- President Duterte ordered a crackdown against “Bumbay 5-6” moneylenders
- The President ordered DFA Sec. Yasay to inform the Indian Embassy in Manila about the government’s plan to stop the usurious practice
- The President announced the allocation of P1 billion for micro-lending program for small borrowers
President Rodrigo Duterte ordered the arrest and possible deportation of Indian nationals engaged in usurious moneylending schemes. Although the usury law is no longer in effect in the country, the Supreme Court has ruled that moneylenders cannot impose unconscionable interest rates.
The Indian nationals, or Bumbay as we call them, usually impose 20% monthly interest on a loan. The moneylending scheme is popularly known as “5-6” because for every P5 one borrows, one must pay P6 (principal + 20% interest). This lending scheme has only brought hardships to borrowers because of the exorbitant interest rate.
Department of Trade and Industry (DTI) Secretary Ramon Lopez said that the 5-6 lending scheme proliferated because government lending institutions are unable to give easy access facility for small borrowers. To address this, President Duterte announced the allocation of P1 billion for a micro-lending program to provide loans to small borrowers. It will be handled by the DTI.
In a Facebook Post, Agriculture Secretary Manny Piñol shared that DTI has designed a loan scheme that will charge borrowers with 20% interest per year, payable in one year.
President Duterte has also ordered Foreign Affairs Secretary Perfecto Yasay, Jr. to inform the Indian Embassy in Manila about the government’s plan to put an end to Indian nationals’ “5-6’ money lending scheme.