Starting in January, lending and financing companies and their online lending platforms will only be able to charge a maximum nominal interest rate of 6% monthly, the Bangko Sentral ng Pilipinas (BSP) announced Thursday.
BSP Governor Benjamin Diokno said the Monetary Board approved on December 16 a ceiling for both the nominal interest rate and the effective interest rate.
The nominal interest rate ceiling of 6% per month or approximately 0.2% per day is expressed as a percentage of the amount borrowed — the interest paid on the loan without considering other fees and charges.
The Monetary Board also set a 15% cap on the effective interest rate, which includes the nominal interest rate as well as applicable charges such as processing, service notarial, and handling and verification fees.
The effective interest rate excludes fees and penalties for late payment or non-payment, which has been capped at 5% per month on the outstanding scheduled amount due.
“The prescription of the interest rate ceiling will be published in a forthcoming BSP Circular,” Diokno told reporters in a virtual briefing, adding that the implementing rules and regulations will be issued by the Securities and Exchange Commission (SEC).
“These recommendations were closely coordinated by BSP with SEC and with consultation with market players,” he said.
According to BSP Monetary Policy Research Group Director Dennis Lapid, the circular is currently being finalized, and is set to take effect on January 3, 2022.
The circular will specify a periodic review every year, with the central bank coordinating with the corporate regulator on the implementation of the interest rate cap. — VBL, GMA News
BSP caps nominal interest rate of lending, financing companies at 6%
Source: News Panda Philippines
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