MANILA—The government wants those engaged in ‘5-6’ lending scheme to be registered in the Securities and Exchange Commission (SEC) to legalize their lending business.
In an inter-agency meeting attended by officials of Department of Trade and Industry (DTI), SEC, Bangko Sentral ng Pilipinas, Small Business Corporation (SB Corp.), Department of Justice, Department of Foreign Affairs, Bureau of Immigration, National Intelligence Coordinating Agency, Philippine National Police, and the Indian Chamber of Commerce, a transition period will be given to those in the business of ‘5-6’ lending.
As part of the transition period, foreign nationals who are in the business of ‘5-6’ lending scheme shall also legalize their resident status in the Philippines.
Most of those in the ‘5-6’ lending scheme are Indian nationals.
According to the Indian Chamber of Commerce Philippines, there are 30,000 Indian money lenders in the country with total operation value amounting to Php 2.4 billion.
The government has not yet disclosed further information on the transition period given to money lenders with interests higher than the market rate.
A Technical Working Group is currently working on the specific guidelines for the registration of the lending business.
“After the prescribed transition period, ‘5-6’ scheme must stop and micro-businesses must shift to P3 and other legal microfinancing facilities,” DTI Secretary Ramon Lopez said.
P3 or Pondo para sa Pagbabago at Pag-asenso is the microfinancing program of the Duterte administration to provide financing facilities with low interest rate to micro enterprises.
For this year, the government has allocated Php 1.0 billion for the program.
“We should be seeking the frontiers, these people who have not been reached by the microfinance institutions are the same people targeted by the ‘5-6’,” Lopez added.