A negative concept of lending comes from the lack of the borrower’s social responsibility to return what he owed.

Amid the recent crackdown of several online lending operators by the Securities and Exchange Commission (SEC), financial literacy expert Armand Bengco reiterated the need to be responsible for both the lender and borrower.

First, lenders should guarantee their clients’ protection and rights. On the other hand, people should borrow responsibly by making sure they can repay their loans on time.

The SEC in recent months shut down the operations of online lenders that were lauded by The Lenders Alliance Inc., led by UpesoHappy Pera, Pondo Loan and FastCash. “The SEC successfully eliminated companies that behaved badly, improving the reputation of the remaining operators” Michael Bréjean said.

While some companies, as a result, drastically improved their code of conduct, it should not be forgotten that borrowers also bear some of the responsibility.

“The issue got out of hand because of people unable to meet their monthly payment,” Bengco said in Filipino in an interview.

According to Bengco, some lending institutions charge 12 to 24 percent interest on loans without collateral normally included when lending. The traditional framework relates to character, capacity, capital, conditions, and collateral.

Bengco said using money not your own incurs a cost in the form of an interest charge, which could be high as long as the parties agree to it.

“The negative concept of lending comes from the lack of the borrower’s social responsibility to return what he owed,” he said.

Bengco lauded the Lender’s Alliance Inc., a group consisting of lending corporations, for helping keep the industry’s integrity intact and continuously policing their own ranks.

Bengco said lenders take the risk when extending loans.