The Philippine Securities and Exchange Commission has issued for public comment a draft memorandum circular proposing recalibrated ceilings on interest rates and other fees charged by lending and financing companies and their online lending platforms, aiming to curb predatory pricing on small unsecured loans. The proposed caps would apply to unsecured general-purpose loans of up to PHP 20,000 with terms of up to six months, covering contracts entered into, restructured or renewed from 1 December 2025 through online, traditional and offline channels. The draft would set a maximum nominal interest rate of 6% per month (about 0.2% per day) and cap the effective interest rate at 10% per month (about 0.33% per day) including interest and applicable fees and charges, while excluding late and non-payment fees and penalties from the effective rate calculation; late or non-payment penalties would be limited to 5% per month. A total cost cap of 100% of the amount borrowed would also apply to all interest, fees, charges and penalties regardless of how long the loan remains outstanding, with the ceilings subject to periodic review. The draft includes escalating sanctions, including fines that can reach up to PHP 1 million on a third offence and potential 60-day suspension of lending activities and/or revocation of a secondary licence, with primary registration also subject to suspension or revocation depending on severity. Comments on the draft are due by 14 November.
Philippine Securities and Exchange Commission 2025-10-31
Philippine Securities and Exchange Commission consults on 6% nominal and 10% effective monthly caps for unsecured loans up to PHP 20,000
The Philippine Securities and Exchange Commission has issued a draft memorandum for public comment, proposing caps on interest rates and fees for lending companies to prevent predatory pricing on small loans. It sets a maximum nominal interest rate of 6% per month and an effective interest rate cap of 10% per month for loans up to PHP 20,000, with late payment penalties limited to 5% per month. The proposal includes a total cost cap of 100% of the borrowed amount and outlines escalating sanctions for non-compliance, including fines and potential suspension or revocation of licenses.