MANILA - The government has rolled out a P1-billion loan fund in at least 65 provinces to wean them off shadow lenders who charge exorbitant interest rates, Trade Secretary Ramon Lopez said Tuesday.
Lopez said up to P30 billion was needed to defeat "5-6" lenders. The government aims to offer loans to micro entrepreneurs in 81 provinces, including the 30 poorest.
"So if we are really to replace all the 5-6, that’s the amount of fund that we need," Lopez said, referring to the P30-billion estimate.
"And then as we get through a good running system, if you remember, the President envisions a P1 billion (loan assistance) per region. So we’re getting there," he said.
Under the loan fund, an interest rate of 25 percent per year or 2 percent per month is charged. A P1,000 interest on a P5,000 loan can be spread out over one year at P83.33 per month.
Lopez said this was much lower than the 20-percent daily interest charged by loan sharks.
Since the government targeted the informal loan industry, interest rates from “5-6” loans have started going down.
“So it’s doing a bit of benefit to those provinces. Even if the program has not reached your area, you are benefitting because of competition. The rate becomes more reasonable,” he said.