Legalities and Operations of Online Lending in the Philippines

Online lending has rapidly gained popularity in the Philippines, mainly because it offers a convenient and accessible alternative to traditional banking options for individuals and businesses who are seeking quick financial solutions.

However, with the rise of online lending platforms, it has also brought forth numerous regulatory and operational challenges that potential borrowers, especially, Filipino entrepreneurs, must be well aware of.

Hence, that is precisely why understanding these aspects for both lenders and borrowers is crucial, as it will give them in-depth knowledge of the legal framework governing online lending in the Philippines, as well as the operational intricacies involved in the entire process, too.

So, to ensure the lending process in the Philippines remains as seamless as ever for everyone, in this article, we will take a look at all the legalities and operations of online lending in the Philippines in greater detail.

Furthermore, we will also provide borrowers, especially Filipino entrepreneurs, insight into the regulatory environment, compliance requirements, and best practices to follow to ensure their lending practices are not only ethical but efficient, too.

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Are Online Loans Legal in The Philippines - Legal Regulatory Framework of Online Lending Options in The Philippines

Online lending has become a significant part of the financial landscape in the Philippines, providing accessible and convenient financial solutions to many Filipinos.

However, as the industry grows, so does the need for a robust legal framework to regulate it. The legality of online lending involves various aspects, from regulatory compliance and licensing to consumer protection and data privacy.

So, in this section of the article, we will explore the legal regulatory framework of online lending options in the Philippines and outline the key regulations, governing bodies, and compliance requirements they must abide by.

This will ensure borrowers receive fair and transparent lending services that will also protect their rights and respect their privileges in the process as well.

Here, take a look at the legal regulatory framework for online lending options available in the Philippines -

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1. Regulatory Framework

Bangko Sentral ng Pilipinas (BSP): The BSP is the primary regulatory body overseeing the financial sector in the Philippines, including online lending platforms. It ensures that these platforms operate within the legal framework and maintain financial stability.
Securities and Exchange Commission (SEC): The SEC regulates non-bank financial institutions, including online lending companies. It enforces laws related to securities and corporate governance to protect investors and the public from potentially fraudulent practices.

2. Licensing and Registration

Registration with SEC: Online lending companies must register with the SEC to legally operate in the Philippines by submitting necessary documents, such as articles of incorporation, company by-laws, and proof of capital.
Compliance with BSP Regulations: If the online lender is a financial institution, it must comply with BSP regulations, including obtaining the necessary licenses and going along with capital requirements and risk management standards.

3. Consumer Protection Laws

Truth in Lending Act: This law commands online lenders to disclose the full cost of credit to borrowers, including interest rates, fees, and other charges, to ensure transparency and provide clear information to them.
Data Privacy Act: Online lending platforms must comply with the Data Privacy Act of 2012, which protects consumers’ personal information. They are required to implement measures to safeguard data and ensure it is used only for legitimate purposes.

4. Anti-Usury Laws

Interest Rate Cap: The BSP has imposed an interest rate cap on online loans to protect consumers from unreasonable, inflated interest rates. This cap limits the maximum allowable interest rate and ensures loans are offered at fair and reasonable rates.
Penalty Charges: Regulations also cover the additional burden of penalty charges on overdue loans to ensure they are not excessive and are within the legal limits set by the BSP.

5. Advertising and Marketing Regulations

Truthful Advertising: Online lending companies must comply with advertising standards set by the SEC and other regulatory bodies by providing truthful and non-misleading information in their advertisements and marketing materials.
Disclosure of Terms: Advertisements must include clear and prominent disclosure of loan terms, including interest rates, fees, and repayment schedules, to help consumers make the right financial decisions.

6. Enforcement and Penalties

Monitoring and Enforcement: The SEC actively monitors online lending companies to ensure they comply with the laws and regulations laid out by actively investigating complaints and conducting audits to identify and address any violations.
Penalties for Non-Compliance: Non-compliance with regulatory requirements can result in significant penalties, including fines, suspension of operations, and revocation of licenses, as the SEC and BSP have the authority to impose these penalties to maintain market integrity and protect consumers.

7. Borrower Rights and Responsibilities

Right to Information: Borrowers have the right to access clear and comprehensive information about loan terms, conditions, and costs, and it is the online lender’s responsibility to provide this information transparently and in an easily understandable format.
Responsible Borrowing: While regulations protect borrowers, it is also their responsibility to understand loan terms, repay loans on time, and avoid over-borrowing.

