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Philippine central bank sets out standards for savings, loan associations

Bangko Sentral ng Pilipinas laid out minimum standards for non-stock savings and loan associations in order to protect their members.

In a circular No. 1013 issued Sept. 17, the BSP said the standards will allow savings and loans associations to provide their services fairly to their members. The central bank prohibited the entities from charging unreasonably high service fees while granting loans, saying service fees are unreasonably high if the fee rate exceeds 50% of the annual nominal interest rate charged on a loan.

Non-stock savings and loan associations collect the savings of its members and provide long-term financing for home development and personal loans.

Other unfair practices include limiting capital contributions, granting unauthorized salaries, recognizing as income unused insurance premiums instead of refunding the same to borrowers and lending to borrowers with poor credit history, among others.

The circular will take effect 15 days after its publication.