BSP relaxes pawnshops’ borrowing limit
PAWNSHOPS are expected to access more liquidity amid the coronavirus disease 2019 (Covid-19) pandemic after the country’s monetary authorities offered regulatory relief to these financial institutions supervised by the Bangko Sentral ng Pilipinas (BSP).
In a memorandum issued on Monday, BSP Deputy Governor Chuchi Fonacier announced that the central bank’s policymaking Monetary Board approved the granting of regulatory relief to pawnshops by relaxing their maximum borrowing limit.
The board increased the allowed percentage of pawnshops’ total borrowings to pledge loans from 50 percent to 70 percent, she said.
The relief would last until December 31.
“The regulatory relief is expected to provide pawnshops better access to liquidity as they manage the impact of the Covid- 19 crisis,” said Fonacier, who heads the Bangko Sentral’s financial supervision sector.
“Such relief can also assist pawnshops as they continue to deliver financial services during this extraordinary situation,” she added.
According to the central bank’s manual of regulations, pawnshops’ maximum borrowing limit shall not include borrowings for purposes of acquiring fixed assets used for business operations.
The latest relief followed other relaxed regulations implemented by the BSP in the past few months to cushion financial institutions from the pandemic’s impact.
These include the relaxation of the single borrower’s limit, penalty for reserve deficiencies, compliance period with Bangko Sentral’s supervisory requirements, and know-your-customer requirements to facilitate access to financial services, according to BSP Governor Benjamin Diokno.
“Meanwhile, prudential accounting relief measures were also implemented to reduce the impact of mark- to-market losses on the financial condition of supervised financial institutions,” he said.