The Philippine Securities and Exchange Commission issued SEC Memorandum Circular No. 14, Series of 2025 to recalibrate ceilings on interest rates and other fees charged by financing and lending companies on certain unsecured, general-purpose loans, tightening limits and strengthening enforcement against circumvention. The updated ceilings apply to loans entered into, restructured, or renewed beginning on April 1, 2026. Under the circular, the effective interest rate cap is set at 12 percent per month (about 0.40 percent per day), defined as nominal interest plus other fees and charges excluding penalty and late payment fees. Nominal interest rates may not exceed six percent per month (0.20 percent per day), late and non-payment penalties are capped at five percent per month on the outstanding scheduled amount due, and the total cost cap is 100 percent of the total amount borrowed, covering all interest, fees, charges, and penalties. The ceilings cover unsecured loans with principal amounts not exceeding PHP 10,000 and payment terms of up to four months. Circumvention through practices such as restructuring, splitting loan amounts, recharacterising fees, shifting tenor, simulated collateral, or similar schemes is treated as a violation, with administrative sanctions available under the Financing Company Act of 1998, the Lending Company Regulation Act of 2007, and the Financial Products and Services Consumer Protection Act. Non-compliance carries a PHP 50,000 penalty for a first offense, escalating for a second offense to at least twice the first penalty up to PHP 1 million and or a 60-day suspension, and revocation of certificates for a third offense, while the ceilings are subject to periodic review.
Philippine Securities and Exchange Commission 2025-12-11
Philippine Securities and Exchange Commission lowers the effective interest rate cap to 12 percent per month for small unsecured loans by financing and lending companies
The Philippine Securities and Exchange Commission issued SEC Memorandum Circular No. 14, Series of 2025, setting new ceilings on interest rates and fees for unsecured, general-purpose loans, effective April 1, 2026. The circular caps effective interest rates at 12% per month, nominal interest at 6% per month, and late payment penalties at 5% per month, with a total cost cap of 100% of the borrowed amount. Violations, including circumvention practices, incur escalating penalties, with potential certificate revocation for repeated offenses.