Here’s a breakdown of the key money lending rules and regulations in the Philippines:
Governing Bodies
- Securities and Exchange Commission (SEC): The primary regulator of lending companies in the Philippines. Responsible for registration, licensing, and oversight.
- Bangko Sentral ng Pilipinas (BSP): Regulates pawnshops and sets broader monetary policies that can impact interest rates.
Main Laws and Regulations
- Republic Act 9474 (Lending Company Regulation Act of 2007): The central law governing lending companies. It covers:
- Registration and licensing requirements
- Minimum capitalization
- Disclosure and transparency rules
- Prohibited practices
- Truth in Lending Act (Republic Act No. 3765): Mandates full disclosure of loan costs to borrowers, including interest rates, fees, and finance charges.
- Usury Law (Act No. 2655) and Revised Penal Code: Set ceilings on interest rates that lenders can charge to protect borrowers from excessive costs.
Key Provisions for Lenders
- Registration: Lending companies must register with the SEC and obtain a Certificate of Authority to operate.
- Capital Requirements: Minimum capitalization is set to ensure financial stability.
- Interest Rate Limits: Usury laws set maximum allowable interest rates.
- Reporting: Regular reporting requirements to the SEC.
- Fair and Ethical Practices: Prohibited acts include unfair collection practices, deceptive advertising, and unconscionable terms.
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