8. Challenges and Future Developments

Regulatory Challenges: The rapid growth of online lending poses challenges for regulators in keeping pace with technological advancements and ensuring effective management, which is why continuous updates to regulations and farsighted enforcement measures are necessary.
Technological Innovations: As the online lending industry evolves, integrating new technologies such as artificial intelligence and blockchain can enhance compliance, improve transparency, and streamline operations.

Also Read: Understanding Interest Rates and Fees for Business Loans in the Philippines

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What Are The Mandatory Requirements For Online Lenders to Operate in The Philippines?

As the demand for accessible financial services continues to grow, online lending platforms have emerged as a convenient alternative for many Filipinos.

However, to ensure these platforms operate ethically and transparently, the Philippine government has established a set of mandatory requirements that online lenders must adhere to.

Here, take a look at the key eligibility requirements that online lenders must meet to operate in the Philippines legally -

1. Registration and Licensing

Securities and Exchange Commission (SEC) Registration: Online lending companies must register with the SEC. This involves submitting required documents such as Articles of Incorporation, By-Laws, and other fitting documents that establish the company’s legal existence and operational intent.
Certificate of Authority: After registration, lenders must obtain a Certificate of Authority from the SEC to operate legally, as it ensures that the lending company complies with all regulatory standards set by the SEC.

2. Capital Requirements

The SEC commissions a minimum paid-up capital requirement for online lending companies. This capital requirement is intended to ensure that the lender has sufficient financial resources to cover its operational risks and obligations.

3. Compliance with the Lending Company Regulation Act

Online lenders must comply with the Lending Company Regulation Act - Republic Act No. 9474. This law provides the regulatory framework for lending companies, including provisions on licensing, capital requirements, and operational standards.

Moreover, the Act also outlines specific operational guidelines that lending companies must follow to ensure fair and transparent lending practices.

4. Consumer Protection and Disclosure Requirements

Truth in Lending Act Compliance: Online lenders must comply with the Truth in Lending Act - Republic Act No. 3765, which requires them to provide clear and comprehensive disclosure of loan terms, interest rates, fees, and other charges.
Data Privacy Act Compliance: Lenders must comply with the Data Privacy Act of 2012 - Republic Act No. 10173 to ensure the protection and confidentiality of borrowers’ personal information by implementing in-depth data security measures.

5. Interest Rate and Fee Regulations

Interest Rate Cap: The Bangko Sentral ng Pilipinas (BSP) imposes an interest rate cap on loans to protect consumers from unreasonable interest rates to ensure borrowers receive interest rates that are fair and within the legal limits permitted.
Penalty Charges: There are regulations governing the imposition of penalty charges on overdue loans to ensure online lenders do not charge excessive overdue rates and comply with BSP guidelines.

6. Advertising and Marketing Standards

Truthful Advertising: Online lending companies must ensure that their advertising and marketing materials are truthful and not misleading, as the SEC and other regulatory bodies monitor advertisements to ensure they follow the required ethical standards.
Disclosure of Loan Terms: All promotional materials must include clear and prominent disclosure of loan terms, including interest rates, fees, and repayment schedules. This complete disclosure ensures that potential borrowers have a complete understanding of the loan product before committing to it.

7. Reporting and Record-Keeping

Regular Reporting to SEC: Online lenders are required to submit regular reports to the SEC detailing their financial condition, lending activities, and compliance with regulatory requirements. These reports help maintain transparency and allow regulators to monitor their activities effectively.
Accurate Record-Keeping: Lenders must maintain accurate and up-to-date records of all transactions, including loan agreements, payment histories, and customer communications. Proper record-keeping ensures accountability and aids in resolving any disputes that may arise in the future.

8. Compliance with Anti-Money Laundering Laws

AML Regulations: Online lenders must comply with the Anti-Money Laundering Act - Republic Act No. 9160, which implements measures to detect and prevent money laundering activities. This involves conducting due diligence on borrowers, monitoring transactions, and reporting suspicious activities to the relevant authorities.
Know Your Customer (KYC) Procedures: Implementing KYC procedures is essential to verify the identity of borrowers and make sure they are not involved in illegal activities.

9. Ethical Collection Practices

Lenders must follow ethical collection practices to ensure that debt collection methods are legal and respectful. Harassment or unfair practices are strictly prohibited, and complaints regarding collection practices are closely monitored by the concerned regulators.

