Higher capital for online lenders pushed

THE FINTECH ALLIANCE.PH is advocating higher capitalization standards for online lending companies to strengthen the industry’s stability.

“We are pushing that because we need serious players,” FinTech Alliance.PH Chairman Angelito M. Villanueva told a news briefing last week. “How would you even expand your lending when your capital is too low?”

The Securities and Exchange Commission (SEC) on Thursday issued a circular aiming to lift the moratorium on online lending platform registrations.

The move introduces a tiered capitalization framework, where the required capital depends on the number of platforms a company manages.

Under the proposed framework, financing companies must maintain P30 million for a single platform, P60 million for two to five platforms and P100 million for a maximum of 10 platforms. Lending companies face lower thresholds, topping out at P50 million for 10 platforms.

Mr. Villanueva noted that the previous minimum of P1 million was insufficient, particularly when digital banks are required to hold at least P1 billion in capital.

“If they’re dead serious about it, we need players who can sustain operations,” he said. “We don’t want these online lenders to fold.”

A higher capital base would also allow companies to grow responsibly, Mr. Villanueva said. “If your capital base is just P1 million, how are you underwriting beyond that? There is something wrong,” he said. He suggested tying lending coverage to capitalization, so smaller lenders focus on specific segments rather than offering nationwide loans.

Mr. Villanueva said FinTech Alliance.PH members are expected to complement the SEC’s regulations, ensuring alignment between industry standards and formal oversight.

The move comes as online lending continues to expand in the Philippines, with regulators seeking to balance growth with consumer protection and risk management. By setting higher capitalization standards, industry leaders aim to encourage more robust, sustainable operations and reduce the likelihood of company failures. — Aaron Michael C. Sy