1. LENDING POLICY OF BANKS IN
PHILIPPINES
Nikita Pandey
Roll no.- 775

2. LENDING COMPANY?
 Lending companies or lending investors are those
engaged in granting direct loans with interest and
charges, whether on a secured or unsecured basis. They
are the ones that provide credit to borrowers who are left
out of the sophisticated formal financial system.
 However, Lending companies are different from banks
and quasi-banks in that they lend their own funds.
Although they may source the funds from other
persons, such sources do not exceed 19 at any single
time.

3. SYSTEM IN PHILIPPINES
 Micro-finance, as recognized by the Bangko Sentral ng
Pilipinas (BSP), is the provision of a broad range of financial
services such as deposit, loans, payment services, money
transfers and insurance products to the poor and low
income households, for their micro-enterprises and small
businesses, to enable them to raise their income levels
and improve their living standards.
 Institutions providing microfinance services in the Philippines
include: pawn shops, credit unions, rural banks,
microfinance NGOs(NGO-MFIs), thrift banks, cooperative
banks and commercial banks.

4. REGULATORS
 Bangko Sentral Ng Pilipinas (BSP)
Several of these institutions (ex. thrift banks, rural
banks, pawnshops) are regulated by the Bangko
Sentral ng Pilipinas (BSP)
 Cooperative Development Authority
Credit unions are regulated by the Cooperative
Development Authority.
 NGO-MFIs, which cannot accept deposits, are not
regulated by any government regulatory agency.
 The government is in the process of establishing an
extensive credit information system.
 The Philippines is at the forefront of the development of
a branchless banking industry and has focused
significant regulatory attention to this growth area.

5. HISTORY
 In 1972, the Central Bank of the Philippines had the
jurisdiction and authority over the entire credit system.
Consequently, lending investors, although they do not
obtain funds from the general public, were placed
under the regulatory umbrella of the old Central
Bank.
 However, when the BSP Charter was enacted, lending
investors were removed from the regulatory powers of
the Bangko Sentral. While most non-bank financial
institutions are governed by special laws like the
Financing Company Act, the Investment Company Act
and the Pawnshop Regulation Act, lending companies
were left in limbo.

6. RESULT OF BSP CHARTER
 The lack of regulation resulted in a host of
unacceptable practices. High-lending rates were
charged, official receipts were not issued, and
charges were not wholly disclosed to the
borrowers. A number of multibillion scams were
pulled off by unscrupulous lending investors
against the public, in large part due to the lack
of appropriate in industry regulation.

7. CORRECTIVE MEASURE
 Securities and Exchange Commission issued a
circular directing lending, investors to
incorporate as financing companies and conform
to the requirements of the Financing Company
Act, including the minimum capitalization of P10
million for Metro Manila and other first-class
cities.

8. CURRENT SCENE
 We now find the industry again back to the non-
regulatory regime.
 Housing, automobile, personal, business and other types
of loans have become cheaper in the Philippines, with
bank lending rates falling by an average of about one-
fourth of one percent since the start of the year.(2012)
 This was according to the Bangko Sentral ng Pilipinas,
which said lending rates for all types of bank loans and
all maturities had dropped by an average of 25.3 basis
points since January.

9.  The average bank lending rate now stands at only
6.34 percent, BSP data as of July 13 2012 .
 Now, the lower interest rates were expected to
accelerate growth in demand for loans and in the
loan portfolio of banks in the country. The
outstanding loans of universal and commercial
banks were originally expected to grow by 15
percent this year, but are now seen to rise by a
faster pace with the latest round of policy-rate cut
by the BSP

10. BIBLIOGRAPHY
 http://www.bu.edu/bucflp/countries/philippines/
 Veronica B.Bayangos, Does the bank credit
channel of monetary policy matter in the
Philippines, Bangko Sentral ng Pilipinas, 23 April
2010
 http://www.adb.org/site/public-sector-
financing/lending-policies
 http://dirp3.pids.gov.ph/ris/pdf/pidsdps0210.pdf