10. Continuous Compliance and Monitoring

Ongoing Compliance: Online lending companies must continuously comply with all regulatory requirements and remain updated on any changes in legislation. Regular training and compliance audits can help online lenders make sure they are actively complying with the necessary legal standards.
Regulatory Audits: The SEC and BSP conduct periodic audits and inspections to ensure compliance, so online lenders must be prepared for these audits to take place at any time and must provide all required documentation and access to their operations at the time of audit.

Also Read: Understanding Collateral Loans: Types, Pros, and Cons

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Understanding Your Rights And Responsibilities as a Borrower in The Philippines

As a borrower in the Philippines, it's crucial to be aware of your rights and responsibilities to ensure fair treatment and protect yourself from potential abuses.

Hence, that is why the Philippine government has established a comprehensive legal framework to safeguard borrowers, covering aspects such as transparency, fair treatment, privacy, and ethical collection practices.

Carefully understanding these rights and responsibilities empowers borrowers to make informed financial decisions, seek compensation when necessary, and go through the borrowing process with confidence.

Here, take a look at some of the key rights and responsibilities that you have as a borrower in the Philippines to help ensure you secure a fair lending experience -

Rights as a Borrower in The Philippines

1. Right to Full Disclosure

Transparent Terms: Borrowers have the right to receive full and clear disclosure of all loan terms and conditions before entering into any agreement. This includes details about interest rates, fees, repayment schedules, and any other charges associated with the loan.
Truth in Lending Act: Under the Truth in Lending Act - Republic Act No. 3765, lenders are required to provide relevant information transparently to ensure borrowers are fully informed about their financial commitments.

2. Right to Fair Treatment

Non-Discrimination: Borrowers have the right to fair and equal treatment, free from discrimination based on race, gender, age, religion, or socio-economic status.
Ethical Practices: Lenders are obligated to follow ethical practices in their interactions with borrowers to ensure that all processes are conducted with integrity and respect.

3. Right to Privacy

Data Protection: Borrowers have the right to privacy regarding their personal and financial information. The Data Privacy Act of 2012 - Republic Act No. 10173 commands online lenders to protect and secure borrowers’ data and use it only for legitimate purposes.
Consent and Transparency: Lenders must obtain explicit consent from borrowers before collecting, processing, or sharing their personal information. Moreover, borrowers should be informed about how their data will be used and who it will be shared with.

4. Right to Fair Collection Practices

Respectful Collections: Borrowers are entitled to fair and respectful treatment during the debt collection process. Disrespectful behaviours such as harassment, threats, and abusive practices are strictly prohibited.
Regulatory Compliance: Collection agencies and lenders must comply with the Fair Debt Collection Practices Act and other relevant regulations to ensure that all collection efforts are conducted legally and ethically.

5. Right to Information and Assistance

Access to Information: Borrowers have the right to access all relevant information regarding their loan accounts, including statements, payment histories, and account balances.
Customer Support: Lenders must provide adequate customer support to address borrowers’ queries and concerns. Borrowers should be able to seek assistance and clarification on any aspect of their loan agreement or repayment process.

6. Right to Early Repayment

Prepayment Options: Borrowers have the right to repay their loans ahead of schedule without facing excessive penalties, and early repayment options should be clearly outlined in the loan agreement.
Interest Savings: Early repayment can reduce the total interest paid over the life of the loan, providing financial benefits to borrowers.

7. Right to Recourse and Complaint Resolution

Filing Complaints: Borrowers have the right to file complaints if they believe their rights have been violated or if they experience issues with their loan agreement or lender.
Regulatory Support: The Securities and Exchange Commission (SEC) and Bangko Sentral ng Pilipinas (BSP) provide channels for borrowers to seek compensation and resolution of disputes, borrowers can approach these regulatory bodies for support and guidance at any time.

Also Read: Top 5 Legit Online Loan Apps in the Philippines

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Responsibilities as a Borrower in The Philippines

1. Timely Repayments

Respecting The Repayment Schedule: One of the primary responsibilities of a borrower is to comply with the agreed-upon repayment schedule. Making timely payments ensures that you avoid late fees, penalties, and potential negative impacts on your credit score.
Budgeting for Payments: It is essential to budget effectively to ensure you have sufficient funds to meet your repayment obligations. Proper financial planning helps in avoiding defaults and maintaining a good credit history.

