Contractual Requirements
- The loan or credit contract must explicitly state the seven disclosure items listed.
- It must also specify any additional charges applicable if the borrower breaches contract stipulations.
Posting Requirements for Banks and Financial Institutions
- Banks and financial institutions must prominently display:
a. An abstract of R.A. No. 3765 provisions as prescribed by the Monetary Board (format: 60 cm x 75 cm).
b. Information on loans including:- Type of loan.
- Simple annual interest rate.
- Method of interest payment (e.g., advance or otherwise).
- Other relevant fees and charges associated with the loan.
Penalties for Non-Compliance
- Creditors who fail to disclose required information face monetary liability to the borrower.
- The liability is the greater of P100 or twice the finance charge from the transaction.
- However, such liability is capped at P2,000 per credit transaction.
Regulatory Basis and Enforcement
- Compliance is mandated under BSP Monetary Board Resolution No. 356 and relevant sections of the Manual of Regulations for Banks and Non-Bank Financial Institutions.
- The Truth in Lending Act is enforced to promote transparency and protect borrowers from undisclosed credit terms.
Summary
This legal framework mandates transparency in credit transactions by requiring detailed pre-contract disclosure, explicit contract statements, public posting of loan terms, and penalties for violations, thereby ensuring informed consumer consent and equitable lending practices.