‘5-6’ operators can now register with government

Loan sharks or “5-6” operators will be given enough time to register with the government to legitimize their lending business with a more reasonable interest rate and avoid penalty for their illegal activity.

DTI Secretary Ramon M. Lopez told reporters the government will ensure that this policy against exorbitant interest rates from loan sharks will not turn into some form of harassment stressing that “5-6” operators, especially that this illegal activity is normally being spearheaded by other nationalities. It is a known fact that some Indian nationals are deep into this “5-6” business.

“We are trying to avoid issues of foreign nationals getting apprehended or harassed. So our plan is to have a curing period to allow them to register with us to legitimize their operation,” Lopez said. He refused to say how long the curing or the transition period before the full force of the law is implemented.

Already, the DTI has created an inter-agency meeting to work on the transition to allow illegal foreign money lenders to legalize their resident status and register with the DTI or the Securities and Exchange Commission.

“What is important is they have the license to lend money,” he stressed.

The DTI recently launched the President Duterte's flagship P3 or the Pondo Para sa Pagbabago at Pag-asenso, a micro program with a budgetary allocation of R1 billion for lending to micro enterprises.

Lopez has already met with SEC Chair Tess Herbosa and representatives from the Departments of Justice and Foreign Affairs, Immigration Bureau, NICA, Bangko Sentral ng Pilipinas, Philippine National Police, SB Corp. and the Indian Chamber of Commerce.

The Technical Working Group (TWG) that was formed will come up in two weeks with specific guidelines for the compliance and registration of the lenders. The P3 program was recently launched in Tacloban, Occidental Mindoro and Sarangani. The trade chief was joined by Undersecretaries Rowel Barba and Zenaida Maglaya, and the Indian Chamber of Commerce (Phils.) led by Pres. Rex Daryanani.

“The transition period would also prevent undue harassment in the field. After the prescribed transition period, the illegal ‘5-6 scheme’ must stop and micro business must shift to P3 and other legal microfinancing facilities,” said Lopez.

The P3 program provides MSMEs with easy access to finance with no collateral and minimal interest, through MFIs and cooperatives accredited by DTI and the Small Business Corporation (SB Corp).

According to Lopez, these loan sharks can register with the DTI under single proprietorship for their lending activities. They can also upgrade as micro finance organization lending capital to micro enterprises and even under P3, thereby legitimizing their operation.

The government has yet to determine how many are actually involved in “5-6” operations although this is prevalent in Metro Manila.