MANILA ,Philippines —Illegal lending by Indian nationals or the so-called “5-6” has significantly decreased in the country amid the government’s crackdown against such activity.
In an interview, Vishnu Hathiramani of the Filipino-Indian Chamber of Commerce Indian-Filipino said the government’s campaign against loan sharks has been successful.
“The 5-6 business interest has crashed recently as the present government is monitoring them and telling them to be fair and to update their business registration,“ Hathiramani said.
Hathiramani is the publisher of Filipino-Indian magazine Namaste in the Philippines and administrator of at least 12 chat groups providing updates on the Filipino-Indian community.
He said the Department of Trade and Industry also has a lending program for businesses at reasonable rates which made the “5-6“ lending scheme less viable. “Also, competition nowadays is very high,” he said.
A “5-6“ lending scheme is a practice by mostly Indian nationals who charge an interest of 20 percent per month, which means that when a borrower borrows five pesos, he has to pay six pesos.
The Securities and Exchange Commission (SEC) has been cracking down on illegal lenders including loan sharks as instructed by President Duterte.
There is no available information on the number of “5-6“ lenders in the country, but industry sources said they could total to at least 40,000 or one in every barangay in the Philippines.
In all, the SEC continues to stamp out illegal lending activities.
It has issued recently a cease and desist order covering six online lending operators.
The Commission En Banc issued the order last month against Batis Loan, Happy Credit, Easy Cash, Wahana Credit & Loan Corp., PesoMaMa and Light Kredit to immediately cease their unauthorized lending activities.
The order extends to the agents, representatives and promoters, the owners of the hosting sites and all persons acting for and on behalf of the online lending operators.
Furthermore, the SEC also ordered the online lending operators to cease from offering and advertising their lending business through the internet and to delete or remove promotional presentations and offerings of such lending business from the internet including the lending applications that they operate.
The SEC likewise directed any and all persons and entities carrying out, abetting or promoting lending business or similar activities without the requisite license to immediately cease and desist from engaging in such lending activities until they have incorporated and have secured the requisite certificate of authority to operate as lending or financing companies.
Any person who shall engage in the business of lending without a validly subsisting authority to operate from the SEC may face a fine ranging from P10,000 to P50,000 or imprisonment of six months to 10 years or both, under Section 12 of the Lending Company Regulation Act.
Investigations by the SEC Enforcement and Investor Protection Department (EIPD) confirmed the existence and operation of the online lending applications, which have been advertising on social media.
These online lending operators have gained access to personal information stored in borrowers’ mobile phones, including social media accounts, contact numbers and email addresses, through their mobile applications.
A number of complainants said these entities engage in abusive collection practices.
“Considering that these online Lending Operators are not incorporated entities or have no Certificate of Authority to Operate as Lending Companies or Financing Companies, the lending activities and transaction are illegal and must be immediately stopped by this Commission,” the cease and desist order read.