(Adds BNDES confirmation)

By Guillermo Parra-Bernal

SAO PAULO, Aug 16 (Reuters) - Banks and bondholders accounting for more than half of Oi SA's debt of 65.4 billion reais ($20 billion) are considering proposing a 5-year grace period and lower borrowing costs to speed up the Brazilian phone carrier's in-court reorganization, a person with direct knowledge of the talks said on Tuesday.

The person, who requested anonymity because the discussions are preliminary and remain confidential, said the bondholder group advised by Moelis & Co and a number of lenders, including state-run Banco do Brasil SA and China Development Bank Corp, are discussing several options to provide Oi with a debt relief plan.

Oi, Brazil's No. 1 fixed-line phone carrier, filed in June for the country's largest ever in-court reorganization plan after it ran out of time to reorganize operations and restructure liabilities during a harsh recession.

Oi owes 17 billion reais to banks and about 35 billion reais to bondholders.

Proposed options for debt relief include cutting borrowing costs, with bondholders agreeing to take losses on their investments in Oi's notes, the person said. The emergence of proposals from other bondholders and minority shareholders has brought the banks and the Moelis-led group closer, the person said.

"The parties are working closely and jointly in order to accelerate Oi's in-court reorganization plan and thwart any unconstructive proposal that could potentially generate noise in the process," the person said, adding that bondholders are interested in a solution that involves swapping part of their debt into equity of the revamped company.

The source said the banks involved in the talks include a number of export credit agencies.

Media representatives for Moelis in São Paulo declined to comment. CDB, Banco do Brasil and Caixa Econômica Federal did not immediately provide a comment.

A spokeswoman at Rio de Janeiro-based state development bank BNDES, another key Oi creditor, said "there are some negotiations on the matter under way, but they are in a preliminary stage."

The discussions come after a group of minority shareholders led by Brazilian fund Société Mondiale began to work on a "parallel" reorganization plan for Oi, consisting of a debt reduction of at least 50 percent, a spin-off of some non-essential business and the search for investors to help fund capital spending. Another person close to Société Mondiale confirmed the plans to Reuters earlier on Tuesday.

STATE-SPONSORED MERGER

Last week, Chief Executive Marco Schroeder said Oi expected to present a plan to overhaul business and repay creditors later this month or by early September. Suppliers and creditors will be offered terms of the business reorganization plan, which involves a debt-for-equity swap, Schroeder said, without elaborating.

Rio de Janeiro-based Oi, formed through a government-sponsored merger in 2008 and the country's carrier solely funded with Brazilian capital, succumbed to a heavy debt burden and mounting competition after years of shareholder disputes.

The rift led to the collapse of negotiations between the company and the Moelis-led group after Oi's largest single shareholder, Pharol SGPS SA, balked at the prospect of being heavily diluted in a debt restructuring deal.

The Moelis-advised bondholder group, which is also working with law firms Cleary Gottlieb Steen e Hamilton LLP and Pinheiro Neto Advogados, includes more than 70 different firms which own Oi bonds worth over $4 billion in face value.

($1 = 3.2005 Brazilian reais) (Reporting by Guillermo Parra-Bernal; Editing by Jonathan Oatis and Richard Chang)