Recent Posts

Breaking News

Pawnshops can now borrow up to 70%

By Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP) has raised pawnshops’ maximum borrowing limit to 70 percent from 50 percent as part of the temporary relief measures to cope with the impact of the pandemic.

BSP Deputy Governor Chuchi G. Fonacier. (Bloomberg Photo)

BSP Deputy Governor Chuchi G. Fonacier. (Bloomberg Photo)

BSP Deputy Governor Chuchi G. Fonacier, in a central bank memo, said that pawnshops “through the relaxation of their maximum borrowing limit by increasing the allowed percentage of their total borrowings to pledge loans from 50 percent to 70 percent” can tap more resources to fund their business.

The regulatory reprieve will be implemented until December 31, 2021.

“The regulatory relief is expected to provide pawnshops better access to liquidity as
they manage the impact of the COVID-19 crisis,” said Fonacier in BSP Memorandum No. M-2020-050.

“Such relief can also assist the pawnshops as they continue to deliver financial services during this extraordinary situation,” she added.

The Monetary Board has approved Resolution No. 743 last June 11 and the memo was signed on June 15. A pawnshop business, as described by the BSP, is the “business of lending money on personal property that is physically delivered to the control and possession of the pawnshop operator as loan collateral.”

Before the memo, the maximum borrowings of a pawnshop business, as a percentage of total borrowings to pledge loans, do not exceed 50 percent and not from more than 19 creditors. The exception is if pawnshops borrow to acquire fixed assets for their business operations which are not covered by the maximum limit.

Millions of Filipinos, who do not have access to banks, transact their financial business with non-bank channels such as pawnshops and the remittance agents.

Pawnshops, along with foreign exchange dealers/money changers and/or remittance agents, are also referred to as money service businesses or MSBs by the BSP.

There are 1,077 pawnshops in the country operating 12,724 total offices as of end-April this year. More than half of pawnshops are multi-functioning as foreign exchange dealer/money changer and/or remittance agent.


Source: Manila Bulletin (https://business.mb.com.ph/2020/06/21/pawnshops-can-now-borrow-up-to-70/)

No comments