BSP says pawnshops help ease rural finance crunch

MACTAN, Cebu—The growing presence of pawnshops and convenience stores offering bills payments, remittance and other financial services is expected to substantially trim the number of municipalities in the Philippines that do not have any financial service providers (FSPs).

The Bangko Sentral ng Pilipinas projects that the number of municipalities without FSPs will drop from the current 609 to just 372 over the near term.

This is because most pawnshops and key convenience stores are now offering financial services, including bills payments and remittance facilitation.

Also, the decision of some mobile phone service providers to establish electronic payments systems for their customers has helped ease the financial crunch in the countryside.

According to the BSP, a significant number of Filipinos living in remote areas are unable to access financial services.

And since banks normally do not operate in remote areas, the central bank said, the expansion of services of pawnshops and retail stores to include financial services, apart from “mobile phone banking,” has helped address the problem of providing such services.

Currently, there are still 609 municipalities, out of the total 1,634, that do not have banks or any other form of FSP.

Still, there have been significant efforts toward achieving full “financial inclusion”—the ability of people to access financial services—in the country, the BSP said.

For example, the number of automated teller machines around the country has increased from 3,882 at the end of 2001 to 10,658 as of 2011.

The push toward financial inclusion is a vital step in alleviating poverty, the BSP said.

In the Philippines, nearly a third of the population is living below the poverty line, bulk of whom reside in rural areas where financial services are scarce if not totally absent.

“Financial inclusion, or the provision of access to financial services for all, has received growing recognition as a key ingredient for inclusive growth,” the BSP said in a statement.

“Inclusive growth” is a form of economic expansion where the increase in income is actually enough for people to get out of poverty.

The Organization for Economic Cooperation and Development (OECD) and the BSP are holding a three-day seminar on financial literacy in Mactan as a means to promote savings and investments among students, families of overseas Filipino workers, professionals, and people interested in becoming micro-entrepreneurs.