Global digital lending platform Tala has expressed its support for the campaigns of the Bangko Sentral ng Pilipinas (BSP) and Senator Raffy Tulfo against sangla-ATM, and other predatory loan schemes that trap financially struggling Filipinos.
Their campaigns and calls for legislation to prevent these practices are growing because no laws to date exist prohibiting them.
The sangla-ATM practice has borrowers give their ATM cards to informal financiers as collateral for their loans. Because borrowers are often pensioners and small income earners, they are essentially stripped of their sole source of funds while their ATM cards, which store their pensions or salaries, are confiscated.
Borrowers often have no written contracts with the informal lenders. As a result, borrowers have difficulty filing complaints with proper agencies or cases in courts.
“Loans should help, not hinder, borrowers from making productive use of their money,” says Bianca Villarama, Tala’s Director for Regulatory and Privacy. “Sangla-ATM loans, which require borrowers to surrender their ATM cards and to share their ATM security codes, prevent borrowers from using their money freely and safely. Tala believes that borrowers should be trusted and empowered to make good financial decisions to improve their lives. Tala supports the government’s campaigns to restrict lending practices that physically put borrowers’ property in the hands of untrustworthy lenders.”
According to a 2022 Consumer Expectation Survey conducted by the BSP, 2.6% of Filipinos resorted to sangla-ATM for two reasons: quick release of loans and no lengthy documents required.
The BSP survey also showed that the difficulty in completing requirements, the lack of guarantors, the lack of stable employment, and the lack of credit history are factors that compel borrowers to use predatory lending practices.
The BSP has been warning the public, pointing out the risk of identity theft, fraud, and other criminal activities associated with the sangla-ATM practice to the borrowers. Borrowers became prey to the unauthorized exposure of their bank details and other information to illegal, unscrupulous parties.
Senator Raffy Tulfo recently called the Senate’s attention to the prevalence of sangla-ATM among SSS and GSIS pensioners. For Tulfo, lenders who use the sangla-ATM scheme take advantage of the elderly who need to ease their financial woes by taking a loan.
In his privilege speech during a Senate plenary session on February 27, Senator Tulfo said that he “is looking to proposing the prohibition or regulation of the use of SSS (Social Security System) or GSIS (Government Service Insurance System) pension ATM as a collateral and providing corresponding penalties.”
Given the harm that sangla-ATM and predatory lending schemes are inflicting on their users, Senator Tulfo wants to put a stop to them. The private sector also has its part to play in preventing predatory lending schemes, including by providing alternatives with less risk.
Unlike rampant predatory lending schemes, Tala provides a sustainable, efficient and transparent platform where Filipinos can access loans and other financial resources quickly but securely.
Filipinos who lack collateral can still apply for loans. They don’t need to leave their property with a stranger. Payment schedules are flexible, giving borrowers the freedom to use their funds – whether it is their salary or pension – according to their needs.
With the new Tala loans, borrowers are assured of a safe lending space that provides transparent terms and conditions, implements fair collection practices, and ensures customer data security to avoid exposure to identity theft, fraud, and other criminal activities.
“Tala offers loans to Filipinos through a convenient, accessible and transparent digital lending platform. We are committed to ensuring that our customers can safely borrow, save and control their money so that they live with financial agency,” said Ms. Villarama. “With Tala, Filipinos no longer have to turn to sangla-ATM lenders, loan shark syndicates, and other informal lenders to address their most pressing financial needs.”