2. Providing Accurate Information

Truthful Application Details: When applying for a loan, it’s crucial to provide accurate and truthful information, which includes details about your income, employment, and personal identification. Providing false information can lead to loan denial and severe legal consequences.
Updating Lender on Changes: Inform your lender about any significant changes in your financial situation, such as job loss or a reduction in income. Effective and farsighted communication can help you in negotiating modified repayment terms if necessary.

3. Understanding Loan Terms and Conditions

Thorough Review: Carefully review all loan terms and conditions before signing any agreement. This includes understanding the interest rates, fees, repayment schedules, and any penalties associated with the loan.
Seek Clarification: If any terms are unclear, seek clarification from the lender. Fully understanding the agreement helps in making informed decisions and avoiding misunderstandings.

4. Managing Loan Proceeds Responsibly

Purposeful Use of Funds: Use the loan proceeds for the purpose stated in your loan application. Responsible use of funds ensures that you can meet your financial goals and repay the loan without difficulty.
Avoiding Over-Borrowing: Borrow only what you need and can afford to repay. Over-borrowing can lead to financial strain and increase the risk of default.

5. Monitoring Loan Account

Regular Account Checks: Regularly monitor your loan account to keep track of payments, balances, and any changes in terms, as staying informed about your loan status helps in managing repayments effectively.
Addressing Errors Promptly: Report any discrepancies or errors in your loan account to the lender immediately. Prompt action can prevent minor issues from becoming significant problems later on if neglected.

6. Maintaining Communication with Lender

Open Communication Lines: Maintain open communication with your lender throughout the loan term. This includes responding to lender inquiries and providing requested information promptly.
Seek Assistance: If you encounter difficulties in making payments, contact your lender to discuss possible solutions. Lenders may offer options such as payment extensions or restructuring plans to help you manage repayments effectively.

7. Compliance with Legal Obligations

Following Laws and Regulations: Ensure that you comply with all applicable laws and regulations related to borrowing and repaying loans in the Philippines. This includes understanding your rights and responsibilities under the Truth in Lending Act and other relevant legislation.
Understanding Contractual Obligations: Fulfill all contractual obligations outlined in the loan agreement, which not only include making timely payments but also following any other terms specified by the lender.

8. Managing Debt Responsibly

Debt Management Strategies: Implement effective debt management strategies to ensure you can meet all your financial obligations. This includes stabalizing your debts, seeking financial advice, or creating a repayment plan.
Avoiding Additional Debt: Be cautious about taking on additional debt while repaying an existing loan, as the additional debt can potentially strain your finances and increase the risk of default.

9. Maintaining Good Financial Habits

Financial Discipline: Practice financial discipline by budgeting, saving, and managing expenses wisely. Good financial habits support timely loan repayments and overall financial stability.
Building Creditworthiness: Responsible borrowing and timely repayments contribute to building a positive credit history, which can benefit you in future borrowing needs.

Also Read: Finding Low-Interest Business Loans in the Philippines

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How to Select The Best Online Lending Option in The Philippines - Key Points For Borrowers To Consider Before Applying

Selecting the best online lending option requires careful consideration of various factors to ensure borrowers choose a service that meets their financial needs and offers favorable terms.

The best way to do this is by making the right financial decisions that can help you and your business avoid potential pitfalls and ensure a smooth borrowing experience.

Here, take a look at some of the key points borrowers should remember when selecting an online lending option in the Philippines -

1. Assess Your Financial Needs

Determine Loan Purpose: Clearly define why you need the loan. Whether it's for personal expenses, business expansion, or emergency funds, knowing your purpose helps in selecting the appropriate loan type and amount.
Calculate the Loan Amount: Determine the exact amount you need to borrow. Avoid borrowing more than necessary to minimize interest costs and ensure manageable repayments.

2. Research Lenders Thoroughly

Check Credibility: Ensure the lender is registered with the Securities and Exchange Commission (SEC) and complies with local regulations. Avoid unregistered or unlicensed lenders to protect yourself from fraud and unfair practices.
Read Reviews: Look for customer reviews and testimonials to gauge the lender’s reputation. Reliable feedback can provide insights into the lender's service quality, transparency, and customer support.

