SLA group opposes budget law provision

An umbrella group of non-stock savings and loan associations yesterday expressed fear yesterday that their entire industry could collapse if a controversial provision in the 2003 budget law is not removed.

Leandro Bacud, president of the Confederation of Non-Stock Savings and Loan Association (CONSLA), also said billions in capital contributions and amortizations of their one million members are currently "stranded" in various loans and could not be collected because of the re-insertion of "Section 36" in the 2003 GAA.

Section 36, Bacud said, prohibits automatic payroll deductions for the repayment of their members’ new or renewal salary loans and provides a P3,000 minimum net take home pay for government workers, net of all taxes, GSIS and PHIC premiums and loan payment to the Land Bank of the Philippines (LBP) and other government financial institutions.

"This section essentially violates a special law, Republic Act 8367, which provided for the creation and regulation of non-stock savings and loan associations in both the private and government sectors. RA 8367 not only empowers non-stock savings and loan associations to accept deposits and grant loans to our members, but also obligates government agencies to automatically deduct loan payment from the salaries of our members," Bacud explained.

"Section 36" was allegedly re-inserted in the 2003 GAA despite strong opposition from non-stock SLAs.

He stressed that Section 36 "is choking the life out of non-stock savings and loan associations that cater to the needs of the majority of government employees and more than seven million of their beneficiaries."

"Billions of our members’ hard-earned money are stranded in loans. If we cannot collect, our 1.5 million members won’t be able to use their money which they now need in the face of our country’s economic difficulties," he added.

The bulk of CONSLA members in the government sector are low-salaried rank-and-file employees from at least 25 government agencies, including public school teachers under the Department of Education (DepEd), who rely on emergency and salary loans with 9 to 18 percent interest rates per annum, to bridge gaps in their budgets.

Bacud said CONSLA is pushing for the reduction of the P3,000 minimum net take home pay to only P1,500, as well as the lifting of the prohibition on automatic salary deductions on new or renewal loans, to help their members cope with financial difficulties especially with the onset of the Christmas holidays.

"A mere provision in a general law, such as the GAA which has to be renewed annually, could not be used to suspend or cancel provisions of a special law, such as RA 8367. Special laws are superior over general laws," Bacud said.

Bacud lamented that as a result of the re-insertion of section 36, their members are forced to borrow from non-NSSLA entities, including so-called "bumbay" lenders who charge more than 15 to 20 percent per month, and even use their ATM cards and PIN numbers as collateral for the loans.

"The situation is worsening. Unless section 36 is deleted from the GAA, our industry could collapse and our 1.5 million members would suffer great losses from their unrecovered funds. The government should not allow this to happen," Bacud appealed.