It may not be an exaggeration to say that probably more than half of the Philippine population today is languishing in debt.
The debt cycle in paying off credit-card bills, monthly car or home amortization, cash lifeline for maintaining small businesses, among others, would probably remain unpaid until the very last of a borrower’s breath.
Being mired in debt, most especially if you’re in the middle to the bottom end of the wealth hierarchy, could be an ugly caricature of how people grasp at straws just to make it to the next day.
To the lenders, it is just another day at the office, their eyes probably glued on their respective computer screens, counting how much money they earn from their atrocious interest charges.
It’s a pit that is difficult to escape from, unless you stumble upon a pot of gold, or miraculously win big at any numbers game—jueteng and other forms of gambling—that continue to flourish in our country. Lack of funds forces some people to gamble on the future. Small wonder then why there are people who would resort to day-dreaming of a good life with the aid of mind-bending narcotics, bought with, you guess it, borrowed or stolen funds.
Are we financially better off now than we were years ago? Some may have been lucky; many others still feel boxed-in, living hand to mouth.
This was the usual topic of conversation I had with my good friend, the late Bangko Sentral ng Pilipinas Governor Nestor “Nesting” Aldave Espenilla Jr., for many months before he succumbed to tongue cancer. In one of our midafternoon coffee sessions, he narrated the hardship faced by some public-school teachers whom he had encountered in one of his provincial sorties years before he became BSP’s top honcho. With their salaries, they could hardly make ends meet. They were forced to sell stuff on the side from the capital they borrowed at exorbitant rates from lending hawkers.
When he became BSP governor, Nesting was thinking of ways on how to make cash accessible to people who had little or no gateway to traditional lending institutions. There are just too many requirements that these lending facilities impose on borrowers, which turn off and drive salary-challenged individuals to borrow from unregulated fund sources.
This is why I’m heartened by the recent move by the Securities and Exchange Commission (SEC) to halt what it calls “predatory lending” when it asked the BSP to put a cap on interest rates and other emoluments which lenders charge: payday loans or debts paid on monthly installments (every 15th or 30th). After all, the BSP’s monetary board has the authority to set a limit on the interest rates, fees and other charges that these lenders could levy on borrowers.
This is just one of the moves that would make cash available to those in need, exactly what Nesting had in mind and, had he lived longer, would have been a reality sooner.
Lenders are mandated by the Lending Company Regulation Act of 2007 to impose “reasonable” rates and charges on borrowers. In it, the Monetary Board, in coordination with the SEC and other stakeholders, has the power to set ceilings on interest rates, depending on prevailing economic and social conditions.
Predatory lenders can levy as much as 2.5 percent a day exclusive of other fees and charges, amounting to 60 percent a month or 720 percent annually! This is unconscionable! Compare this to credit-card rates of 2 percent a month or about 24 percent a year. Banks, on the other hand, earn an interest of 10 percent a year on loans from their
valued customers.
The SEC’s move could have been prompted by the mounting complaints forwarded to it by the National Privacy Commission. NPC has been hearing the grievances of those who have been shamed by online lenders—a tactic they use to force borrowers to pay up. These lending entities, accessed via online apps, have been accused of violating the Data Privacy Act.
Readers who have been victimized by online shaming have e-mailed me to air their disappointment with the outcome of the first NPC hearing held on October 15.
“There were 40 of us, and lawyers of the apps were also on hand to defend their clients’ position. Although NPC ‘was not forcing settlement,’ it sounded like it, because we were told that it would take forever if we’d pursue the case,” my readers reported. “We also noticed that they were friends with the apps lawyers and agreed with their position that what has happened is just a simple case of wrong practice of collection.”
Shady online lending firms are the worst kind of predatory lenders. Not only do they charge exorbitant rates, they also hack their victims’ contact numbers to shame them. The NPC should be reminded that online shaming falls squarely within its jurisdiction. Collecting the debts of these shamed borrowers should be treated differently from these lenders’ reckless violation of the Data Privacy Act.
I must admit though that online lenders serve a purpose. They provide ready funds for cash-strapped individuals without the wearisome documentation, collateral and guarantor requirements of traditional banks. But more than just putting a cap on lending rates, the government, through the BSP and the SEC, should also make sure that these lenders are legitimate companies that have undergone a rigid registration and accreditation process. Otherwise, their operations should be immediately stopped.
What I find disturbing are commentaries blaming the borrowers for spending needlessly, or spending beyond their means. Let us not lose focus on the real issue: the blatant violation of the borrowers’ right to privacy.
Just to be clear, lawful online lending is definitely a legitimate business activity. I am not lumping all online lenders in one disreputable heap. Online lenders, such as FCash Global Lending Inc., have been insisting that the good guys have to be distinguished from the bad guys.
According to Dean J.V. Bautista, lawyer of FCash Global Lending Inc., “the company’s business operations are completely legal and regulations-compliant. It is duly registered with SEC as a corporation, and has been issued the requisite license to operate as lending company.”
For Bautista’s information, however, his company is one of those reported to me by my readers to be guilty of online shaming. “FCash calls us, threatens us, asks money from our relatives. It harasses our officemates, parents, friends in our phone contacts regarding our loan. We were so humiliated,” these readers lamented.
There has to be a firm and aggressive action from the government to regulate online lending.
For comments and suggestions, e-mail me at mvala.v@gmail.com
1 comment
Sir pano po yan kapag hindi kapo makabayad ng loan sa FCash tulad ngayon po tawag ng tawag sakin sinasabi ko naman po na mag iipon muna ako dahil wla pa po akong trabaho at nag eextra lang po ako.. nag send po sila ng demand letter sa email ko nakikiusap ako sakanila na wla pa po ako pera nag iipon pa po ako.. kaso deretso parin daw ung penalties ko nakikiusap ako sa kanila na hulog hulugan ko ayaw po nila ng hulugan gusto nila kalahati o buo ang bayad kaso po diko makuha agad ung kalahati na ipon for 2days dahil gusto nila 1day or 2days lang byad kna.. pano nyo po ako matutulungan sa kaso ko po?