The Monetary Board, the policy making body of the Bangko Sentral ng Pilipinas, approved on 30 April 2009 a new set of rules that will govern all pawnshops operating throughout the country.
Pawnshops have increased in number over the years and they have provided an alternative source of credit to a large segment of our population, particularly those who do not like to go to banks.
The new rules will replace the existing implementing rules and regulations of Presidential Decree No. 114 also known as the Pawnshop Regulation Act issued in 1973.
The new rules are designed to enhance consumer protection and foster confidence in the pawnshop industry by the pawning public. For instance, proprietors, partners, incorporators, directors, stockholders and officers of pawnshops must meet certain “fit and proper” standards to ensure that pawnshops are owned and run by people without any derogatory record and to promote good governance. Pawnshops will also be required to maintain a minimum level of capital or net worth in relation to their loan portfolio. The existing statutory capital of P100,000 has become too small and it is susceptible to the proliferation of “fly-by-night” operators.
Under the law, pawners have 90 days after maturity to redeem their pawned articles and pawnshops must notify their clients within the 90 day period before they can sell the pawned items in an auction. For the convenience of pawners, the new rules will require them to indicate in the pawn ticket their preferred mode of receiving the notice, whether by mail or courier to a given address, or by SMS or text through a specified mobile phone.
On the part of pawnshops, they will be required to comply with explicit “Know Your Pawner” procedures consistent with the requirements of the Anti-Money Laundering Act and to address concerns on the Anti-Fencing Law. For transparency and to minimize malpractices, pawnshops will be required to post in their premises the Acknowledgement of Registration or Authority to Operate issued by the BSP, business days and hours of the pawnshop, their interest rate and charges for loans, among others.
The new rules will take effect fifteen (15) days after publication in the Official Gazette or a newspaper of general circulation in the Philippines.
Recently, the BSP signed a Memorandum of Agreement with the Department of Interior and Local Governments on the sharing of information between BSP and the city and municipal government units to ensure that only those that have the proper business permits and registered with the BSP are transacting with the public.