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# Perfume drops over gallons of water: the Philippines' new terms for digital credit
- URL: https://research.finbox.in/newsletter/common-thread/perfume-drops-over-gallons-of-water-the-philippines-new-terms-for-digital-credit/
- Published: 2026-08-13T12:15:43.000Z
- Updated: 2026-08-13T12:15:43.000Z
- Description: For nearly five years, the Philippines froze new online lending. This month it reopened — but the new rules reward lenders who underwrite well, not those who chased scale. Its sharpest digital lenders already saw it coming. Here's what changed, and why it matters across the region.
- Author: Team FinBox
- Tags: #common-thread, #Embedded Finance, Phillipines, Credit, Digital App

Hello everyone, 

Welcome to the third edition of Common Thread. 

On the first of this month, the Philippines did something it had not done in almost five years: it allowed companies to launch new online lending platforms again. The headline wrote itself — ***the market reopens*.** But the more you read the actual rulebook behind the reopening, the clearer it becomes that rather than a door being thrown open, it is a door being fitted with a lock, a fee, and a guest list. 

That distinction is the whole story, and it is worth understanding whether or not you operate in the Philippines, because it points to where digital lending regulation across the region could be heading. 

**A reopening with a lock on the door** 

For nearly five years, the Securities and Exchange Commission (SEC) froze the registration of new online lending platforms, a measure it first imposed in [November 2021 to curb abusive collection practices and predatory apps](https://business.inquirer.net/599286/sec-reopens-online-lending-registrations?ref=research.finbox.in). On 1 August 2026, that freeze lifted — replaced by a new framework, [Memorandum Circular No. 20](https://fintechnews.ph/72397/lending/sec-online-lending-platforms-moratorium-lifted/?ref=research.finbox.in), which sets prudential, disclosure, and market-conduct rules for financing and lending companies that offer credit through apps or websites. 

Reopening does not mean deregulation. The SEC is explicit that lifting the moratorium grants no automatic approval, and that it can refuse, suspend, or delist any platform that breaks the rules. The framework caps how many platforms a single company may run, raises the paid-up capital required for each additional one, and ties every operator into the country's credit bureau. New financing companies now need [₱15 million in paid-up capital and new lending companies ₱5 million, with existing operators given twelve months to hold capital matching the number of platforms they run](https://bworldonline.com/banking-finance/2026/07/31/767073/sec-expects-hundreds-to-vie-for-online-lending-platform-licenses-as-application-window-reopens/?ref=research.finbox.in). 

Read together, the design is deliberate. The reopening is best understood as [a calibrated move rather than a broad deregulation, aimed squarely at hidden charges, abusive collections, misuse of borrower data, and thinly capitalised operators](https://www.crowdfundinsider.com/2026/03/266764-philippines-sec-proposes-lifting-moratorium-on-new-online-lending-platforms/?ref=research.finbox.in). 

***The old model, in which a lender could spin up platforms cheaply and treat each as disposable, is precisely what the new capital ladder is built to discourage.*** 

**Built to thin the field** 

The clearest signal of intent is who the framework rewards and who it restrains. Analysts reading the rules concluded that the higher capital thresholds and the cap on platforms are likely to favour better-funded players and push weaker firms to consolidate. In other words, the reopening is expected to thin the field rather than crowd it, steering the market toward fewer, better-capitalised lenders that can carry the cost of running platforms responsibly. 

This is consistent with everything the SEC has done in the run-up. The new rules follow [a shutdown of seven unregistered lenders in August 2025 and a public warning against 22 illegal lending apps in January 2026](https://fintechnews.ph/72397/lending/sec-online-lending-platforms-moratorium-lifted/?ref=research.finbox.in), part of a longer enforcement record of [cease-and-desist orders and licence revocations against online lenders](https://www.sec.gov.ph/lending-companies-and-financing-companies-2/press-release/?ref=research.finbox.in). The direction has been consistent for years: make it harder to lend badly. MC 20 simply writes that intent into the cost of doing business. 

