BSP to decide on 2% credit card interest cap before November

By J.Lo

“We’re targeting to elevate it within the month… it will be decided once elevated to the MB,” Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi Fonacier said in a mobile message decision on review of  2% ceiling on credit card interest is targeted before the month ends, a top official of the Bangko Sentral ng Pilipinas (BSP) said. According to BSP Deputy Governor Chuchi Fonacier, the review on the 2% interest cap is set to be elevated for consideration and decision by  Monetary Board (MB).  

MB in September 2020 set  24% annual interest rate cap on all credit card transactions, equivalent to  monthly interest of 2%, in  bid to ease  financial burden amid  COVID-19 pandemic.

Under the policy, credit card issuers can only charge  maximum monthly add-on rate of 1% for credit card installment loans, and no other charges or fees can be imposed on cash advances except for  maximum processing of P200 per transaction.

The rates are subject to review by BSP every six months, pursuant to the central bank’s supervisory authority. This was last retained in May.

The latest data available from  BSP shows  soured loans held by banks declined for sixth straight month in August, dragging  nonperforming loan (NPL) ratio to 23-month low.

The banking sector’s gross NPL ratio stood at 3.53% as of end-August, the lowest since September 2020’s 3.51%. This compares with 3.57% in July and 4.51% in the same month last year.

The banking industry’s gross loan portfolio was at P11.84 trillion in August, reflecting 8.72% growth from P10.89 trillion in the same month last year and 0.5% higher than the P11.77 trillion recorded in July.