CitizenWatch Philippines warned the Securities and Exchange Commission that its new interest rate caps on small loans may restrict access for borrowers.
The SEC memorandum, issued on December 10, limits nominal interest rates to six percent per month and effective rates to 10 percent per month for loans of P10,000 and below.
“If compliance leads lenders to quietly scale back small-loan offerings, tighten approvals, or stop serving higher-risk borrowers, the policy may unintentionally reduce access rather than improve outcomes,” said CitizenWatch convenor Orlando Oxales.
The group noted that small loans carry higher risks and shorter repayment periods, and lenders might respond by tightening credit, withdrawing products, or avoiding small borrowers entirely.
Loans under P10,000 are the most commonly issued by licensed digital lenders and are particularly sensitive to regulatory changes, CitizenWatch added.
Oxales urged the SEC to monitor for warning signs such as declining approvals, longer processing times, or disappearing loan products, and to adjust the policy if necessary.
The caps will apply to loans contracted, restructured, or renewed starting April 1, 2026, with a four-month term.
The SEC said the measure aims to protect consumers and small entrepreneurs while maintaining the viability and competitiveness of legitimate lenders.