3. Compare Interest Rates and Fees

Interest Rates: Compare interest rates from multiple lenders to find the most competitive option, as lower interest rates can significantly reduce the overall cost of the loan.
Hidden Fees: Be aware of any additional fees, such as processing fees, late payment charges, and prepayment penalties. Ensure all costs are clearly disclosed and factor them into your decision-making process.

4. Evaluate Loan Terms and Conditions

Repayment Terms: Consider the repayment period and installment amounts. Choose a loan with terms that align with your financial capacity to avoid defaulting.
Flexibility: Check if the lender offers flexible repayment options, such as the ability to change payment dates or make early repayments without penalties.

5. Understand the Application Process

Simplicity and Speed: Opt for lenders with straightforward and quick application processes. Online lenders often offer faster approval times but ensure the process is clear and easy to follow.
Required Documentation: Prepare all necessary documents in advance, such as proof of income, identification, and bank statements. Knowing the requirements helps streamline the application process.

6. Ensure Data Privacy and Security

Data Protection: Verify that the lender complies with the Data Privacy Act of 2012 - Republic Act No. 10173. Your personal and financial information should be protected and used only for legitimate purposes.
Secure Platform: Ensure the lender’s website or app uses secure encryption methods to protect your data during transactions.

7. Check Customer Support

Availability: Choose a lender with reliable customer support that can address your queries and concerns promptly. Good customer service is crucial for resolving issues and ensuring a smooth borrowing experience.
Support Channels: Look for multiple support channels, such as phone, email, and live chat, to ensure you can reach the lender easily.

8. Review Borrower Rights and Responsibilities

Know Your Rights: Familiarize yourself with your rights as a borrower, including the right to full disclosure, fair treatment, and data privacy, as clearly understanding your rights helps you protect yourself from unethical practices.
Understand Responsibilities: Be aware of your responsibilities, such as timely repayments and providing accurate information. Fulfilling your obligations helps maintain a good credit standing and ensures a positive borrowing experience.

9. Assess Long-Term Impact

Credit Score: Consider how the loan will impact your credit score since timely repayments can improve your credit rating, while missed payments can harm it.
Financial Planning: Integrate the loan into your overall financial plan. Ensure that taking on the loan aligns with your long-term financial goals and stability.

10. Look for Additional Benefits

Some lenders offer additional benefits, such as rewards programs, lower rates for repeat borrowers, or financial education resources. These perks can add value to your overall loan borrowing experience.

Also Read: Applying for a Small Business Loan: 5 Steps to Get Approved

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Filing Complaints Against Online Lenders in The Philippines - A Detailed Guide For Borrowers

As the online lending industry in the Philippines grows, so does the need for borrowers to be aware of their rights and the avenues available for addressing grievances. While many online lenders operate ethically, some may engage in unfair practices, causing borrowers distress.

That is why, in this section of the article, we will provide borrowers with all the necessary steps to file complaints against online lenders in the Philippines to ensure their voices are heard and their concerns are addressed appropriately.

Here, take a look at the steps required to file a complaint against an online lender in the Philippines -

1. Identify the Issue

Nature of the Complaint: Clearly identify and articulate the specific issue you are facing with the online lender. This could include unfair interest rates, hidden charges, harassment from debt collectors, or data privacy violations.
Gather Evidence: Collect all relevant documentation and evidence to support your complaint. This may include loan agreements, payment receipts, email correspondences, screenshots, and any other pertinent records.

2. Review Your Loan Agreement

Terms and Conditions: Revisit the terms and conditions of your loan agreement to ensure you understand your rights and obligations. This will help you determine if the lender has breached any contractual terms or not.
Lender Policies: Check the lender’s policies on complaints and dispute resolution, as some lenders may already have an existing internal process for addressing borrower grievances.

3. Attempt to Resolve Directly with the Lender

Contact Customer Support: Reach out to the lender’s customer support team to discuss your issue and provide all relevant details and evidence to support your case.
Formal Complaint: If initial contact does not resolve the issue, submit a formal written complaint to the lender. Clearly outline your concerns, the evidence, and the resolution you seek. Keep a copy of this complaint for your records.

