The pawnbroking industry has played a key role during the pandemic by serving as access points for the distribution of government cash aids and by providing needed loans and financial services to Filipinos, according to the Bangko Sentral ng Pilipinas (BSP).
“The pawnshop industry fosters economic activity by providing financial services in areas where these are most needed,” explained BSP Governor Benjamin E. Diokno.
With their presence in 1,338 out of 1,634 cities and municipalities nationwide, Diokno said 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,” the governor added.
At end-July this year, the industry had a network of 14,416 head offices and branches nationwide.
The figure exceeds the combined 12,913 network of universal, commercial, thrift, rural and cooperative banks.
Based on the BSP’s daily surveillance report, 68 percent of pawnshop offices operated during the Enhance Community Quarantine (ECQ).
These increased to almost 80 percent when the ECQ was lifted.
Eighty-two percent of the industry provided corollary services to the public as of end-July 2020.
Pawnshops with money transfer services are also tapped in the distribution of the government’s financial assistance for COVID-19 beneficiaries.
These include processing of remittances (domestic and international), money-changing, bills payment, e-loading, collection, corporate disbursement pay-out, and distribution of microinsurance.
Microinsurance is an inexpensive insurance product that minimum wage earners can afford with minimal and easy-to comply documentary requirements.
This usually comes in combination with different kinds of services such as sickness, accident, death, burial assistance, fire and vehicle, among others and terms vary from three (3) to twelve (12) months.
Banks and e-money issuers (EMIs) also tap pawnshops as cash agents in areas that cannot be reached by the banks’ or EMIs’ own network.
Pawnshops with money transfer services are also tapped in the distribution of the government’s financial assistance for COVID-19 beneficiaries, such as the Department of Labor and Employment’s Social Amelioration Program and COVID-19 Adjustment Measures Program, the Social Security System’s Small Business Wage Subsidy, and the Department of Agriculture’s Rice Farmers Financial Assistance, with a minimal cash out fee of two percent per transaction.
These include Villarica Pawnshop, Tambunting Pawnshop, M. Lhuillier Pawnshop, Cebuana Lhuillier Pawnshop, RD Pawnshop, Gemmary Pawnshop and Palawan Pawnshop.
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, 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.
To help the industry access liquidity and cash, the BSP’s gold buying station in Quezon City accommodated pawnshop sales of gold.
It also provided additional supply of cash to pawnshops’ depository banks up to almost thrice their normal requirements and temporarily increased the maximum borrowing limit from 50 percent to 70 percent of total pledged loans effective until end of next year.
