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Article (news)

Arthur Fuentes

ABS-CBN News

MANILA — The Securities and Exchange Commission (SEC) said it is tightening interest rate limits on small consumer loans to curb abusive lending practices.The SEC released new rules on the ceilings on interest rates and related fees for unsecured, general-purpose loans of up to P10,000 with repayment terms of up to four months.Under the new regime, the effective interest rate is capped at 12 percent per month—down from the previous 15 percent—equivalent to roughly 0.4 percent per day. This covers nominal interest plus all other fees and charges, excluding penalties. Nominal interest rates, however, may not exceed 6 percent per month.Penalties for late or missed payments are limited to 5 percent per month of the outstanding amount due, while the total cost cap—covering interest, fees and penalties—cannot surpass 100 percent of the loan principal. The rules take effect for new, renewed or restructured loans starting April 1, 2026.The policy is anchored on the Financial Products and Services Consumer Protection Act, which empowers regulators to assess the reasonableness of charges imposed on borrowers, the agency said.“The recalibrated interest rate cap offers a balanced and sustainable framework that considers the interests of both lenders and borrowers, consistent with the Commission’s mandate of promoting consumer protection while also ensuring the viability of legitimate financing and lending companies,” SEC Chairperson Francis Lim said.The SEC also laid out tougher sanctions for firms that attempt to circumvent the caps through restructuring, disguised charges, or other schemes. Companies face fines starting at P50,000, escalating to suspension, and ultimately revocation of their authority to operate for repeated violations.The Commission said it would periodically review the policy to ensure it remains responsive to industry conditions and regulatory developments.The Bangko Sentral ng Pilipinas, in consultation with the SEC, previously set the ceiling for effective interest rates at 15 percent per month, or about 0.5 percent per day.Interest rates have been going down since last year as the BSP began easing monetary policy amid slower inflation and a slower economic growth.

Under the new rules, the effective interest rate is capped at 12 percent per month—down from the previous 15 percent.

Under the new rules, the effective interest rate is capped at 12 percent per month—down from the previous 15 percent.

SEC tightens limits on interest rates on small consumer loans

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SEC tightens limits on interest rates on small consumer loans

Arthur Fuentes,

ABS-CBN News

Published December 11, 2025 06:21 PM PHT

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SEC

personal loan

general purpose loan

interest rate cap

consumer protection

abusive lending

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