Medalla told reporters on Wednesday, March 17, 2023, that limiting the interest rate to the current six percent per month or 0.2 percent per day had been requested by the Securities and Exchange Commission (SEC), the regulator for non-depository lending institutions, which are not like the traditional banks and credit unions. Non-depository lenders include online lenders, peer-to-peer lending platforms, finance companies and credit card companies.
“Lending that is not connected to deposits is increasing. It’s attracting foreign money. So, we must coordinate with SEC for policies on the new rate,” said Medalla, who attended the BSP-International Monetary Fund Conference for Financial Risk Summit at the Shangri-La Mactan Cebu in Lapu-Lapu City on May 15-17.
According to the SEC, it is the BSP that sets the interest rates for banks and other depository institutions, and these rates are then used as a benchmark for non-depository lending institutions. However, the SEC said it has regulatory authority over non-depository lending institutions, and it can take action against these institutions if they are found to be engaging in predatory lending practices.
Medalla said imposing a cap on the interest rate for non-traditional lending institutions will reduce informal lenders, who make consumers suffer by implementing a high interest rate.
He said the rise of online lending sites has also significantly increased people’s ability to borrow money.
Medalla said the “great ability of lending can tempt people to overborrow.”
The BSP governor also addressed the recent GCash breach of security through phishing that affected multiple users. Phishing is a type of cyber crime in which attackers send fraudulent emails or text messages that appear to be from a legitimate source, such as a bank or credit card company. The goal of phishing is to trick the recipient into clicking on a malicious link or opening an attachment, which can then install malware on the victim’s computer.
Medalla said all of the affected mobile wallet app users have already been reimbursed, and the cost of the reimbursement was shouldered by the app’s company.
“Dapat maintindihan na hindi siya hacking, in this particular case, phishing talaga. For some reason na-convince ang mga tao na ibigay ang OTP (one-time password) nila. (It must be understood that this is not a case of hacking, but phishing. For some reason, people were convinced to give their OTPs),” he said.
Although the incident has affected multiple users, Medalla said he has maintained trust with the country’s digital banking system. He said the public must also be vigilant in keeping their accounts safe.