SEC likely to keep P1 million minimum capital for lending

MANILA, Philippines — The Securities and Exchange Commission (SEC) may maintain the existing P1 million minimum capital requirement for lending companies under a proposed circular lifting the moratorium on online lending platforms, but their territorial jurisdictions will be limited.

“While the SEC is raising the capital requirements, we are also revising them again so that the licensing of the small financing and lending companies would most probably be based on territorial jurisdiction. Those without OLPs (online lending platforms) will be limited, depending on their capital, even at the barangay level,” SEC commissioner Rogelio Quevedo said.

“Maybe in the next few days we will be releasing the revised circular wherein we will either maintain the capital requirement of P1 million, but will not be allowed to operate an OLP,” he said.

The SEC on March 12 issued for public comment a draft memorandum circular that provides guidelines for lifting the moratorium on OLPs and prescribes prudential, disclosure and market conduct requirements for financing and lending companies.

Pursuant to the lifting of the moratorium, the SEC had earlier proposed new paid-up capital requirements for financing and lending companies based on the number of OLPs they operate.

Financing companies that do not operate any OLP should maintain a minimum paid-up capital of P20 million, while lending companies should maintain a minimum paid-up capital of P10 million.

For financing companies with one OLP, the minimum paid-up capital should be P30 million; P60 million for two to five OLPs; and P100 million for a maximum of 10 OLPs.

Meanwhile, lending companies must maintain a minimum paid-up capital of P20 million for one OLP, P30 million for two to five OLPs, and P50 million for up to 10 OLPs.

“As you know, if there is an OLP, that is immediately nationwide or even outside the Philippines. But we can limit the territorial jurisdiction without also requiring an increase in capital. So those with P1 million capitalization can most probably operate within a barangay level,” Quevedo said.

“If their capitalization is only P1 million, then they will only be allowed to have a brick and mortar operation within, let’s say, a barangay, or a town. So, depending on the capital requirements, which we are revising in the revised guidelines,” he said.

Quevedo said the SEC is also likely to limit the OLPs per company to about three or five.

“At most five, but most probably three OLPs per corporation and depending on the capitalization,” he said.

The previously issued draft circular sought to limit the number of OLPs that financing and lending firms operate to not more than 10, to ensure manageable oversight and mitigate systemic risk.