Senator Bam Aquino called on the government to strengthen microfinance institutions (MFIs) in the country to give millions of Filipinos a better alternative from loan sharks and other informal lenders that burden them with unreasonable and high interest rates.
“Dapat palakasin ng pamahalaan ang ating microfinance institutions upang tuluyan nang magwakas ang pagdepende ng mga Pilipino sa 5-6 na naniningil ng sobra at hindi makatwirang interes na lalo pang nagpapahirap sa kanila,” said Aquino.
“Sa tulong ng Microfinance NGOs, mayroon nang alternatibong malalapitan ang mahihirap at maliliit na negosyante para makakuha ng pautang sa mababang interes at walang collateral,” the senator said.
Aquino made the pronouncement after it was reported that around three million Filipinos, mostly small entrepreneurs, are indebted to loan sharks and informal lenders.
Despite the high interest, many Filipinos are enticed to obtain financing from loan sharks because they are not required to submit documentary requirements and collateral, unlike in banks.
“Hindi na tayo kailangang kumapit sa patalim at kumagat sa 5-6 dahil mayroon tayong microfinance NGOs na handang magbigay ng pautang sa mababang interes at walang collateral,” the senator added.
Microfinance NGOs provide Filipinos access to low-interest, no collateral loans to pay for housing, medical, and educational needs as well as loans for small businesses.
Aquino was the principal sponsor and co-author of Republic Act 10693 or the Microfinance NGOs Act during his term as chairman of Committee on Trade, Commerce and Entrepreneurship in the 16th Congress.
“Layunin ng batas na ito na mailayo ang mahihirap sa malaking interes na sinisingil ng loan sharks at masusuportahan ang pagnanais ng gobyerno na mabura ang talamak na 5-6,” he said.
The law gives incentives to microfinance NGOs to continue helping Filipinos overcome poverty not just through financing but also through financial literacy, livelihood, and entrepreneurship training.
The law also provides microfinance NGOs needed support and incentives that includes access to government programs and projects, technical assistance and exemption from taxes.