228 pawnshops closed by BSP in second quarter

Two hundred and twenty-eight pawnshops were closed and delisted by the central bank for the second quarter period this year, either through voluntary closure or not.

In a circular letter updating pawnshop registrations, Bangko Sentral ng Pilipinas (BSP) Supervision and Examination Sector (SES) sector-incharge Chuchi G. Fonacier said the delisting “is based on receipt of notices of voluntary closures and relevant information gathered from the conduct of BSP oversight functions.”

From March to June this year, the BSP delisted 228 from its registry of pawnshops, foreign exchange dealers/ money changers and/or remittance agents – also referred to as pawnshops and money service businesses. This was a small number of closures considering as of end-March this year, there are 16,740 pawnshop offices registered with the BSP.

For the second quarter, Fonacier said they approved six new applications for registration and five for reregistration of new pawnshop offices.

There are 5,401 pawnshop firms in the country. Of the 16,740 total offices in operation across the Philippines, almost 7,000 are multi-functioning as foreign exchange dealer/money changer and/or remittance agent.

Eight years ago the BSP improved its supervision of pawnshops by focusing more on the top brass of the sector. The revisions effectively updated the 36-year-old policy guidelines on pawnshops.

The central bank has also started efforts to better capture the whole pawnshop business. In 2010, about 30 percent of the sector were not covered by the BSP monitoring system. A partnership between the BSP and Department of Interior and Local Government enhanced the monitoring pawnshops, moneychangers and remittance agents.

Last year, the BSP amended anew regulations covering pawnshops by tightening compliance to consumer protection issues as well as adopting a network-based approach to update how business is done.

Revisions included not only consumer protection but financial inclusion and the strengthening of the licensing process.

In a BSP statement, it said the approved framework is just part of a series of reforms for a “more responsive regulatory environment for pawnshops and other non-bank financial institutions.”

The BSP said it recognizes the important role of the pawnshop industry as a financial inclusion vehicle and in “protecting the welfare of financial consumers.”

Pawnshops engage in the business of lending money on personal property delivered as security for loans. 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.