19 Lending Apps were Banned in the Philippines

Michael Dumaloan

12.11.2024

The central bank of the Philippines recently banned 19 lending apps for engaging in predatory and usurious lending practices. The move is intended to protect consumers from unscrupulous lenders who have been known to charge interest rates upwards of 200%, with some cases reaching as high as 1,000%.

For those who are unaware, lending apps are mobile applications that allow individuals to borrow money, usually in the form of a loan. The app assesses a potential borrower’s creditworthiness and then issues a loan accordingly. This type of service has become increasingly popular in the Philippines, as it has allowed many people to access funds they couldn’t otherwise get through traditional lenders.

However, the Philippines recently banned the use of lending apps due to the amount of debt they were creating. There are several reasons why the government took this step. First, there was concern that many of these apps were charging unreasonably high-interest rates and fees, which put borrowers at risk of being unable to pay back their loans. Second, the government was worried about the lack of regulation of these apps, which could lead to fraud and other financial crimes.

For many Filipinos, the ban on lending apps was a major setback. Many had come to rely on such apps for quick and easy access to funds. One company that was affected by the ban was Cashwagon, a leading lender in the Philippines. The company had been providing loans to hundreds of thousands of people, helping them access funds for various needs, including medical expenses, education costs, and more.

The Bangko Sentral ng Pilipinas (BSP), the country’s central bank, has been closely monitoring the proliferation of these online lending apps, which are unregistered and not licensed to operate in the Philippines. To address this issue, the BSP issued Circular No. 1060, which prohibits the use of online lending apps that are not registered with the BSP and not in compliance with existing regulations.

The circular directs all financial institutions operating in the Philippines to immediately cease and desist from providing services to unregistered online lenders. This means that all transactions involving these lending apps will no longer be recognized. Furthermore, the BSP has instructed financial institutions to not permit the promotion of these unregistered mobile lending apps in any medium or format.

The 19 lending apps that were banned include Cashab, Cashlending, Cashwagon, Crazyloan, Flash Cash, Happy2Peso, Hatulong, InstantPera, Jazzy Loans, Easycash, Loanload, MeLoan, MoneyTree Quick Loan, PautangOnline, Pera247, PesoLending, QuickPera, UangMe, WeLend.

The move to ban these lending apps is an important step in protecting consumers in the Philippines from predatory and usurious lending practices. It sends a strong message that the BSP will not tolerate any attempts to bypass existing regulations. It also shows that the government is serious about protecting its citizens from financial exploitation and abuse.

This sudden ban has left many Filipino consumers without access to quick cash, as digital lending apps were the most popular way to obtain quick loans in the country. This has been a major blow to the Filipino economy, as millions of people now have limited access to capital to start businesses and address financial emergencies.

The BSP’s decision was based on the fact that the digital lending industry in the Philippines had become too large and lacked proper regulation. In addition, there were reports of digital lending companies engaging in predatory lending practices, charging exorbitant interest rates and fees, and unfairly targeting vulnerable populations.

In response, the BSP issued a statement stating that digital lending companies will be allowed to resume operations once they comply with the necessary regulations and meet the standards set by the government. As of now, the government is still in the process of drafting rules and regulations for the industry, and it is unclear when digital lending companies will be allowed to resume operations.

Cashwagon, one of the apps that has been banned, is a financial technology company that provides access to short-term loans and other financial services. It is designed to provide customers with quick and easy access to financial solutions.

However, the app has been criticized for a range of issues, including its high interest rates and fees, as well as its short repayment periods. In addition, consumer groups have argued that the app creates an unsustainable debt cycle that can lead to financial ruin for vulnerable customers.

The Philippine government has made it clear that it will not tolerate the exploitation of its citizens in this manner and has taken the decision to ban these apps. This is an important step to ensure that citizens are protected from predatory practices, and that they have access to safe and secure financial services.

In the meantime, consumers are encouraged to explore alternatives for obtaining quick cash, such as cash advances, payday loans, and peer-to-peer lending platforms. Although these methods may not be as convenient as digital lending apps, they can still provide fast access to cash when needed.

For those who may be in need of financial assistance, there are still numerous legitimate avenues they can explore. Consumers are advised to explore all of their options, such as personal loans, micro-lending programs, and other forms of non-bank financing, before resorting to online lenders.

For potential borrowers, it’s important to be aware of the potential risks associated with digital lending and to do your research before you take out a loan. Additionally, you should always read the terms and conditions of any loan carefully before signing and make sure you understand all of the fees, interest rates and repayment terms.

The BSP’s move to ban 19 online lending apps is a positive step towards ensuring the safety and security of consumers in the Philippines. It is also a reminder to all potential borrowers to be vigilant and to always be aware of their rights and responsibilities. Consumers should always do their own due diligence and research any lender before entering into a loan agreement.