THE BANGKO SENTRAL ng Pilipinas (BSP) has relaxed the borrowing limit of pawnshops to help the industry provide financial services to unbanked Filipinos amid the coronavirus pandemic.

Memorandum No. M-2020-50 signed by BSP Deputy Governor Chuchi G. Fonacier on June 15 said the regulatory relief will increase pawnshops’ allowed percentage of total borrowings to pledge loans to 70% from the current 50%.

The relief measure will be in place until Dec. 31, 2021.

“This will help them manage their liquidity. With the grace period granted to those that availed loans from financial institutions including pawnshops, it somehow affects the liquidity condition of some pawnshops,” Ms. Fonacier said in a text message.

The Bayanihan to Heal as One Act’s implementing rules and regulations directed banks and quasi-banks, including pawnshops, to provide a 30-day grace period for loan payments of clients at the onset of the enhanced community quarantine.

Although this has been extended in the previous months, the grace period has been lifted as most of the country moved towards general community quarantine.

In the memorandum, Ms. Fonacier said the relief is also meant to assist pawnshops “as they continue to deliver financial services during this extraordinary situation.”

The relief measure will also help Filipinos who avail of pawnshop services for their financial needs amid the crisis, said UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion.

“At a time when there are many cash-strapped people because of the COVID-19 (coronavirus disease 2019) pandemic, it is an opportunity to continue pre-COVID financial plans that may have been derailed by the virus spread,” Mr. Asuncion said in an e-mail.

2017 World Bank data showed only 34.6% of adult Filipinos have a formal bank account. The rest of the unbanked population continues to rely heavily on nonbank institutions like pawnshops for financial services and liquidity. — L.W.T. Noble