THE Securities and Exchange Commission (SEC) is seeking public comment on the proposed policy to put a limit on interest rates and other charges for lending activities to protect the public.
A draft memorandum circular was issued on Thursday, Oct. 30, 2025, aimed at setting a ceiling on interest rates and fees under Republic Act (RA) 11765, or the Financial Products and Services Consumer Protection Act, it said in a press release on Friday, Oct. 31.
Under the proposed memorandum, a six percent cap is being mulled for unsecured general-purpose loans worth up to P20,000 and with terms of up to six months.
A limit of 10 percent per month on effective interest rate is also being proposed, and this includes the nominal interest rate and all other applicable charges, such as processing fees, service fees, notarial fees, handling fees and verification fees, but shall exclude fees and penalties for late and non-payment on outstanding scheduled amounts due.
The same proposal also allows lending and financing companies to charge penalties “of up to five percent per month for late payment or non-payment on outstanding scheduled amounts due.”
“The regulation will cover all such loan contracts entered into, restructured, or renewed beginning Dec. 1, 2025, whether online or through traditional and offline distribution channels,” it said.
This follows the cap for interest rates of lending and financing companies in 2022, which only applies to unsecured general-purpose loans not exceeding P10,000 and payable up to four months.
The latest proposal, the SEC said, “aims to better reflect current socioeconomic conditions, striking a balance between consumer protection and the competitiveness of duly licensed lending and financing companies.”
SEC Chairman Francis Lim noted that “the number of borrowers struggling under excessive interest rates has continued to grow in recent years, as certain entities exploit the accessibility of online lending applications to trap our fellow kababayans (citizens) in cycles of debt.”
“Through responsive policies and stronger enforcement actions, the SEC will ensure that lending practices remain fair, transparent and aligned with consumer protection standards, while promoting the continued viability and competitiveness of legitimate financing and lending companies,” he added. / PNA