Published by the Visayan Daily Star
Editor-in-Chief & President
Bureau Chief, Dumaguete
MAJA P. DELY
|CARLOS ANTONIO L. LEONARDIA
The Department of Finance has announced that more than 200 previously informal lenders have applied to register their business with the Securities and Exchange Commission as a result of the Duterte administration's crackdown on the so-called 5-6 lending.
SEC chair Teresita Herbosa also reported to Finance Secretary Carlos Dominguez it had initiated investigations into the activities of suspected informal lenders for possible filing of criminal complaints. Apart from charging them with violation of Republic Act No. 9474 (Lending Company Regulation Act), the SEC is likely to include the charge of violation of the Truth in Lending Act which likewise imposes fine and/or imprisonment. Foreign informal lenders will be referred to the Bureau of Immigration, Herbosa added.
The SEC has given lenders without the required certificate of authority until April 30 of this year to secure the document and formalize their operations.
The Department of Trade and Industry has been working with the departments of Justice and Foreign Affairs, the Bangko Sentral ng Pilipinas, the Bureau of Immigration, the National Intelligence Coordinating Agency, the Philippine National Police, Small Business Corp. as well as the Federation of Indian Chambers of Commerce in crafting a transition scheme that would allow illegal foreign money lenders to switch to microfinancing in a bid to stop the usurious 5-6 lending scheme where borrowers pay an interest of at least 20 percent a month.
The crackdown against illegal lenders that is gaining ground should help improve the lives of the millions of Filipinos who have become dependent on 5-6 due to the lack of knowledge and options more if the gap that has been left can be filled as soon as possible. Aside from encouraging the illegal lenders to go legit, both in operations and in the interest rates they charge, the government will have to make microfinance options available to the poor and underserved communities that have been dependent on these illegal lenders due to the lack of choices.
The illegal lenders and their usurious interest rates who prey on the poor by burying them in debt, are armory of the reasons why many Filipinos have great difficulty uplifting their lives. The government's success in this campaign will be a significant victory in its efforts to alleviate poverty.*