2 proposals for BSP’s consideration

I wrote the Financial Consumer Affairs Group of the Bangko Sentral ng Pilipinas to consider two proposals which I believe will benefit the public:

1. Account closed. I suggest that whenever a checking account depositor orders/reorders a new check booklet(s), he shall commit in writing to surrender the unused checks for “account closed.” The issuing bank in turn shall refund the depositor the cost of the documentary stamps not used.

There have been several complaints by lenders in good faith, who accepted unfunded postdated checks (which bounced) issued by an “account closed” depositor.

2. Effective interest rate per

annum against converted monthly factor rate. Most banks use the “converted monthly factor rate” to entice borrowers to do business with them. Several borrowers do not understand this “converted monthly factor rate.”

For example, a 0.79 percent converted monthly factor rate looks attractive, appearing it is a quite low interest rate. However, when converted to effective interest rate per annum it comes out at 17.06 percent.

I propose that all banks use the effective rate per annum instead of the converted monthly factor rate for uniformity and easy understanding by borrowers.

—BERNARDO V. PERALTA, CPA,

retired accounting professor,

Cebu City