Pawnshops continued to dominate the country’s financial sector as of the first quarter this year, outnumbering banks in terms of physical reach, government data showed.
The Bangko Sentral ng Pilipinas (BSP) said the number of pawnshops across the country reached 17,408. Of these, 6,279 are head offices while the remaining 11,129 are branches.
Of the total, the BSP earlier said about 10,000 were exclusively in the pawning business, while the rest have other revenue streams, particularly remittance services.
Pawnshops outnumbered all other types of financial institutions regulated by the BSP, including universal and commercial banks, rural banks, and savings and loans associations.
As of the end of March, BSP-regulated financial institutions totaled 27,211. This means pawnshops made up 63 percent of the total.
The number of pawnshops as of the first quarter grew by 4.3 percent year-on-year, faster than the total industry’s growth of 3 percent. If non-bank institutions were excluded, banks were outnumbered by pawnshops nearly two-to-one.
While the BSP considers pawnshops a vital part of the country’s financial sector—helping people meet needs for short-term cash, some companies have been suspected of being directly or indirectly engaged in money-laundering activities.
Earlier this year, the BSP said it had received reports that a substantial number of pawnshops were not compliant with the “know-your-pawner” policy. This policy requires people who pawn items to show proper identification cards and provide relevant personal information such as their address, tax account number and existing pension fund and insurance information.
The lax implementation of this policy makes pawnshops susceptible to becoming facilitators of money laundering activities, the BSP said.
The BSP has since tightened its watch over pawnshops, mandating that all customers be required to present IDs containing their tax information details and social security numbers.
The BSP likewise included pawnshops in the coverage of the government’s “Truth in Lending” rules that required lenders to be more transparent about fees and interests charged to their customers.