“The existing statutory capital of P100,000 has become too small and it is susceptible to the proliferation of ‘fly-by-night’ operators,” the Bangko Sentral ng Pilipinas said.
Under the 36-year old Pawnshop Regulation Act issued in 1973, the minimum paid-in capital of any pawnshop will be P100,000.
The new rules will replace the implementing rules and regulations of Presidential Decree No. 114, which provides definite and uniform standards for pawnshop operations since these provide an additional source of credit especially for small borrowers left unserved by the banking and other financial institutions in the country.
The BSP noted pawnshops have increase over the years and have provided an alternative source of credit to a large segment of the population.
“The new rules are designed to enhance consumer protection and foster confidence in the pawnshop industry by the pawning public,” the BSP said.
Proprietors, partners, incorporators, directors, stockholders and officers of pawnshops must meet “fit and proper” standards to make sure these are owned and run by people “without any derogatory record and to promote good governance.”
Borrowers from the pawnshops will be required to indicate in the pawn ticket, or pawnbroker’s receipt for a pawn, their preferred mode of receiving the notice whether by mail or text message for their convenience.
Under PD 114, they have 90 days after maturity to redeem their personal property delivered as security for a loan while pawnshops must notify their clients within the 90-day period before they can sell the items in an auction.
The new rules will compel pawnshops to comply with the “Know Your Pawner” procedures in line with the Anti-Money Laundering Act and to address concerns on Anti-Fencing Law.
The Anti-Fencing Law imposes heavy penalties on persons who profit from robbery and theft while Anti-Money Laundering prescribes penalties against money laundering and terrorist financing.
“For transparency and to minimize malpractices, pawnshops will be required to post their premises the acknowledgment 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 BSP said.-Ruby Anne M. Rubio, GMANews.TV