Legislation proposed to regulate ‘paluwagan’ scheme



A proposed legislative measure seeking to regulate paluwagan, a popular saving scheme among Filipinos, was approved on second reading by the House of Representatives last Tuesday.

House Bill 10284, a consolidated version of various related measures, aims to formalize and strengthen the organization and operation of paluwagan, a form of community fund pooling.

The Department of Trade and Industry (DTI) had previously labeled paluwagan as a form of pyramid scheme, as it involves a group of individuals pooling their money as savings. In this system, the pooled funds are distributed to different members on agreed dates by an appointed collector, and the cycle continues until all members have received their shares, usually determined by drawing of lots.

Under the approved bill, paluwagan will be regulated for the protection and benefit of the people. The legislation mandates the creation of the Community Paluwagan Administration, which will be attached to the DTI to oversee paluwagan operations. Guidelines will be set for creating paluwagan, including registration for groups with nine or more members, as well as a requirement for insurance coverage for the members.

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