautious approach to the product, the bank's chief executive

for Brazil told Reuters.

Listed on Nasdaq and with Japanese conglomerate SoftBank

among its main shareholders, Inter&Co has became one of

the top fintech players in Brazil's booming online banking

scene, boasting nearly 38 million clients by the end of March.

This year, the Brazilian government launched new rules for

payroll-deductible loans to private sector workers, aiming to

replicate the success similar products have achieved among

public sector employees.

"We really like the product. We really believe that it will

be a huge product," Inter&Co's CEO for Brazil, Alexandre Riccio,

said in an interview in Sao Paulo on Monday. "However, it is

still a time for caution regarding growth."

Brazilian President Luiz Inacio Lula da Silva's

administration has said, citing an estimate from the financial

sector, that the new rules could more than triple

payroll-deductible loans to private workers, reaching 120

billion reais ($21.56 billion).

Riccio said Inter&Co sees an even greater potential for the

product, projecting a 250 billion-real market, but added that

operational and default risks need to be mitigated before the

company further escalates its loan offerings.

"This learning cycle will be important," he said, estimating

at least one year for Inter&Co to significantly scale its

involvement with the product, though noting this growth will be

progressive.

Inter&Co's credit portfolio for payroll-deductible loans to

private sector workers stood at 606.7 million reais as of

Monday, according to data from the Labor Ministry. This figure

represents a fraction of the total market, which currently

stands at 14.6 billion reais.

The firm's total credit book was approximately 42.5 billion

reais by the end of March.

Riccio also mentioned that Inter&Co, which launched

operations in the United States in 2021, views the new

payroll-deductible loans as a potential boost to its 2027

targets, which analysts have previously viewed with some

skepticism.

($1 = 5.5668 reais)