BSP highlights pawnshops’ role amid pandemic

MANILA, Philippines — Pawnshops are expected to play a key role by serving as access points for the distribution of government cash aid and by providing needed loans and financial services to Filipinos amid the coronavirus disease 2019 or COVID-19 pandemic, according to the Bangko Sentral ng Pilipinas (BSP).

BSP Governor Benjamin Diokno said in a recent virtual press conference the pawnbro-king industry fosters economic activity by providing financial services in areas where these are most needed.

“With their presence in 1,338 out of 1,634 cities and municipalities nationwide, pawnshops are major financial service access points for individuals, small businesses and social amelioration beneficiaries during the health crisis. Their network and clientele also highlight their role in financial inclusion,” Diokno said.

The industry had a network of 14,416 head offices and branches nationwide as of end-July, exceeding the combined 12,913 network of universal, commercial, thrift, rural and cooperative banks.

“I think they will continue to grow because they’ve been used in terms of distribution, for example, of welfare grants to some people because of their extensive reach and because they now provide varied services,” Diokno said.

Based on the BSP’s daily surveillance report, 68 percent of pawnshop offices operated during the enhanced community quarantine implemented in the middle of March.  The number increased to almost 80 percent when the lockdown was relaxed in June.

Likewise, 82 percent of the industry provided corollary services to the public, including domestic and international processing of remittances, money-changing, bills payment, e-loading, collection, corporate disbursement pay-out, and distribution of microinsurance.

These helped offset the 15 percent decline in the average business in the first half of the year, as most customers redeemed their pledge loans despite the pandemic.

These lenders provide immediate liquidity to borrowers who have assets that can serve as collateral. These include items that do not qualify as collateral for bank loans.

Diokno said banks and electronic-money issuers  also tap pawnshops as cash agents in areas that cannot be reached by their networks.

Pawnshops with money transfer services were also tapped in the distribution of the government’s financial assistance for COVID-19 beneficiaries, such as the social amelioration program of the Department of Labor and Employment  and the COVID-19 adjustment measures program, the small business wage subsidy of the Social Security System, and the rice farmers financial assistance of the Department of Agriculture (DA).

Diokno said the industry has also initiated relief measures for its consumers.

Apart from granting the grace period for loan payments under the Bayanihan to Heal as One Act, he said pawnshops extended maturity dates, rescheduled auctions, crafted easy payment schemes and discounts for accrued interests, and waived inter-branch renewals for those that allow renewal in other branches.

The BSP, on the other hand, extended regulatory relief measures to help the industry access liquidity and cash. These include accommodating pawnshop sales of gold in the BSP’s gold buying station in Quezon City, and providing additional supply of cash to pawnshops’ depository banks up to almost thrice their normal requirements.

Diokno said the BSP also temporarily increased the maximum borrowing limit to 70 percent of total pledged loans from 50 percent until end-2021.