TACLOBAN CITY—An affordable loan program will be launched in this city next week being one of the three pilot areas in the abolition of the so-called “5-6” money lending scheme popularized by Indian nationals in the country.
The new program is tentatively scheduled for launching at the city public market here on Jan. 25. Arrangements are being made for President Rodrigo Duterte to lead the launching, said Department of Trade and Industry Regional Director Cynthia Nierras.
President Duterte, who ordered for a crackdown of loan sharks last week, is set to visit post-Yolanda housing projects in the northern part of the city on Jan. 25.
The city government provided a space at the public market for the office of Small Business Corporation, the DTI’s financing arm.
The office will be manned by three staff, with two of them tasked to collect payment around the market on a daily basis.
“Tacloban is a pilot area for the Visayas because our market vendors are most in need of this kind of assistance due to reeling impacts of Super Typhoon Yolanda,” Nierras said.
Other pilot areas are San Jose, Occidental Mindoro for Luzon and Alabel, Sarangani for Mindanao.
The 2017 General Appropriations Act has included an initial funding of P1 billion for financial assistance, a part of the planned P19-billion financing initiative for micro and small businesses in the next five years.
The program’s fund will be lent out in the business centers in selected provinces, where the participating microfinance institutions and the SBC can operate.
The government earlier identified 30 poorest provinces in the country as priority areas for the micro-financing program, which include Leyte, Samar, eastern Samar, and northern Samar.
Priority beneficiaries include microenterprises and entrepreneurs that do not have easy access to credit, or are accessing credit at very high cost, such as, micro-entrepreneurs, market vendors, agri-businessmen and members of cooperatives, industry associations and co-operators.
Loanable amount per end-borrower can range from P5,000 for start-ups to P300,000, with maximum interest rate of 26 percent every year with no collateral requirement.
This rate is significantly below the hefty 20 percent per day, week, or month charged by “5-6” lenders. It is also lower than what is charged by most MFIs in the country.
In a meeting with his Cabinet on Jan. 9, President Duterte took up the “5-6” money lending scheme and ordered the arrest and deportation of foreigners involved in this practice, especially Punjabis from India.