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Loans disbursed by pawnshops drop

PAWNSHOPS’ pledged loans posted an average decline of 28% last year, due to lesser customers who renew their loans or avail of new pledged loans. — BW FILE PHOTO

MAJORITY OF pawnshops in the country saw a decline in pledged loans last year due to lower demand, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Wednesday.

“Data from the players representing 71% of the industry network disclosed that some pawnshops have increased their pledged loans due to promotions or programs,” Mr. Diokno said at an online briefing.

“However, the majority of the pawnshops registered an average decline in pledged loans of 28% in 2020, primarily due to lesser customers who renew their loans or avail of new pledged loans because of business closures, slowed down operations and travel restrictions, among others,” he added.

Meanwhile, Mr. Diokno noted that pawnshops helped disburse cash aid worth P6.8 billion to more than 980,000 beneficiaries as of December 2020.

The footprint of the pawnbroking industry has surpassed the banking industry, as its head offices and branches reached 14,641 at end-2020 present in 82% of the country’s local government units. This is compared with the 13,044 physical network of universal, commercial, thrift, rural, and cooperative banks in the same period.

Pawnshops have also evolved to offer more services, as 83% of their offices and branches were already engaged in remittance and money changing activities as of last year.

The central bank has noted the role of pawnshops in financial inclusion as they provide credit and immediate liquidity to borrowers who have personal assets that can serve as collateral, regardless of whether or not they have a credit history.

“Pawnshops play a key role in inclusive finance because of their extensive network that serves as financial access points for low-income individuals, small businesses and social amelioration beneficiaries,” Mr. Diokno said. — L.W.T. Noble