Cruz said the government has nothing against them and that they have left it open for the borrowers to choose from whom to borrow money.
"We cannot phase them out, but we can scale (their business) down," she told MindaNews during the microfinance forum today.
In the forum, Cruz presented a scheme to make available for cooperatives and associations microfinance packages from the National Livelihood Support Fund (NLSF).
In the program, NLSF can extend microfinance loans to organizations like market vendors associations so their members can choose to borrow from their association instead of lending from the Indian nationals.
Cruz recognized that foreign informal lenders have distorted prices of commodities, like in public markets, due to sometimes exorbitant interest rates, which could go up as much as 100 percent per year.
She said the NLSF scheme now honors agreements between the borrower and the lending party.
She noted the borrowers' aversion to documentation. Thus, the alternative loan scheme now requires only a one-page documentation.
Cruz said a more accessible microfinance scheme should lessen the hold of the foreign informal lenders. "Eventually, it will bring down the prices of commodities sold by the borrowers," she said.
But she said Indian lenders cater to a big market that present microfinancing institutions still could not fill up.
Davao City Councilor Emmanuel Galicia Sr., who discussed legislative support for microfinancing, said there is no local and national law regulating the spread of the informal lenders.
But lawyer Jhopee Avanceña Agustin, chief of Davao City's business bureau, said anyone doing business in the city must secure a permit to do so.
She said there had been Indian informal lenders who registered with them as "lending investors" but added that they have to monitor if all of these lenders have registered their businesses.
Agustin said they will sue anyone caught extending loans without a business permit for violating the city's revenue code. She said they could be meted out fines, if not imprisonment.
She said they could also charge the informal lenders for tax evasion.
An eatery operator in Matina said availing loans from “Bombay” lenders is convenient for her because they do not require collateral and can be accessed fast. (Walter I. Balane / MindaNews)