Biz groups back credit card interest rate cap

Two local business groups on Tuesday voiced support for the proposed limit on credit card interest rates and a 60-day moratorium on loan payments.

In separate statements, the Management Association of the Philippines (MAP) and the Bankers Association of the Philippines (BAP) said this proposal would greatly help businesses and individuals affected by the coronavirus pandemic.

“The BSP (Bangko Sentral ng Pilipinas) Governor’s proposal, coupled with the 60-day payment deferment under the Bayanihan to Recover as One Act (Bayanihan 2), will provide big relief to businesses and individuals using credit cards, many of whom have found themselves jobless as a result of the pandemic,” MAP President Francis Lim was quoted as saying in his organization’s statement.

In a draft circular, BSP Governor Benjamin Diokno pushed for the imposition of a maximum annual interest rate of 24 percent for credit-card cash advances and installment purchases, which will be reviewed every six months.

“We understand that the [BAP] is supportive of the proposal, and that is a clear indication how the banking industry is bending over backward to help our countrymen during this critical period,” Lim said.

MAP hopes that the ratification of Bayanihan 2 will help businesses recover from the pandemic, he added.

BAP President Cezar Consing said his group welcomed “this initiative of the BSP and hope that this collective effort of the banking industry will help ease the burden of our credit cardholders during these challenging times.”

Diokno earlier said the proposal was fair, as the BSP already reduced its key interest rates to its lowest level so far this year.

“I think it is in the sense of fairness, right? The BSP has been cutting the interest rates. In fact, the policy rate is now 2.25 percent. That’s the lowest ever rate I’ve seen, but the interest rates on credit cards, which is considered to be unsecured consumer loan, goes up to about 40 percent. So to me, that is unacceptable,” he said.

“[M]aybe more will be inclined to use the credit cards” if the proposal is adopted, the Bangko Sentral chief added.

With reports from MAYVELIN U. CARABALLO

Source: TheManila Times