For far too long, Filipino borrowers have entered loan agreements without a genuine understanding of what those agreements cost them. The Commission is changing that.
THE Securities and Exchange Commission headquarters in Makati City. The regulator has issued new guidelines tightening compliance, reporting, and bond requirements for one person corporations to strengthen transparency and corporate oversight.
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For more than five years, the door to new Online Lending Platforms (OLPs) in the Philippines has been closed. The Securities and Exchange Commission, however, is opening it again, but on fundamentally different terms.
Memorandum Circular (MC) 20, Series of 2026, lifts the moratorium on the registration of new OLPs and establishes a comprehensive regulatory framework governing the digital lending sector.
The moratorium, imposed in 2021, was a deliberate and necessary intervention. The sector had been expanding at a pace that outstripped the rules meant to govern it, bringing with it predatory debt collection practices, data privacy violations, and troubling opacity in the terms presented to borrowers.
The Commission used the intervening years to study the landscape, consult extensively with industry and consumer groups, and design a framework equal to the complexity of what digital lending has become. MC No. 20 is the result of that work.
The lifting of the moratorium is not deregulation. It is a recalibration — and a principled one.
One cornerstone of the new framework is borrower protection. Section 20 of the circular operationalizes the disclosure requirements of the Truth in Lending Act for every loan transaction. Before a single peso is released, lending companies must fully inform borrowers of the total amount financed, the applicable finance charges, the effective interest rate, the complete payment schedule, and all fees and penalties that may be imposed.
These disclosures must be made before the loan is consummated, clearly and completely — not concealed in fine print or revealed only after funds have changed hands.
For far too long, Filipino borrowers have entered loan agreements without a genuine understanding of what those agreements cost them. The Commission is changing that. Informed consent is not a courtesy. Under MC No. 20, it is a legal obligation.
The circular likewise imposes strengthened capitalization requirements commensurate with the risks of operating in the digital lending space. New lending companies seeking to register a single branch must maintain a minimum paid-up capital of P5 million, five times the threshold under which many existing operators were originally registered.
Existing lending companies with P1 million in paid-up capital retain the right to continue operating their current branch, but their ability to expand is deliberately and appropriately constrained until they comply with the capitalization requirements.
The treatment of kiosks and temporary locations is also clarified. MC No. 20 provides that any kiosk, booth, or temporary location that represents itself to the public as authorized to receive, process, approve, or release loans on behalf of a financing or lending company shall be deemed a branch office, regardless of its name or designation.
Operators that have historically used alternative formats to sidestep branch registration requirements will find no shelter in nomenclature under the new rules.
The circular’s requirement for the submission of borrower data to the Credit Information Corp. further strengthens the lending ecosystem. It enables responsible borrowers to build verifiable credit histories, supports more accurate risk assessment by lenders, and chips away at the conditions that have long made predatory refinancing a recurring harm.
The Commission’s position is unequivocal: Access to credit and protection from exploitation are not in tension. Millions of Filipinos depend on digital lending because the formal banking sector has not reached them. MC No. 20 ensures that this access is real, its terms are honest, and the companies providing it are fit to do so.
That is the standard the Commission has set. It expects the industry to meet it.
