Aware that many Filipinos are turning to pawnshops during this time of financial stress, Cagayan de Oro City Rep. Rufus Rodriguez has urged the Bangko Sentral ng Pilipinas (BSP) to mandate lower interest charges for these establishments during the COVID-19 pandemic.
“During this pandemic, it is just proper for the BSP to help our fellow Filipinos and mandate that pawnshops charge lower interest rates. Our people are already facing many problems right now, and high interest rates should not be one of them,” the veteran lawmaker said in a statement Monday.
Rodriguez, chairman of the House Committee on Constitutional Amendments, penned and filed House Resolution (HR) No.1212 to express the sense of the 300-member chamber in connection with his appeal to the BSP.
He noted in his measure that the health crisis and ensuing lockdowns imposed by the government have prevented millions of Filipinos from working, while thousands have also been laid off.
“Because of this, many are deprived of their opportunity to earn, resulting in them being unable to pay their bills, including rent and utilities,” he said.
These hapless Filipinos are thus forced to go to pawnshops to obtain funds by pawning their valuables, Rodriguez said. He added that people prefer these lenders because they are more accessible and they impose lesser and more lenient requirements than banks.
Rodriguez noted that in recent months, there have been long lines of borrowers at pawnshops. He said this situation gives unscrupulous pawnshops the “opportunity to take advantage by raising their lending rates.”
He invoked BSP Circular No. 938 in asking the regulator to prescribe lower interest charges.
The circular provides: “The rate of interest, including surcharges on any loan or forbearance of money extended by a pawnshop, shall be in accordance with market conditions. However, such interest rate shall not be iniquitous, unconscionable, or contrary to morals, if not against the law as may be determined by the court. These shall also be properly declared in accordance with the Truth in Lending Act.”