Whether monetary authorities will place or not a ceiling rate in terms of loan products other than credit cards will require “close coordination” with the industry, an executive from the Bangko Sentral ng Pilipinas (BSP) said.

“Will we (cap rates) for other credit products? It depends. It will need to undergo a very close coordination with the industry because as you know, interest rates on credit cards were consulted with the credit card industry very extensively,” BSP deputy director for Consumer Empowerment Group Rochelle Tomas said during Home Credit’s virtual media forum on Wednesday.

“The same process will need to be done for other types of credit products and it will have to be backed by good and robust data so that we can say that we need to lower interest rates for different types of credit products,” she added.

According to Tomas, the central bank’s recent move to cap the interest rate for credit cards at 24 percent was subjected to certain reasonableness as their data revealed average interest rates for such in the country sits at 47 percent, significantly higher than the 15 to 27 percent regional range.

The BSP earlier approved the placement of the 24 percent interest rate cap on credit cards transactions, making maximum monthly charges at just two percent.

Still, the banking regulator said this new regulation will be subjected to a review by the BSP every six months.

Rate cap support
While at it, Home Credit Philippines chief marketing officer Sheila Paul said they are supportive of the BSP’s latest move and will abide by it, especially now that they are issuing their own credit cards as well.

“When it comes to the rate cap on credit cards, we are supporting that and we will be rolling that out as well to our customers and this initiative was really in support of our consumers at this time,” Paul explained.

In terms of its impact to their business model, the lender executive said they will work with it and continue to collaborate with their stakeholders, especially the BSP.

Digital credit score
Meanwhile, the Credit Information Corporation (CIC) upgraded its manual and paper-based credit registry into a digital one, allowing quick access for credit information such as credit reports and scores.

CIC president and CEO Atty. Aileen Amor-Bautista said that through their mobile app or CIBIapp, identity verification will be accomplished online while helping financial institutions approve loan applications. -- Joshua Lao

Source: Daily Tribune