The Securities and Exchange Commission (SEC) plans to impose new limits on interest rates and fees charged by lending and financing companies to protect borrowers from predatory practices while keeping legitimate lenders competitive.
A draft circular, Recalibrated Ceilings on Interest Rates and Other Fees Charged by Financing Companies, Lending Companies, and their Online Lending Platforms, was released for public comment. The proposed rule will apply to unsecured general-purpose loans of up to ₱20,000 with terms not exceeding six months, effective December 1, 2025.
Under the proposal, nominal interest rates will be capped at 6 percent per month (about 0.2 percent per day), while effective interest rates—including all applicable fees except penalties—will be limited to 10 percent per month (about 0.33 percent per day). Companies may charge a maximum penalty of 5 percent per month for late or missed payments. A total cost cap of 100 percent of the loan amount will also apply, covering all interest, fees, and penalties over the loan’s duration.
SEC Chairman Francis E. Lim said, “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 in cycles of debt.” He added that the SEC aims to ensure fair and transparent lending practices through responsive policies and stronger enforcement.
Non-compliant lending firms face fines of ₱25,000 to ₱1 million, depending on the number of offenses, and may risk suspension or revocation of licenses. The interest rate ceilings will be periodically reviewed to reflect market and regulatory changes.
The SEC previously set a similar cap in 2022, aligned with Bangko Sentral ng Pilipinas guidelines, but that rule applied only to smaller loans of up to ₱10,000 payable within four months.
The proposed regulation aims to protect consumers from debt traps, particularly those borrowing from online platforms, while maintaining a fair business environment for lending companies. By expanding the loan coverage and tightening limits, the SEC seeks to balance borrower protection and lender sustainability in the evolving digital lending market.
