MANILA–To give Filipinos a better alternative from loan sharks and other informal lenders that burden them with high interest rates, a Senator on Wednesday called on the government to strengthen microfinance institutions (MFIs) in the country.
Sen. Paolo Benigno Aquino IV made this remark following reports that around three million Filipinos, mostly small scale entrepreneurs, are indebted to loan sharks and informal lenders.
“The government should strengthen our microfinance institutions to end people’s dependence on ‘5-6’ lending that overcharge and have unacceptable interests that burden them,” Aquino said.
“With the help of Microfinance NGOS, there will be an alternative for small scale entrepreneurs to avail of loans with low interest and no collateral,” he added.
Aquino pointed out that despite the high interest, Filipinos are enticed to obtain financing from loan sharks because they are not required to submit documentary requirements and collateral, unlike in banks.
However, he said that Microfinance NGOs also provide Filipinos access to low-interest, no collateral loans to pay for housing, medical, and educational needs and loans for small businesses.
Aquino was the principal sponsor and co-author of Republic Act 10693 or the Microfinance NGOs Act during his term as chair of Committee on Trade, Commerce and Entrepreneurship in the 16th Congress.
The law gives incentives to microfinance NGOs to continue helping Filipinos overcome poverty through financial literacy, livelihood, and entrepreneurship training.
It also provides microfinance NGOs needed support and incentives that includes access to government programs and projects, technical assistance and exemption from taxes.