Philippine Securities and Exchange Commission consults on recalibrated caps including 10 percent monthly effective interest rate for small unsecured loans

The Philippine Securities and Exchange Commission (SEC) has published for public comment a draft Memorandum Circular that would recalibrate ceilings on interest rates and other fees charged by financing companies, lending companies, and their online lending platforms. The proposed caps would apply to unsecured, general-purpose loans of up to PHP 20,000 with a tenor of up to six months that are entered into, restructured, or renewed beginning 01 December 2025. Under the draft, the nominal interest rate ceiling would be 6 percent per month, while the effective interest rate ceiling would be 10 percent per month inclusive of nominal interest and other fees and charges (excluding late and non-payment penalties). It would also cap late and non-payment penalties at 5 percent per month on the outstanding scheduled amount due, and impose a total cost cap of 100 percent of the total amount borrowed across interest, fees and charges, and penalties. Non-compliance would be subject to escalating administrative sanctions, including fines (first and second offenses differentiated for financing companies and lending companies) and, for a third offense, potential fines up to PHP 1,000,000, suspension of financing or lending activities for 60 days, and/or revocation of the certificate of authority, with possible suspension or revocation of primary registration depending on severity. Comments are due on or before 14 November 2025. The draft states that, if issued, the Circular would take effect immediately after publication in two newspapers of general circulation.