Press Release
January 30, 2006

Proposes amended requirements and standards for pawnshop operations

 Senator Manny Villar, Chairman of the Senate Committee on Finance, says that pawnshops which are playing a very important role in the lives of many Filipinos seem to be neglected by regulators. Thus, Villar proposes through Senate Bill 522 or An Act regulating pawnshop establishments and operations for a more updated or responsive set of requirements and standards for pawnshops.

Villar, President of the Nacionalista Party, cites on his bill, Pawnshops provide an additional source of credit especially for small borrowers left unserved by banking and other financial institutions in the country. They often serve as a last resort especially for the poor who need instant money for emergencies and urgent requirements.

Based on data from the Bangko Sentral ng Pilipinas (BSP), pawnshops provided a total of P10.1 billion worth of loans at the end of 2004 or almost double from the P5.5 billion worth of loans they extended in 1995.

Considering that pawnshops have multiplied in number in recent years and have been posting fast-paced growth in terms of operations and revenues, there is a need to properly monitor and regulate them so that the public can truly derive optimum advantages from them as an additional source of credit, adds Villar.

As of November last year, according to BSP, there are 11,942 pawnshops operating in the country from only 4,173 pawnshops 10 years ago or in 1995. Furthermore, pawnshops' total assets stood at P14.6 billion at the end of 2004, from only P7.7 billion in 1995. Moreover, pawnshops consolidated capital base considerably increased from P4.2 billion in 1995 to P7.7 billion in 2004.

According to Villar, Existing laws governing pawnshop operations in the country are no longer responsive given the growing complexities of the pawnshop business. Presently, Presidential Decree (PD) 114 or the Pawnshop Regulation Act governs pawnshop establishments.

There have been a lot of changes that have taken place over the years that affect pawnshop operations. For instance, 10 or 15 years ago, personal items such as cellphones or other digital gadgets are not being pawned, but now they are pawned more than jewelries or home appliances. We need to take these changes into consideration as well in supervising pawnshops, cites Villar.

Villars bill recommends more responsive provisions in all areas of the pawnshop business to better protect the interests of both consumers or pledgers and that of pawnbrokers.

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