City employees allowed to avail of loans from bank

CEBU, Philippines - To prevent the bad practice by many City Hall employees of availing loans with high rates of interest from the “loan sharks,” Mayor Tomas R. Osmeña had accepted the proposal of Land Bank-Plaza Independencia branch to allow the elected city officials and permanent employees to avail of loans from the bank.

“Loan sharks” is the term commonly referred to persons who are engaged in lending business with high interest rates.

City treasurer Ofelia Oliva had written the City Council informing the city legislators that the mayor favorably endorsed the offer of LBP manager Editha Tacan to allow the City Hall regular employees to avail of loans from the bank that will be subjected only to 1.7 percent monthly interest rates.

The City Council also approved the resolution sponsored by Councilor Arsenio Pacaña for the purpose.

In a letter, Tacan said elected officials can be allowed to avail of loan up to P100,000 and up to P150,000 for the department heads and up to P80,000 for the rank and file employees.

But Tacan said the loan can be paid in installment basis from one year term up to three years period, but the maturities of the loan shall not go beyond the three month period before the expiration of the term. The amortization will be deducted from the workers’ salaries.

Oliva said with the present economic crisis due to high cost of living, some City Hall employees resort to availing of loans from the private lending institutions and even to some individual persons engage in lending activities despite the high rates of interests.

She said some of the lending institutions impose three percent interest, but the private individuals who are accepting loans impose up to 20 percent interest, or 240 percent per annum.

The LBP only imposes 14 percent interest to its creditors.

While Oliva strongly endorsed the proposal, she said the state audit policy is that the employees shall not be allowed to avail of loans if their remaining salary is already below P3,000 a month.

Before an employee can be granted loan from the bank, he is required to secure a certification from the city treasurer’s office to find out how much his retention salary is every payday. — Rene U. Borromeo/WAB (THE FREEMAN)