THE House Committee on Banks and Financial Intermediaries will discuss a bill this week that proposes amendments to the Usury Law that will cap interest rates for credit cards and otherwise set a prescribed range of fixed rates for various forms of lending.
The Committee Chairman, Quirino Province Representative Junie E. Cua, said the measure will set rates by law. Rates are currently only regulated by memorandum orders of the central bank and Supreme Court decisions.
“The idea is to set a cap on interest especially on credit cards. It will also apply to all lending services,” he said in an interview with BusinessWorld on Sunday.
Bataan Rep. Geraldine B. Roman filed House Bill (HB) 7967 on Nov. 6 as proposed amendments to the Usury Law.
HB 7967 sets the maximum interest rate for credit card charges and other cash advance arrangements at 12% annually, or any such rate prescribed by the Monetary Board of the Bangko Sentral ng Pilipinas, subject to some constraints.
The limitation on the Monetary Board-set rate on loan, forbearance agreements, and credit card charges is “not more than the three percentage points higher than the rate of 91-day treasury bills in the quarter preceding the monetary board’s imposition of the said maximum rate.”
The Monetary Board is also authorized to prescribe maximum rates for the various types of borrowing, subject to the limits described above.
Ms. Roman in the bill’s explanatory note said the proposed amendments will “benefit individual borrowers who are especially vulnerable to the economic impact of the pandemic.”
Mr. Cua said there will be a hearing on the matter Friday, and invited the financial industry to make known their positions.
“I don’t want to pre-empt the stakeholders who have yet to submit their positions… Consumers want something fixed while these businesses want something flexible,” he added. — Gillian M. Cortez