BSP caps interest rates on P10K loans at 6% monthly

The Bangko Sentral ng Pilipinas (BSP) has set a cap on interest rates for short-term loans of up to P10,000 from lending and financing firms.

The nominal interest rate ceiling is 6% per month or approximately 0.2% per day, while the effective interest rate, including additional fees, is capped at 15% per month.

Late payment penalties are also limited to 5% per month on the outstanding amount due.

These regulations were implemented after a surge in borrowing rates for payday and personal loans prompted complaints from consumers, leading to consultations between the BSP and the Securities and Exchange Commission (SEC).

The new rules aim to protect low-income borrowers from predatory lending practices while ensuring lenders can still operate sustainably.