CEBU CITY – A member of the Cebu (PB) Provincial Council on Monday tabled a draft ordinance that will regulate interest rates and fees for small loan companies offering loans, but ultimately pushed household owners and small entrepreneurs in “debt traps”.
Cebu 6th District PB Member Glenn Anthony Soco, Chairman of the Commerce Committee, wanted a nominal interest rate cap of 6% per month of 0.2% per day and an effective interest rate of 15 % per month or 0.5% per day for late payment and non-payment.
In addition to the interest limit, Soco said a cap on late payment or non-payment penalties at 5% per month on the expected amount due should be put in place, as well as a total cost cap of 100% of the total amount borrowed regardless of time the loan has been delinquent.
Soco said the province’s legislature is aware of loan companies offering loans that charge exorbitant interest rates and unreasonable terms through “5-6” programs, daily interest payment, confiscation of ATM cards for payroll and even retirement cards.
“These practices are not sanctioned by law and are therefore illegal,” Soco said in its proposed measure tabled for first reading on Monday.
Citing the effect of the coronavirus disease 2019 (Covid-19) pandemic and Typhoon Odette, Soco said Cebuanos are now struggling due to job loss while loan companies take advantage of the situation.
“Apart from this, inflation and soaring oil prices have caused citizens to cling to immediate cash offers in order to cope with the significant increase in prices of goods and services,” he said. -he declares.
Soco said circulars issued by the Securities and Exchange Commission (SEC) implementing Bangko Sentral ng Pilipinas (BSP) Circular No. 1133, Series of 2021, which imposes a cap on interest rates and other fees charged by loan companies, finance companies and other online lending platforms.
The SEC exercises regulatory and supervisory authority over finance companies and loan companies pursuant to Republic Act No. 8556 or the Finance Company Act of 1998 and Republic Act 9474 or the Credit Companies Regulation Act 2007.
However, the authority of the SEC is limited to duly registered financial companies and loan companies, as defined in their specific special laws. people giving loans.
Soco said the people should be protected from “unscrupulous deals and opportunistic individuals who prey on desperate and unsuspecting Cebuanos.”
“The practice of these lending facilities/individuals, especially those considered ‘passive’, must be stopped in order to protect Cebuanos from these illegal, onerous, oppressive and unscrupulous financial activities engineered by exploitative individuals/corporations who prey on to innocent people and desperate citizens,” he added. (NAP)