LENDING, micro-financing, and financing institutions should secure a license to operate, which is still different from the primary and general license that the Security and Exchanges Commission (SEC) is releasing to business establishments.
In an interview with SEC-Davao Extension Office Director lawyer Javey Paul Francisco, he clarified that apart from the business licenses acquired upon application from SEC, lending, micro-financing, and financing institutions must also acquire a license to operate, a secondary permit to be released still from SEC.
He said they had encountered cases wherein lending business do not secure the secondary permits they are required to.
The secondary permits are more “stringent,” requiring disclosure statements, business affiliation, business plan including target market, proposed interest, terms, and location of offices and branches among others.
Francisco also clarified that separate licenses should be acquired for each branches where lending and payment operations are being done.
“We find out about these violations sometimes through complaints of people to us. Other times we stumble upon them accidentally. They process documents with different addresses and we discover that not all their branches are licensed under us. They must ensure that all branches have separate licenses,” Francisco said.
He said there had been an instance wherein an institution had to pay millions after a while of operating without license.
Operating without license penalizes the lending institution of about P50,000 with additional daily penalty for every day that it was not licensed to operate but still does.
The penalized institutions are given about 15 days to settle their balances, otherwise their businesses will be shut down.
So far, Francisco said there had been no reported business shut down in Davao Region and in Soccsksargen as the violation penalties are immediately complied for after notice.