MANILA, Philippines — More Filipinos redeemed their valuables from pawnshops by paying off their loans at the height of the government-imposed lockdown to slow the spread of the coronavirus pandemic, contrary to the conventional wisdom of the higher use of pawning during difficult economic times.
Thus said the Bangko Sentral ng Pilipinas (BSP), which also noted that pawnshops are now increasingly getting more revenue from non-traditional services such as cash remittances and money changing.
As such, BSP Govenor Benajmin Diokno noted that these financial institutions play a key role during the pandemic, including serving as access points for the distribution of government cash aids and by providing needed loans and financial services to Filipinos.
“The pawnshop industry fosters economic activity by providing financial services in areas where these are most needed,” he said.
“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,” Diokno added. “Their network and clientele also highlight their role in financial inclusion.”
As of July 2020, 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 period. These increased to almost 80 percent once the lockdown was relaxed.
Eighty-two percent of the industry provided corollary services to the public as of end-July 2020. These include processing of domestic and international remittances, money changing, bills payment, e-loading, collection, corporate disbursement pay-out, and distribution of microinsurance.
Banks and e-money issuers also tap pawnshops as cash agents in areas that cannot be reached by the banks’ or e-money firms’ own networks.
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.
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 until the end of 2021.