MANILA – Share of pawnshops in the central bank’s bid for financial inclusion is expected to rise given the sector’s huge network nationwide compared to banks.
In a virtual briefing Wednesday, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the industry has an 82 percent footprint in local government units (LGUs) around the country, with 14,641 total offices and branches as of end-2020, and 14,824 as of February 2021.
The number of offices and branches as of end-2020 was higher than the 13,044 combined branches and offices of universal, commercial, thrift, rural, and cooperative banks during the same period, he said.
“Given their reach, pawnshops are key financial service access points for Filipinos,” he added.
Citing the results of the 2019 Financial Inclusion Survey report, Diokno said that aside from banks’ automated teller machines (ATMs), Filipino adults are aware of pawnshops as a key financial access point and these two, along with bayad (payment) centers, are the most accessible points for financial services.
“This is because pawnshops provide immediate liquidity to borrowers who have personal assets that can serve as collateral, even to those individuals with no credit history. They provide funding for cash-strapped Filipinos especially during the pandemic,” he said.
Aside from gold and jewelry, pawnshops now also accept branded bags and gadgets as collateral for loans, monetary authorities said.
Other services being provided by pawnshops include money remittance, bills payments, and electronic money (e-money) cash-in and cash-out.
Amid their wide network, pawnshops catered to about 983,505 beneficiaries of the government’s cash aid program as of end-2020 for the distribution of about PHP6.81 billion worth of subsidy, Diokno said.
He expects the sector to remain resilient despite a hit from the pandemic.
Diokno said 71 percent of pawnshops have reported an increase in loans due to promotions and programs last year.
However, he said about 80 percent of pawnshops reported a 28-percent decline in average loans in 2020 because of lesser customers who renewed their loans due to business closures, slower operations, and travel restrictions.
He said some players have indicated bids to further improve their services by utilizing technical innovations in financial transactions.
“Pawnshops are expected to continue playing a key role in inclusive finance because of their extensive network, which serves as financial access points for low-income individuals, small businesses and social amelioration beneficiaries,” he added. (PNA)