SEC eyes 6% monthly interest rate cap on lending firms’ loans
Business

SEC eyes 6% monthly interest rate cap on lending firms’ loans

The Securities and Exchange Commission is looking to impose a nominal interest rate ceiling of 6 percent a month or 0.2 percent per day on loans extended by lending and financing companies.

It is also eyeing to cap the effective interest rate , which includes applicable fees and penalties for late payment and non payment, at 15 percent a month or 0.5 percent a day.

Penalties for late payment on outstanding scheduled amount due were also capped at 5 percent per month.

The new rates were arrived at by the Bangko Sentral ng Pilipinas after careful evaluation of the market in coordination with the SEC and the industry.

SEC said the ceiling rates would apply to unsecured loans worth P10,000 and below and with a tenor of up to four months.

It cited the Financing Company Act which empowers the BSP’s Monetary Bard to prescribe maximum interest rates that could be charged by financing and lending firms.

The SEC noted that several lending and financing companies, especially those that operate online lending platforms (OLPs), impose exorbitant interest rate, fees, and charges on their unsecured, short-term, small value, and high-cost consumer credit, thereby causing Filipinos, specifically those in the low-income bracket,

to fall into debt traps.

Apart from setting a cap on interest rates that may be charged, the SEC also plans to require lending and financing firms to submit business plans.

 

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