BSP expected to decide on 2% credit card interest cap before end of October

A decision on the review of the 2% ceiling on credit card interest is targeted before the month ends, a top official of the Bangko Sentral ng Pilipinas (BSP) said.
 
According to BSP Deputy Governor Chuchi Fonacier, the review on the 2% interest cap is set to be elevated for consideration and decision by the Monetary Board (MB). 
 
“We’re targeting to elevate it within the month… it will be decided once elevated to the MB,” she said in a mobile message on Thursday.
 
The MB in September 2020 set a 24% annual interest rate cap on all credit card transactions, equivalent to a monthly interest of 2%, in a bid to ease the financial burden amid the COVID-19 pandemic.
 
Under the policy, credit card issuers can only charge a maximum monthly add-on rate of 1% for credit card installment loans, and no other charges or fees can be imposed on cash advances except for a maximum processing of P200 per transaction.
 
The rates are subject to review by the BSP every six months, pursuant to the central bank’s supervisory authority. This was last retained in May.
 
The latest data available from the BSP shows that soured loans held by banks declined for the sixth straight month in August, dragging the nonperforming loan (NPL) ratio to a 23-month low.
 
The banking sector’s gross NPL ratio stood at 3.53% as of end-August, the lowest since September 2020’s 3.51%. This compares with 3.57% in July and 4.51% in the same month last year.
 
The banking industry’s gross loan portfolio was at P11.84 trillion in August, reflecting an 8.72% growth from P10.89 trillion in the same month last year and 0.5% higher than the P11.77 trillion recorded in July. — VBL, GMA News