New circulars from the Bangko Sentral ng Pilipinas (BSP) will render loans and other transactions with banks and other financial institutions more transparent, according to BSP Deputy Governor Nestor Espenilla.
BSP Circulars 730, 754 and 755, which took effect on July 1st , will enhance Republic Act 3765 or the Truth in Lending Act.
Clients will know the real price, terms and conditions of loans and other financial products.
Under the new circulars, banks and other financing institutions should inform borrowers and other clients of the following:
• loan amount;
• upfront charges or deductions collected,
• net proceeds of the loan;
• schedule of payments;
• the percentage the finance charge bears to the total amount to be financed, expressed as an effective interest rate; and
• conditional charges, if any.
Espenilla assured clients that loans will not become more expensive, just more transparent. The new transparency of transactions will also help borrowers understand all the components of the cost they are paying. “Informed clients make informed decisions,” he quipped.
Photo: “Loan” by Philip Taylor, c/o Flickr. Some Rights Reserved