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Philippines : Solon wants cap on interest rates charged by lending institutions

June 27, 2014

A House leader has sought the immediate passage of a bill that will regulate the rate of interest on loans extended by lending institutions to teachers.

Deputy Speaker Giorgidi Aggabao (4th District, Isabela) said House Bill 4601 seeks to put a cap on the interest rates being charged by lending institutions as a modest attempt to alleviate the economic plight of public teachers.

"Our teachers are easy prey to shark loans and in this age of electronic banking, the so-called 'payday' or 'ATM' loans is now the common practice where the borrowers/debtors pledge and surrender their ATMs to their creditors to secure payment of their loans every pay period until the loan is fully paid," Aggabao said.

Aggabao said with a family to support and with such meager salaries, teachers have time and again fallen victims to high interest rates and exorbitant fees, to make both ends meet.

"We have often hailed our teachers as our unsung heroes yet to this day, this recognition remains but an empty accolade. It is high time that we put our teachers first and this bill aims to inch towards that direction," Aggabao stressed.

Under the measure, all actively employed public school teachers, whether full time or part-time, in all levels of education are covered by this Act.

The bill also provides that the rate of interest in consumer loans extended to covered teachers shall not exceed 6% per annum, including all fees and charges, insurance and other ancillary products sold in connection with the consumer loan.

Consumer loans as used in this Act, refer to any type of credit or loan extended by any government or private banking and financing institutions, except that such loan does not include a residential mortgage or a loan obtained in the course of purchasing a car or other personal property when the loan is offered for the express purpose of financing the purchase and is secured by the car of personal property bought.

Under the bill, all lending institutions extending loans to covered teacher shall be granted additional incentives under the development assistance incentive of the Bangko Sentral ng Pilipinas (BSP) under Republic Act 8791 or the General Banking Law of 2000.

The Department of Education (DepEd), the Commission on Higher Education (CHED) and the BSP shall promulgate the rules and regulations for the effective implementation of this Act.

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Source: TendersInfo (India)

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