The Securities and Exchange Commission (SEC) is bracing for a large influx of online lending platform (OLP) license applications when it reopens the licensing window on August 1, ending a moratorium that has been in effect since November 2021.

SEC Commissioner Rogelio V. Quevedo told BusinessWorld on Wednesday that he expects a substantial number of applicants.

"I have heard that there are probably hundreds who want to apply. But of course, I will know only when they start applying on Monday," Mr. Quevedo said.

He emphasized that the SEC has not set a ceiling on the number of licenses it can approve and actively encourages companies to enter the regulated framework.

"There is no limit. I believe in competition. Actually, I will encourage more companies to be licensed. It's better that they are licensed so that we can actually regulate them," he said.

Starting Saturday, the SEC will begin accepting OLP applications under Memorandum Circular No. 20, which raises both capital and disclosure requirements for financing and lending companies. The regulator says the tougher standards are designed to strengthen oversight and bolster consumer protection.

The circular formally lifts the moratorium on new OLP licenses, which was imposed nearly five years ago while the SEC drafted revised rules in response to widespread complaints about predatory lending and abusive debt collection practices across the industry. During the moratorium, the SEC continued to crack down on unregistered and illegal lending apps, ordering the takedown of numerous platforms from app stores for operating without authority and for harassment of borrowers.

The reopening comes as the Philippines' digital lending sector has grown substantially, fueled by rising smartphone penetration and demand for quick credit among underbanked consumers, a trend that accelerated during the COVID-19 pandemic.

Under the new framework, OLP applicants must meet a minimum capitalization of P10 million — a tenfold increase from the previous P1 million threshold.

"We are expecting a lot. But we increased the capital requirement. It's not P1 million anymore. The minimum will be P10 million. If you are an OLP, you will be required to have a capitalization of P10 million," Mr. Quevedo said.

The rules introduce a tiered paid-up capital structure. Financing companies (FCs) operating one OLP must maintain a minimum paid-up capital of P20 million. The requirement rises to P40 million for two OLPs, P60 million for three, P80 million for four, and P100 million for five. Lending companies (LCs) face a lower scale: P10 million for one OLP, P20 million for two, P30 million for three, P40 million for four, and P50 million for five.

The SEC has capped the maximum number of OLPs that any single financing or lending firm can own and operate at five.

Existing FCs and LCs that already operate one or more OLPs must bring their paid-up capital in line with the requirements corresponding to their platform count within 12 months.

For new market entrants, financing firms must hold a minimum paid-up capital of P15 million, while new lending firms must have P5 million. Existing companies are not required to immediately adjust their capital unless they expand operations.

— Aaron Michael C. Sy