MANILA, Philippines – Justice Secretary Vitaliano Aguirre II announced on Tuesday, January 10, that “5-6” lenders – a number of whom are Indians – will be arrested even without a warrant as President Rodrigo Duterte vows to stop the popular scheme and replace it with the Department of Trade and Industry (DTI)‘s alternative lending program.
Aguirre said Duterte has ordered the police to arrest Indian loan sharks and have them deported.
“They can be arrested for operating without any permit,” Aguirre stressed, citing strict requirements for lending businesses. He explained that there is basis for warrantless arrest because the offense is a continuing crime.
The Justice Secretary added that loan sharks commit tax fraud by not paying the correct contribution to the government for their business.
One of Duterte’s campaign promises was a clampdown on the 5-6 lending scheme which he said preys on ordinary Filipinos and small enterprises.
Borrowers of a 5-6 lending scheme incur 20% interest rate per month, which Filipinos endure if only to instantly loan money without having to go through rigorous processes in banks.
The Philippines once had a usury law that set a limit on the interest that can be charged on a loan. But it has been suspended since 1982, and measures that seek to reimpose the law are still pending in Congress.
Because of the suspension, Aguirre acknowledged that the 20% interest rate, however exorbitant, does not violate the law.
“But we could not accept that kind of interest. When it comes to civil cases, the courts do not recognize such excessive interest rate,” Aguirre explained.
Duterte promised to allocate P1 billion for a micro-lending program to provide loans for small business capital. Under this lending program which will be handled by the DTI, businesses will only incur around 2% interest per month. – Lian Buan/Rappler.com
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