Time to restore anti-usury law

Attention honorable senators and representatives: There is an urgent need to restore the anti-usury law because of the high interest rates banks are charging on loans. Given the current high interest rates, small and medium businessmen cannot afford to borrow from banks. With lower interest rates, economic activities will flourish and lift the living conditions of more Filipinos.

In their advertising material, banks usually use the “converted monthly factor rate” which most borrowers (including myself) do not know how to convert into “effective rate per annum.”

For example: 1. Citibank—0.49 percent (Inquirer, 1/27/14); 2. BPI—0.59 percent (Inquirer, 1/10/14); 3. Metrobank—0.68 percent (Inquirer, 1/24/14).

I was able to get from my files the equivalent “effective rate per annum” of these “converted monthly factor rates.”

Converted monthly factor rate:

1. 0.79 percent

2. 1.25 percent

3. 1.75 percent

Effective interest rate per annum:

1. 17.06 percent

2. 26.62 percent

3. 31.06 percent

Loan borrowers should request from the bank the effective rate per annum instead of the converted monthly factor rate, for information and comparison purposes. Hopefully, too, the Bangko Sentral ng Pilipinas should require banks to disclose the effective rate per annum, and for the legislature to revive the anti-usury law.

—BERNARDO V. PERALTA, CPA,

retired accounting professor,

Cebu City