Fit-and-proper rule now applies to pawnshops

May 5, 2009 3:37 am 

MANILA. May 4 — The so-called fit-and-proper rule that used to apply strictly on the management and owners of banks and financial institutions now also apply to tens of thousands of pawnshops across the country, the Bangko Sentral ng Pilipinas said on Monday.

New rules that become effective two weeks from now also relate pawnshop capital to the size of their loan portfolio as the BSP dispensed with the old rule that fixed the industry’s capital to the statutory P100,000 which has become obsolete.

The existing pawnshop capital rule has become too small and is susceptible to the proliferation of “fly-by-night” operators, the BSP said.

In a statement, the BSP said these changes were adopted in recognition of the growing influence of pawnshops in the people’s everyday life as they take on the role of alternative source of funding for people who do not like dealing with the banks.

As added precaution, the BSP now also explicitly require pawnshops to “know their pawner,” a takeoff of the existing “know-your-customer” rule for banks and financial institutions.

“Pawnshops will be required to comply with explicit “know-your-pawner” procedures consistent with the requirements of the Anti-Money Laundering Act and to address concerns of the Anti-Fencing Law,” the BSP said.

It noted that pawnshops have, through the years, provided an alternative source of credit to a larger segment of the population, “particularly those who do not like to go to banks."

”City State Savings Bank pioneered in the uniquely retail activity of accepting cellular phones and jewelry as pawn items and built a multi-million peso industry that has forced the BSP to issue new rules and guidelines.

Under the law, pawnshops have given pawners 90 days after maturity to redeem their pawned articles after which they may sell them at auction.

For the convenience of pawners, new rules will require pawnshops to indicate in the pawn ticket their preferred mode of receiving the notice, whether by mail or courier to a given address or by text or short messaging service of the various telecommunications carrier, the BSP said. (PNA)

DCT/JVallecera/utb

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