Question & AnswerQ&A (BSP MEMORANDUM NO. M-2008-020)
The primary purpose of R.A. No. 3765 is to require banks and financial institutions to disclose to borrowers, prior to consummation of credit transactions, the key information about the credit extended to ensure transparency and informed consent.
All banks and financial institutions under the supervision of the Bangko Sentral ng Pilipinas (BSP) are required to comply with R.A. No. 3765.
Creditors must furnish a clear written statement including: 1) The cash or delivered price of the property or service; 2) Amounts credited as down payment or trade-in; 3) The difference between items 1 and 2; 4) Itemized charges not incident to credit extension; 5) Total amount to be financed; 6) Finance charge expressed in pesos and centavos; 7) Percentage that the finance charge bears to the total amount financed, expressed as a simple annual rate.
The written statement must be furnished prior to the consummation of the credit transaction.
The contract or document must indicate the seven key items of information required by the Act and specify any additional charges that will be collected if the debtor fails to meet certain contract stipulations.
Entities must post in conspicuous places in their main offices and branches an abstract of the provisions of R.A. No. 3765 (in prescribed format) and information regarding interest and other charges on loans such as: type of loan, simple annual interest rate, manner of interest payment, and other fees and charges imposed.
A creditor who fails to disclose any required information is liable to the borrower in the amount of P100 or twice the finance charge, whichever is greater, but the liability shall not exceed P2,000 per credit transaction.
Compliance is mandated under Section X307 of the MORB, and Sections 4309Q, 4101N, and 4307S of the MORNBFI.
Monetary Board Resolution No. 356 enjoins all banks and financial institutions under BSP supervision to strictly comply with the provisions of R.A. No. 3765.
The Bangko Sentral ng Pilipinas (BSP), through its Monetary Board and regulations prescribed in the MORB and MORNBFI, enforces compliance with the Truth in Lending Act.