MANILA – An Indian business group calls for the legalization of “five-six” or the informal micro-lending scheme often associated with Indian money lenders, stating it will benefit both small businessmen and consumers.
Five-six schemes are known for having a 20-percent interest on small loans that are payable in a week.
In 2016, President Rodrigo Duterte criticized five-six, saying exorbitant interest rates were “killing” the Filipino entrepreneur’s spirit.
However, an official of the Federation of Indian Chambers of Commerce Philippines stated that five-six has actually changed over the years.
Rex Daryanani, president of the Indian chamber, noted that instead of being payable in a week, current five-six schemes are stretched over a 4-month period, meaning the interest rate is 5 percent a month.
Daryanani added around 30,000 Indian nationals in the Philippines are involved in five-six, on behalf of at least P30 billion in capital, and they want their business to become legal.
“This way you bring them above ground. They’re paying taxes and to us, this will benefit the Filipino consumers, Filipino small businesses,” Daryanani stated in an interview.
The Department of Justice in 2017 stated that informal lenders can be arrested because they operate without a permit.