SEC proposes interest rate caps for loans up to P20,000

The Securities and Exchange Commission (SEC) is proposing new rules to cap interest rates and fees for lending and financing companies in the Philippines.

These regulations aim to protect consumers from predatory lending and ensure the stability of the legitimate lending industry.

The proposed rules would limit unsecured, general-purpose loans up to P20,000 with terms not exceeding six months.

Under the draft memorandum circular, the nominal interest rate will be capped at 6 percent per month, while the effective interest rate, including all other costs and fees, would be limited to 10 percent per month.

For late payments, lending and financing groups may only enforce fines of up to 5 percent per month, excluding penalties for late and non-payment.

Lending companies that break these rules will be fined P25,000 for the first offense and P50,000 for the second offense, while financing companies will be fined P50,000 and P100,000, respectively.

On the third offense, the SEC may impose a fine equivalent to at least twice the penalty for the second offense, but not more than P1 million.