The most instructive picture of where that pressure leads comes from a different corner of the market — the digital banks that have already chosen to lend this way. 

**What the disciplined lenders already look like** 

Consider UNO Digital Bank, one of the six digital banks licensed in the Philippines. It has [disbursed ₱8 billion in loans to date and aims to reach ₱30 billion by 2026 — in its own words, "not by chasing risky growth, but by building sustainable lending powered by data and responsible underwriting"](https://www.uno.bank/blogs/trust-over-flash-digital-banking-philippines/?ref=research.finbox.in). It targets profitability by 2026, four years after launch, ahead of the roughly seven-year global benchmark for digital banks, while planning to [grow disbursements by more than ₱20 billion](https://my.headtopics.com/news/uno-digital-bank-targets-profitability-by-2026-eyes-75006233?ref=research.finbox.in) in the coming year. Growth is still the ambition; the point is that UNO frames underwriting quality as the thing that earns it. 

Maya, the country's largest digital bank, shows why that framing matters. Maya has disbursed ₱256 billion in loans since 2022 and [turned its first full-year profit in 2025, with ₱1.7 billion](https://business.inquirer.net/576263/bright-spot-for-pldt-group-maya-nets-p1-7b-in-2025?ref=research.finbox.in) in net income. That is real scale, achieved with a heavy in-house technology and risk stack. And yet it closed the year with a [gross non-performing loan ratio of 6.1%](https://newsbytes.ph/?ref=research.finbox.in). That figure is not alarming for a book of that size, but it makes the tension concrete: lend at volume and bad loans accumulate alongside good ones, and the only thing keeping the first number from overwhelming the business is the quality of each decision beneath it. 

BanKo, the microfinance arm of BPI, completes the picture from the other side. It [disbursed ₱23.7 billion to self-employed micro-entrepreneurs in 2025](https://www.banko.com.ph/news/banko-strengthens-commitment-to-financial-inclusion-scales-support-for-filipino-micro-entrepreneurs?ref=research.finbox.in), building on a loan book that had grown 53% the year before, while lending to a segment most lenders treat as too risky to touch. Growth and discipline, held together in the same business. 

What links the three is not their size or their model but their emphasis: each competes on how well it underwrites, not on how much it can push out the door. None of them falls under MC 20, yet each shows what the rule is trying to produce among the rest of the players. 

**One capability decides the rest** 

Put the two halves together and the incentive points one way. For the SEC-regulated lenders MC 20 now governs, running many thinly-capitalised platforms has become expensive and constrained. For the digital banks it does not govern, the market has already shown that quality lending is what turns a growing book into a profitable one. Whichever side of the regulatory line a lender sits on, the same capability decides the outcome: the quality of each credit decision. 

When capital is scarce and every loan has to justify its place on the book, a weak decision is no longer something volume can hide. Every approval has to be sound — priced correctly, extended to the right borrower, and defensible if a regulator asks how it was reached. Reaching the thin-file borrower that these markets are built on makes that harder still, which is why UNO leans on [alternative data and responsible underwriting](https://www.uno.bank/blogs/trust-over-flash-digital-banking-philippines/?ref=research.finbox.in) rather than raw expansion. 

This is the work we think about at FinBox. Our AI-based decisioning infrastructure, the alternate data based credit scores plus behavioral and financial variables, exists so that a lender does not have to choose between growing a loan book and controlling it — turning thin-file, alternative, and real-time borrower data into a credit decision that holds up, on every application, at scale. In a market that now prices platforms and rewards discipline, the edge is no longer how many funnels a lender can open. It is how good the decision is at the end of each one. 

The reopening, then, is really a filter. It lets lending back in on the condition that it be done well, and attaches a real cost to doing it badly. UNO, Maya and BanKo already lend the way the new rules reward — and that is the gap the rest of the market now has twelve months and a capital bill to close. 

Cheers, 

Bindesh Pandey