The Bangko Sentral ng Pilipinas (BSP) needs to look into the operations of certain Non-Stock Savings and Loan Associations (NSSLAs) that are providing loans to active and retired members of the Philippine National Police (PNP), even if the borrowers still have existing unpaid loans with other firms, according to a group of seven financing companies.
The seven companies are DES Financing Corp., Diamond Finance Corp., Facil Lending Corp., Integrity Financing Corp., JMC Financing and Marketing Corp., Quicklend Financing Inc. and Silver WDC Finance Inc.
The group provides loans to PNP pensioners, and are duly registered with the Securities and Exchange Commission.
Under the law, the BSP exercises supervisory and oversight functions over all NSSLAs, and is mandated to guard against the grant of excessive credit relative to an applicant’s capacity to pay. Logically, therefore, a PNP retiree cannot use the same pension as collateral a loan take-out requirement from multiple lenders.
“There have been many instances where my fellow retirees have been persuaded to take out a second—and even third—pension loan, not fully understanding the implications of this,” retired PNP SP01 Edgar Olana said. “Sometimes they are even tricked into believing that their previous loans are canceled, or that there won’t be any collections on the new loans until the previous obligations are paid. Of course, this is not true,” he added.
Olana reiterated the appeal of the financing companies for the BSP to put an end to this deleterious practice. Based on Section 17 (e) of The New Central Bank Act (Republic Act. 7653), the BSP governor has the power and duty to “render opinions, decisions, or rulings, which shall be final and executory until reversed or modified by the Monetary Board, on matters regarding application or enforcement of laws pertaining to institutions supervised by the BSP and laws pertaining to quasi-banks, as well as regulations, policies or instructions issued by the Monetary Board, and the implementation thereof.”
“We have tried our best to reach out to our fellow retirees in order to educate them about correct loan procedures, but the lure of new money is just too attractive,” he said. “Unfortunately, this situation leads to only one ending: the retiree is saddled with debts that he or she cannot pay, mounting interest on the loans, and, ultimately, court cases and legal
consequences.
Hopefully, the BSP can look into this immediately,” the retired policeman added.