SEC orders lending firms to secure license to operate
The Securities and Exchange Commission has called on existing lending companies to secure a license to continue operating their lending business.
In a press conference yesterday, SEC-Cebu Director Lindeza Gavino said the agency had called the attention of more than 200 lending firms in Central Visayas and Eastern Visayas to secure a license to operate.
"It's illegal to act as a lending company unless you are registered as a corporation and you secure a license to operate," the SEC official said.
Prior to the enactment of Lending Company Regulation Act of 2007 or Republic Act 9474, she said individuals or entities were allowed to engage in the lending business even without a license to operate.
Gavino said the SEC has given the said more than 200 lending firms in the two regions until April 30, 2017 to convert into a stock corporation and get a license to operate or a certificate of authority from the agency.
Evelyn Garso, SEC-Cebu officer-in-charge for registration of lending and financing companies, a few of the 200 have already secured license.
Gavino said: "There is a desire to those who legitimately want to engage in the business of lending investor."
She discouraged the public to transact with illegal lenders particularly citing the five-six money lenders who offer "usurious" rates of up to 20 percent.
"We urge the public to only engage with legal and registered lending companies," she said. "Don't fall victim to usurious rates."
Garso also said they had observed the increase of people both locals and "Indians" who are popularly known as those who are engaged in five-six inquiring on the registration of lending business.
The SEC has received reports that many individuals particularly the five-six lenders engaged in lending without the authority to do so, thus violating the law.
"Five-six are illegal and informal. There is no way they can operate legally," Gavino sad.
The law mandates lending companies to organize only as corporations, making it illegal for individuals to engage in lending without being registered as a corporation with SEC and secure the required certificate of authority.
RA 9474 provides that a fine of not less than P10,000 and not more than P50,000 or imprisonment of not less than six months but not more than 10 years or both, at the court's discretion, shall be imposed on violators.