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Friday, March 29, 2024

SEC: BSP may cap rates of lending firms

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The Securities and Exchange Commission asked the Bangko Sentral ng Pilipinas to consider a cap in the interest rates and other fees that lending and financing companies may charge on consumer and payday loans.

SEC chairperson Emilio Aquino in a letter to BSP Governor Benjamin Diokno cited the power of the central bank’s Monetary Board to prescribe the maximum interest rates, fees and other charges that lending companies and financing companies may impose.

A lending or financing company can freely agree with a borrower on the terms and conditions of their loan contract, including the imposable interest rate and other charges, such as transaction fees and penalties for late payment under Central Bank of the Philippines Circular No. 902-82.

Section 7 of Republic Act No. 9474, or the Lending Company Regulation Act of 2007, allows LCs to grant loans in amounts and reasonable rates and charges as may be agreed upon with borrowers.

The same provision, however, gives the Monetary Board an authority to peg interest rate as may be dictated by prevailing economic and social conditions.

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