THE Bangko Sentral ng Pilipinas (BSP) has introduced amendments to the rules governing pawnshops amid changing industry dynamics and to ensure compliance and consumer protection.
In a draft circular approved by the Monetary Board, the BSP updated the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI), extending the traditional model of pawning to more nuanced financial arrangements.
Among the amendments are pawnshops will be permitted to engage in a variety of corollary business activities, “provided that such pawnshop shall maintain records of such business and institute appropriate internal control measures and mechanisms that allow distinction from the pawnshop operation and protect its financial consumers.”
For instance, pawnshops may act as sub-agents for remittances, cash agents for banks, cash-in/cash-out service points, and partners for delivering microfinance and microinsurance products.
To ensure clarity and operational integrity, the amendments require pawnshops to maintain distinct records for each activity and implement robust internal controls to protect financial consumers.
Pawnshops must notify the appropriate supervisory department of the central bank within five working days of engaging in any new business activity. However, the regulations explicitly prohibit activities linked to gambling or betting.
The traditional business model for pawnshops is being authorized to lend money secured by personal property physically delivered as collateral or to purchase goods with the option for the seller to repurchase them at a predetermined price within a fixed period.
The BSP said the term shall be “synonymous and may be used interchangeably, with pawnbroker or pawn brokerage.”
The circular of amendments allows a one-year transition period for compliance, during which pawnshops are expected to reassess their operations and discontinue any activities that conflict with the revised regulations.
“This period of preparation shall be treated as an observation period. Imposition of applicable sanctions for non-compliance shall commence after the end of the observation period,” the BSP stressed.
The amendment will take effect 15 days after publication in the Official Gazette or a widely circulated newspaper.
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