4. Escalate to Regulatory Authorities

Securities and Exchange Commission (SEC): If the lender does not resolve your complaint satisfactorily, escalate the issue to the SEC. The SEC oversees online lending companies and can take action against those that violate regulations.
Filing a Complaint with the SEC: Visit the SEC website or contact their office to file your complaint. Provide detailed information about the issue, including all supporting evidence and correspondence with the lender.
National Privacy Commission (NPC): For issues related to data privacy violations, file a complaint with the NPC. They enforce the Data Privacy Act of 2012 and can address violations concerning the misuse of your personal information.
Filing a Complaint with the NPC: Visit the NPC website or contact their office directly to file your complaint by including all relevant details and evidence at your disposal.

5. Seek Assistance from Consumer Protection Agencies

Department of Trade and Industry (DTI): The DTI provides consumer protection services and can assist in resolving disputes with online lenders. They offer mediation and arbitration services to help resolve issues.
Filing a Complaint with the DTI: Visit the DTI website or your nearest DTI office to file a complaint. Provide a detailed account of the issue and all supporting documents.

6. Consider Legal Action

Consult a Lawyer: If your complaint is not resolved through regulatory authorities, consider seeking legal advice. A lawyer can help you understand your legal options and the feasibility of pursuing legal action against the lender.
File a Lawsuit: If advised by your lawyer, you may file a lawsuit against the online lender for breach of contract, unfair practices, or other legal violations. Ensure you have all evidence and documentation to support your case.

7. Report to Media and Advocacy Groups

Media Exposure: If you believe your case highlights broader issues with online lending practices, consider contacting media outlets to raise awareness. Public exposure can pressure lenders to address complaints and improve their practices.
Consumer Advocacy Groups: Reach out to consumer advocacy groups that can provide support and amplify your complaint. These groups often have resources and connections that can help in resolving disputes.

8. Follow Up and Document Progress

Track Your Complaint: Keep a record of all communications, including dates, names of representatives you spoke with, and the details of each interaction. This documentation can be crucial if you need to escalate your complaint further.
Regular Follow-Ups: Regularly follow up with the relevant authorities and organizations handling your complaint to ensure it is being addressed.

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Conclusion

Online lending in the Philippines currently presents a complex scenario where innovation meets strict regulations. The industry has witnessed rapid growth, driven by the increasing demand for accessible financial services. Fortunately, the sector operates within a detailed legal regulatory framework that is designed to protect consumers from predatory lending practices.

The Securities and Exchange Commission and the Bangko Sentral ng Pilipinas play pivotal roles in overseeing and regulating online lenders, ensuring lenders comply with lending laws, interest rate caps, and data privacy standards.

While challenges such as privacy concerns persist, the industry's obvious potential to promote financial assistance for Philippine businesses remains significant for the foreseeable future.

So, it is fair to conclude that to develop sustainable growth and consumer protection, continuous collaboration between regulators, industry stakeholders, and borrowers is vital.

This is because when all these elements come together, Philippine businesses and entrepreneurs can harness the complete benefits of online lending while also safeguarding their interests by striking a balance between innovation and responsible lending.

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Frequently Asked Questions (FAQs)

1. Is an online lending company legal in the Philippines?

Yes, online lending is legal in the Philippines, but with strict regulations. The Securities and Exchange Commission (SEC) oversees online lending platforms to protect borrowers from predatory practices.

Philippine businesses must deal with licensed lenders only to avoid scams and ensure fair lending practices.

2. What is the legal lending rate in the Philippines?

The legal lending rate in the Philippines is 12% per annum, as specified under the Usury Law Act No. 2655. However, it's important to note that this is the maximum rate and actual interest rates charged by lenders can vary based on factors like risk assessment and market conditions.

While the Usury Law sets a ceiling, it is essential to be aware of potential hidden charges or fees that might effectively increase the overall cost of borrowing.

3. What happens to unpaid online loans in the Philippines?

Unpaid online loans in the Philippines can lead to severe consequences such as -

Debt collection: Lenders may employ aggressive collection tactics.
Damaged credit score: Non-payment negatively impacts your creditworthiness.
Legal action: In extreme cases, lenders may take legal action to recover the debt.
Potential blacklisting: You might be listed on a credit blacklist, restricting future borrowing.

4. What is the 19-lender rule in the Philippines?

The 19-lender rule in the Philippines limits a non-bank financial institution to borrowing from no more than 19 lenders without acquiring a quasi-banking license.

This regulation aims to control the amount of funds a non-bank financial institution can access, eliminating potential risks to the financial system. Essentially, it is a measure to prevent these institutions from engaging in banking activities without the necessary regulatory systems in place.