Thursday, August 15, 2013

HAVE CO-OPS COMPLIED WITH "TRUTH IN LENDING ACT" CIRCULAR OF CDA?





This question came to my mind after reading a press release from the Bangko Sentral ng Pilipinas (BSP)  posted in its website,  regarding its implementation of the updated rules on the "Truth in Lending Act" (R.A. No. 3765).

The BSP reported that of the eighty-five (85) covered institutions assessed by BSP for compliance as of June 30, 2013, only 18.8% were verified to be in full compliance; 60% have substantially complied; while 21.2% were found to be non-compliant.

4/5 ARE NON-COMPLIANT
 

As I see it, less than 1/5 of the covered institutions fully complied.  4/5 are in various stages of compliance/non-compliance.

I did not read about any penalties, nor remedial actions being taken by BSP against those which are fully non-compliant.  Is not this a violation of R.A. No. 3765.

What about the cooperatives?

MC 2012-05
 

The Cooperative Development Authority (CDA)  had also issued a parallel regulation for cooperatives under Memorandum Circular 2012-05, which was approved by the CDA's Board of Administrators on March 14, 2012.

More than a year ago since this MC was approved/issued, what is the status of compliance.  Is CDA even monitoring this?  Were there any complaints from members on the non-compliance of their cooperatives?

NO SANCTIONS
FOR NON-COMPLIANCE?
 

I was reading the CDA's Circular on this.  I was looking for any punitive provisions in the Circular.  There appears to be none.  So, will this be just one of those Circulars?

In my mind, I was computing the interest rates of my loans in my cooperative.  There was the nominal 12% interest rate.  There are processing/service fees, etc. The interest rates on monthly amortizations are not based on the diminishing balance of the loan.

DEAD-LETTER
CDA CIRCULAR?
 

 I am afraid that if this cooperative were to  follow the disclosure requirements of the Truth in Lending Act, the effective interest rates would be shamefully high. 

I am sure many credit cooperatives and multipurpose cooperatives with savings and lending functions are similarly situated.  What about your cooperative?  Will we just let this MC 2012-05, as just another dead letter Circular?  That is said.  (END).

 

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