‘5-6’ lenders urged to legalize operations

The government is giving illegally operating foreign money lenders time to legalize their resident status and register with the Securities and Exchange Commission (SEC) their lending businesses.

Efforts are currently being undertaken to reform the country’s micro-financing system by killing the so- called “5- 6” money lending scheme.

According to the Indian Chamber of Commerce Philippines, the total operation of the 5-6 lending system in the country today is valued at P2.4 billion, with some 30,000 operators across the nation.

The Department of Trade and Industry (DTI) said a transition period would be provided to lending operators, giving them ample time to register their businesses with the SEC.

“After the prescribed transition period, 5-6 scheme must stop and micro-businesses must shift to P3 (Pondo sa Pagbabago at Pag-asenso Program) and other legal microfinancing facilities,” Trade Secretary Ramon Lopez said.

The DTI last week called for an interagency meeting to work on the transition to allow illegal foreign money lenders to legalize their resident status and register their lending businesses with the SEC.

The agency said the transition period is needed to prevent undue harrassment of concerned lenders.

The DTI last month started rolling out P3, a microfinancing program for small entrepreneurs to help eradicate poverty and promote business and employment among Filipinos.

“We should be seeking the frontiers, these people who have not been reached by the microfinancing institutions are the same people targeted by the 5-6,” Lopez said.

The P3 program was initially launched in Tacloban City, Leyte, San Jose, Occidental Mindoro and Alabel, Sarangani province.

A technical working group on the matter will provide specific guidelines on the compliance and registration of lending businesses.