By Paula Arend Laier

SAO PAULO, June 10 (Reuters) - Brazilian digital lender Inter&Co INTR.O 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 9984.T 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)

(Reporting by Paula Arend Laier; Writing by Andre Romani; Editing by Chris Reese)

((Andre.Romani@thomsonreuters.com; 11 991314109;11 56447500;))