Pawnshops reported P45 billion worth of pledge loans in 2020, down by 4.25 percent compared to 2019’s P47 billion due to the pandemic lockdowns, according to Bangko Sentral ng Pilipinas (BSP) officials.

BSP Governor Benjamin E. Diokno said however that despite the restrictions of the community quarantines, pawnshops’ network expanded in 2020 with 14,641 or up by five percent from 2019. The industry’s network continued to grow with 31 new pawnshop licenses issued as of end-February this year.

“Pawnshops are also continuously being tapped by banks and E-Money Issuers (EMIs) to act as their cash-in or cash-out agents,” he noted during his weekly online “GBED Talks”.

Diokno said 71 percent of industry network reported that they have increased their pledge loans or items that borrowers pledged as loan collaterals, because of promotions and enhanced programs.

But a bigger 80 percent of pawnshops said they registered an average decline in pledge loans of 28 percent in 2020 because of lesser customers due to business closures and travel restrictions, among other reasons.

BSP director Dindo R. Santos, head of BSP's Integrated Supervision Department, said for this year, in terms of monthly volume – “usually for pawnshops most of the pawner will renew their loans so generally it’s a stable trend for the pawnshops.”

Pawnshops are popular because it can release immediate liquidity to borrowers using personal assets as collateral, and loans can be granted to individuals with no credit history. “They provide funding for cash-strapped Filipinos especially during the pandemic,” said Diokno.

Santos said the collaterals used have also diversified and items accepted includes luxury bags and most digital equipment such as mobile phones aside from the usual gold and jewelries being pawned.

About 83 percent of pawnshop offices also have corollary businesses and they also offer remittance or money-changing. Based on the BSP’s 2019 Financial Inclusion Survey, pawnshops and money service businesses remained the top remittance channels used by 98 percent of senders and 93 percent of receivers.

Last year, pawnshops were helpful in distributing the government's P6.81 billion financial assistance. This cash aid benefitted 983,505 Filipinos. Pawnshops are present in 82 percent of the country’s local government units, and has a footprint in 1,348 cities and municipalities nationwide.